# Dual citizen tax help



## AccidentlyAmerican :/ (Mar 2, 2021)

I am confused. And a little scared. And just all around 😬
A little background, I am an Australian/US citizen. Was born in Australia to an America mother. I have a SSN and a long expired US passport. Up until a few weeks ago, I had no idea that I was supposed to be filing US taxes and only found out when opening an Australian brokerage account. The "are you a citizen of another country" caught me off guard. I sat there for a moment and thought, well technically, yes. And so I answered yes. Next thing I know, I'm digging out my Social Security card to put in the number, not realising I was about to fall down the rabbit hole.
After googling. And panicking. And googling some more; I came to the conclusion that streamlined amnesty procedure for 17, 18 and 19 +filing 2020 was my best option. I have very very simple tax circumstances and no financial ties to the US. Most of the quotes were more than $1250USD and whilst that is a lot of money to me, I truly thought it was my best option. Once I found out that I'm probably eligible for the stimulus payments my stress went down, in that, they would offset the price of coming into compliance.
And then I stumbled across this forum. Where the going advice seems to be overwhelmingly...if you're not in the US tax system, stay out of it. They can't do anything about you.
So now, I'm confused.
I had been thinking about relinquishing my citizenship, because truthfully, I don't enjoy doing one set of easy taxes. I don't actually want to have to throw in an extra set just for fun.
So now my dilemma is 3 fold.
1. Streamline + 2020 filing, get stimulus, possibly start the renunciation process. (All the stimulus packages would make this cost far easier to stomach)
2. Dont file anything, start the renunciation process.
3. Pretend I'm not a American citizen and hope for the best. Not sure this is the wisest course of action for me personally. I'm a terrible liar and frankly the whole scenario makes me incredibly anxious.

If anyone has any wise words I'm open to suggestions. 
🙂


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## Bevdeforges (Nov 16, 2007)

There is no rush except if you're hoping to cash in on those "stimulus checks" (they're actually pandemic "relief checks" but nevermind). Probably best to do nothing for the time being until you've had a chance to think through the consequences of taking any action.

Streamline is probably the way to go IF you want to get legit and you're OK with continuing to file US returns the rest of your life. The brokerage account will probably get reported (depending on how much is in it) but at least to date there is no indication that the IRS is actually bothering to match up accounts they get reports on with tax filings.

You could start renunciation asap - but that will cost you $2350. There is sometimes a question in there somewhere about "are you current with your tax filings?" (but not always). Obviously, the correct answer (but only if asked) is "yes" with no further detail. There are LOTS of reasons that people living overseas legitimately do not need to file.

But before deciding which way to go, think through your options. Is there any possibility you might someday want to live in the US - whether for work or study? With a non-US birthplace you can certainly visit without raising any issues regarding your US nationality. As long as you don't have any financial assets in the US (bank accounts, trust funds, investments, etc.) there should be no problem. The fact that you have a long-expired passport actually works in your favor anyhow - lots of people believe that if they don't have a passport, they are no longer a citizen. It's not true, but it's a common assumption.

Give yourself some time and space to think through your options. There are lots of folks out there in your situation who are still "considering their options." The IRS is vastly understaffed and underfunded and unless you make a name and a fortune for yourself in some manner that calls attention to the fact that you have US citizenship, the IRS just doesn't have enough resources to bother checking you out at distance.


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## AccidentlyAmerican :/ (Mar 2, 2021)

Thanks Bev 
Honestly, at 41, I dont have any wish to work, study or even visit the US. I lived there for a year when I was a teenager and really have never had any inclination to go back. 
I do understand the point of taking my time in this whole scenario, and I have definitely stopped thinking in terms of "omgomgomg!" And more about whether or not it's worth it to continue down this road.

That being said, if I choose to go through with the streamline process, my tax circumstances would be classed as incredibly basic and as such, would streamline be something that I could do myself instead of paying someone else to do? I've looked at the FBAR side of the process and that seems easy enough. But I'm worried about the actual tax form side. It seems comprehensively incomprehensible with a maze of alphanumeric forms and completely alien to me.
Is there anywhere that I can look up which forms would be needed, without it turning into some sort of chase my tail situation on the IRS website.


