# Renouncing vs non Renouncing: fatca-fbar implications



## gigant (Mar 25, 2014)

HI,

Im a dual citizen, born Europe, naturalized US.

I want to return to Europe and I saw the fee for renunciation is now $2,345.

if I go back and I DO NOT renounce, what the worse that can happen in terms 
of fbar and fatca reporting regulations and tax in general if I get a simple job or
I do not work at all?

I mean if I plan to have a salary under $50.000 and a checking account under $10.000 I don't really need to file us tax return, 
and if I want to open a checking account using my eurpean passport how the bank
can imagine I m an us person unless I tell them?


I m trying to evaluate the Risks of not renouncing.

any feedback pls thank you


----------



## Bevdeforges (Nov 16, 2007)

It really depends on where you're going (ostensibly Spain, I guess) and to what extent you show up on the IRS radar.

If the total of your foreign (i.e. non-US) bank accounts never exceeds $10,000 then you're off the hook for FBAR. But depending on your filing status (i.e. single, married, over 65 or not), you're supposed to file if your worldwide income exceeds the filing thresholds. Anything over about $20,000 most definitely puts you into the "needs to file" category. However, it depends on the source of your income as to whether or not there is any/much likelihood of the IRS taking an interest in you once you're out of the country.
Cheers,
Bev


----------



## gigant (Mar 25, 2014)

Bevdeforges said:


> It really depends on where you're going (ostensibly Spain, I guess) and to what extent you show up on the IRS radar.
> 
> If the total of your foreign (i.e. non-US) bank accounts never exceeds $10,000 then you're off the hook for FBAR. But depending on your filing status (i.e. single, married, over 65 or not), you're supposed to file if your worldwide income exceeds the filing thresholds. Anything over about $20,000 most definitely puts you into the "needs to file" category. However, it depends on the source of your income as to whether or not there is any/much likelihood of the IRS taking an interest in you once you're out of the country.
> Cheers,
> Bev


at one point I guess my checking acc (which I ll open showing my Italian passport, so theres no way a small bank will know im a us person, unless there will be some cross check data base or so..) )will be over the $10K 

and likely ill get a job over 20K but still, how would they know where I work and how much I make?

would you still consider "safer" to renounce vs not renouncing?


----------



## BBCWatcher (Dec 28, 2012)

You're likely to be living in a place where there are U.S. tax _advantages_ to possession of U.S. citizenship. You're going to be living in a comparatively higher income tax jurisdiction, so truthful and timely filing is either going to allow you to collect free money from the IRS or to accumulate credits against possible future U.S. taxes if/when you decide to obtain U.S. source income.

Consequently, since it's extremely unlikely there would be any negative financial consequences to compliance -- quite the opposite! -- what's wrong with compliance?


----------



## gigant (Mar 25, 2014)

BBCWatcher said:


> You're likely to be living in a place where there are U.S. tax _advantages_ to possession of U.S. citizenship. You're going to be living in a comparatively higher income tax jurisdiction, so truthful and timely filing is either going to allow you to collect free money from the IRS or to accumulate credits against possible future U.S. taxes if/when you decide to obtain U.S. source income.
> 
> Consequently, since it's extremely unlikely there would be any negative financial consequences to compliance -- quite the opposite! -- what's wrong with compliance?


so what is your suggestion to keep it? 

did you renounce yourself? 

all expat , almost all of them, are in favor of renounce it if you plan to move oversea and never go back to the us,

what do I lose? pls let me understand since I ve worked in the us for 10 trs
and I don't really know the system well

do I lose my pension? (10 yrs of work, what kind of pension do I lose? $100 a month? do I lose any other benefits?


----------



## Bevdeforges (Nov 16, 2007)

gigant said:


> all expat , almost all of them, are in favor of renounce it if you plan to move oversea and never go back to the us,
> 
> what do I lose? pls let me understand since I ve worked in the us for 10 trs
> and I don't really know the system well
> ...


I would definitely challenge your statement that "all, almost all of them" are in favor of renouncing. There are a variety of reasons for that - not all of them related to the tax issues.

One big consideration (which is, I admit, tax related) is that if you have US source benefits coming to you - like US social security - there is a whopping 30% withholding on all income payable to NRAs (non-resident aliens), regardless of your actual tax obligations. While I believe it's possible to file an NR tax return each year to reclaim the excess withholding, it's kind of up in the air whether you're any better off than having to file a "normal" IRS return as a citizen each year.

And you have already mentioned one big mitigating circumstance in the whole tax thing... the IRS' ability to check on foreign sources of income is, indeed, limited and their interest in certain types of dead normal income, already subject to taxation in your country of residence is often limited, too.

Unless you have elaborate types of investments with the potential for avoiding taxation, it can actually be quicker and easier to just file a US tax return showing that you owe nothing than to reclaim over-withholding every year.
Cheers,
Bev


----------



## BBCWatcher (Dec 28, 2012)

There's also withholding on IRA and 401(k) distributions.

....I'm still confused here. What _personal benefit(s)_ do you think there is(are) in terminating your U.S. citizenship in your personal, particular circumstances? As has already been reasonably established, it costs a minimum of US$2350 for a U.S. Certificate of Loss of Nationality (CLN) since (it would appear) you cannot demonstrate loss of U.S. citizenship. What personal benefits do you think you'll be getting in exchange for spending that fairly considerable amount of money?

I can think of some _personal benefits_ that you would be highly likely to receive as a U.S. citizen, but I can't think of any advantages to termination. As Bev points out, you're probably looking at a future of U.S. tax filings _anyway_ in the process of collecting your U.S. Social Security, IRA, and/or 401(k) benefits, so I'm not sure avoiding U.S. filings is even a realizable benefit in your circumstances as a tax resident of Spain.

I agree with Bev. According to the Federal Register there were 2,999 individuals who terminated their U.S. citizenships in 2013. There were 779,929 individuals who naturalized as U.S. citizens in 2013. The former is a much, much smaller number than the latter, quite obviously.

Now, if there's a personal benefit to terminating your U.S. citizenship, OK, then you have something tangible to consider, but what is it in your circumstances?


----------