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## Sean-The Cloud Expat (Feb 28, 2021)

AccidentlyAmerican :/ said:


> Thanks Bev
> Honestly, at 41, I dont have any wish to work, study or even visit the US. I lived there for a year when I was a teenager and really have never had any inclination to go back.
> I do understand the point of taking my time in this whole scenario, and I have definitely stopped thinking in terms of "omgomgomg!" And more about whether or not it's worth it to continue down this road.
> 
> ...





AccidentlyAmerican :/ said:


> I am confused. And a little scared. And just all around 😬
> A little background, I am an Australian/US citizen. Was born in Australia to an America mother. I have a SSN and a long expired US passport. Up until a few weeks ago, I had no idea that I was supposed to be filing US taxes and only found out when opening an Australian brokerage account. The "are you a citizen of another country" caught me off guard. I sat there for a moment and thought, well technically, yes. And so I answered yes. Next thing I know, I'm digging out my Social Security card to put in the number, not realising I was about to fall down the rabbit hole.
> After googling. And panicking. And googling some more; I came to the conclusion that streamlined amnesty procedure for 17, 18 and 19 +filing 2020 was my best option. I have very very simple tax circumstances and no financial ties to the US. Most of the quotes were more than $1250USD and whilst that is a lot of money to me, I truly thought it was my best option. Once I found out that I'm probably eligible for the stimulus payments my stress went down, in that, they would offset the price of coming into compliance.
> And then I stumbled across this forum. Where the going advice seems to be overwhelmingly...if you're not in the US tax system, stay out of it. They can't do anything about you.
> ...


Point number 3 isn't so bad as it seems. Renouncing isn't possible without showing them that you were Tax Complaint. It's a vicious circle. The stimulus payments have a certain income threshold. Not everyone is eligible. The total cost of renouncing, plus streamline, plus legal fees would easily cross 5 grand. FATCA has made opening bank account in a foreign country a nightmare for all expats. Good Luck!


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## Bevdeforges (Nov 16, 2007)

Sean-The Cloud Expat said:


> Renouncing isn't possible without showing them that you were Tax Complaint. It's a vicious circle.


Perhaps it depends on the consulate you go through, but I'm aware of at least two consulates here in Europe where the question simply never comes up. And by all reports, those going to the consulate to renounce seem to be met by very friendly, sympathetic personnel all the way.


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## Nononymous (Jul 12, 2011)

Sean-The Cloud Expat said:


> Renouncing isn't possible without showing them that you were Tax Complaint. It's a vicious circle. The stimulus payments have a certain income threshold. Not everyone is eligible. The total cost of renouncing, plus streamline, plus legal fees would easily cross 5 grand. FATCA has made opening bank account in a foreign country a nightmare for all expats. Good Luck!


This is quite incorrect. There is no requirement to demonstrate tax compliance before renouncing. If one wishes to formally exit the US tax system after renouncing, that is a separate process. The IRS office responsible for this recently admitted that 40 percent of those who renounce do not submit the final tax paperwork (Form 8854) and they don't have the resources to follow up with even a letter. In short, if you need to renounce, renounce, don't worry about the taxes.

While the renunciation fee is ridiculous, that's basically it. No need to pay lawyers, or to use tax preparation services to file for 5 years etc.

The income threshold for the stimulus payment is actually AGI of $75,000. This means that an expat using the FEIE can earn up to $182,000 and still receive a payment. At that level of income they can probably afford to renounce without assistance.

FATCA makes banking difficult for anyone born in the US or without a second citizenship in some countries, but not all countries. In Canada - and presumably Australia as well - banks make no effort to validate customers' answers, nor do they require ID that shows place of birth. Upon opening a new account, one simply fails to check the little "US citizen" or "foreign tax resident" box on the application form and that's the end of it.


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## Nononymous (Jul 12, 2011)

AccidentlyAmerican :/ said:


> 1. Streamline + 2020 filing, get stimulus, possibly start the renunciation process. (All the stimulus packages would make this cost far easier to stomach)
> 2. Dont file anything, start the renunciation process.
> 3. Pretend I'm not a American citizen and hope for the best. Not sure this is the wisest course of action for me personally. I'm a terrible liar and frankly the whole scenario makes me incredibly anxious.


#3 is the clear winner here. You were born in Australia so you don't need to worry about having a US birthplace on your ID. You have no meaningful connection to the US. Just ignore it. No reason to renounce.

You do have a small FATCA problem to solve. If you only just opened the brokerage account, close it immediately. Ideally without putting any money into it. Then go down the street to the next financial institution and open a new one, but without disclosing your US citizenship. Small FATCA problem solved. 

You could file a 2020 return to collect the stimulus benefit to offset the cost of renouncing, but honestly given that you weren't born in the US, it's probably not worth the trouble.

Finally, everyone panics when they first learn about this. It's normal. Take a deep breath, relax, get comfortable with the idea of lying to banks every so often. Soon it becomes second nature.


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## Moulard (Feb 3, 2017)

Sean-The Cloud Expat said:


> Renouncing isn't possible without showing them that you were Tax Complaint. It's a vicious circle.


This is demonstrably false. The only paperwork one has to complete and sign are Forms DS-4080 and DS-4081. Form 4081 summarises the consequences and ramifications of renunciation or relinquishment.

Point 10 does deal with taxes, but nothing on either form requires you to be tax compliant or to make an oath or declaration that you are tax compliant.



> 10. My renunciation/relinquishment may not exempt me from United States income taxation. With regard to United States taxation consequences, I understand that I must contact the United States nationality is determined by the United States Attorney General to be motivated by tax avoidance purposes, I will be found excludable from the United States under Immigration and Nationality Act, as amended


Even if one was fully tax compliant, one is meant to complete and submit form Form 8854 either on its own, or as part of a tax return AFTER renunciation or relinquishment has been accepted by the Dept of State (which can be many months later). So even if one was fully up to date and compliant, from an IRS perspective true compliance cannot happen until after the receipt of the CLN.


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## Pacifica (Oct 19, 2011)

Sean-The Cloud Expat said:


> Renouncing isn't possible without showing them that you were Tax Complaint.


*You can renounce if you have not filed taxes. Likewise you can apply for a CLN based on a prior relinquishing act if you have not filed taxes. The CLN is issued regardless of your status as a tax-filer. 

Here’s some general information regarding that and the relation between DoS and IRS in the context of renunciation/relinquishment. Renunciation falls under s. 349a(5) of the Immigration and Nationalities Act. (Loss of citizenship by relinquishment falls under other sub-sections of s. 349a; in those cases, persons apply for a CLN based on an act they performed, such as working for a non-US government or serving in its army or becoming a citizen of the non-US country, if the person had the intention of terminating their US citizenship by so doing.)

(1) Dept of State*

Dept of State basically doesn’t care about one’s tax status as the citizenship itself (and the issuance of the CLN) is not dependent on one being tax compliant.
DoS’s involvement/connection with tax is the following:

*(a)* At the consulate the person signs DS-4081, Statement of Understanding of Consequences; one of the 12 items on it is Item 10, that renouncing “… may not exempt me from US tax income taxation [etc] …”

*(b)* The DS-4079, which is relevant and required for relinquishments, is not used for renunciations. However, some consulates have used it for renunciation (while DoS discourages its use with renunciation, they do not forbid it 7 FAM 1264  Your local consulate will let you know which forms they require, either on their website or when you send in an appointment request).
This questionnaire, DS-4079, asks at q. 13 (e) “Do you file US income or other tax returns?” This question is on the DS-4079 is there as an indicator of your ties and connections to the US, which is important if you’re claiming to have relinquished some years ago (in which case you’re trying to illustrate your lack of ties/connections/citizenship behaviour). For renunciations, it’s irrelevant if you have ties/connections/citizenship behaviour or not – and your answer has no bearing on if you can renounce or not.

* (c)* Dept of State is to provide IRS with a copy of each CLN they issue as per DoS Interagency Coordination and Reporting Requirements, 7 FAM 1243(a).

*(2) IRS*

To log out of IRS and avoid covered expatriate status, IRS requires that the person file their exit tax form (8854), their final year form, and has “complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation” basically, for most people, file, unless your income was below the minimum threshhold which requires filing), by June 15th of the year following the renunciation.

If a person does not file, the citizenship itself remains terminated and the CLN remains valid.


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## Pacifica (Oct 19, 2011)

Re: *#7 Nononymous wrote:*
_". . . You were born in Australia so you don't need to worry about having a US birthplace on your ID. You have no meaningful connection to the US. Just ignore it. No reason to renounce.
You do have a small FATCA problem to solve. If you only just opened the brokerage account, close it immediately. Ideally without putting any money into it. Then go down the street to the next financial institution and open a new one, but without disclosing your US citizenship. . . . "_

In most countries that I’m aware of, financial institutions are not requiring you to document your place of birth and I know a lot of people are doing as Nononymous writes. Basically, a fact set where one can stay under the radar and does not need to renounce. To stay under the radar or to renounce is an individual decision and seems to come down to which option the person is most comfortable with and is most practical for them.

If staying under the radar, I add the suggestion to check the internet periodically to make sure nothing in legislation or business practice of the FIs regarding this has changed in your country -- for example news reports, or websites where people report their banking experiences. Two other useful sites for that are the Australian site Fix the Tax Treaty and the Isaac Brock Society, which is Canadian based with a worldwide scope.


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## Bevdeforges (Nov 16, 2007)

Just a note on the question of whether or not you "must" reveal your place of birth. Some countries (often in Europe - at least as far as I'm aware) identify individuals using their name, date of birth and place of birth. It's really only for identity purposes that you will be asked for this - but obviously for setting up a bank or other financial account they will require the information. If they don't ask you for the information, just make sure that the i.d. document(s) you give them to open your account don't display this if you were born in the US. Key docs to check are: national i.d., passport and local driving license.


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## Moulard (Feb 3, 2017)

Australia uses a points system for identification. To open a bank account you must provide 100 points of ID. Each form of ID is given a point value based on whether it is a primary or secondary form of ID. You have to provide one primary for of ID (photo). Pretty easy to assemble 100 points of ID and still avoid any document that reveals your place of birth or citizenship. Drivers License and Medicare card will do it.


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## Nononymous (Jul 12, 2011)

Similar in Canada. Two pieces of ID, only one with a photo, so drivers license plus health card or even credit card is enough. No need to haul out the passport.


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## Bevdeforges (Nov 16, 2007)

Depends on where your i.d. comes from. Nearly every form of i.d. here in France (possibly in much of Europe) includes date and place of birth. (Even the health care card here includes that info encoded into the social security number.) Yet another of the joys of being an expat, I guess.


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## nayuamada (Mar 13, 2021)

Bevdeforges said:


> With a non-US birthplace you can certainly visit without raising any issues regarding your US nationality. As long as you don't have any financial assets in the US (bank accounts, trust funds, investments, etc.) there should be no problem.


Hello, thanks for your help. I am thinking about renunciation or not, but right now I have personal difficulties and don't have the ability or money to do this. I have been completely disconnected from the US and also expired passport. However, when I left the US, I kept a bank account open with very little money in it. It was meant to be money in case I ever decided to go back to the US. Also I had a 401K with little money in it. I kept it there in the same bank. Now reading your comment that I have quoted above, you say something like that could be a problem. Really? Could you explain why it could be a problem. In fact, I think that they don't allow me to close the account without being physically in the United States. I don't even have the money to go there to do this sort of thing.


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## Nononymous (Jul 12, 2011)

nayuamada said:


> Now reading your comment that I have quoted above, you say something like that could be a problem. Really? Could you explain why it could be a problem.


It's not a problem in your case. What was meant is simply that if you had assets in the US and you owed the IRS a lot of money, they could seize those assets - which they cannot do with assets outside the country.


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## nayuamada (Mar 13, 2021)

Moulard said:


> .... from an IRS perspective true compliance cannot happen until after the receipt of the CLN.


Hello Regarding renunciation and form 8854 .... What is CLN? ... never mind. I googled it Certificate of Loss of Nationality of the United States (*CLN*)


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## nayuamada (Mar 13, 2021)

Nononymous said:


> It's not a problem in your case. What was meant is simply that if you had assets in the US and you owed the IRS a lot of money, they could seize those assets - which they cannot do with assets outside the country.


Thanks so much. I don't owe any money. Not only that but I am not even bothering with stimulus checks and stuff just because the headache is too much.


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## nayuamada (Mar 13, 2021)

nayuamada said:


> Hello Regarding renunciation and form 8854 .... What is CLN?


Oh I googled it.
The Certificate of Loss of Nationality of the United States (*CLN*) is form DS-4083 of the Bureau of Consular Affairs of the United States Department of State which is completed by a consular official of the United States documenting relinquishment of United States nationality.Apr 24, 2020


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## Nononymous (Jul 12, 2011)

nayuamada said:


> Thanks so much. I don't owe any money. Not only that but I am not even bothering with stimulus checks and stuff just because the headache is too much.


Your call, but at $3200 the stimulus benefit covers the renunciation fee with enough left over for a nice weekend getaway.


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