# US bank accounts (IRA) after renunciation



## pishoux007

Is it a problem to keep bank accounts in the US after renouncing the US citizenship?

What about the IRA?


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## Phil Hogan

Hi

I won't be too difficult to hold US account after you renounce, however the bank may restrict your trading on account as a non resident.

Also note that any withdrawals from the IRA (non periodic) will most likely attract a 30% withholding rate at source.

You will however be able to take a foreign tax credit on your domestic return is applicable.

Cheers

Phil


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## pishoux007

Cross_Border_Tax said:


> Hi
> 
> I won't be too difficult to hold US account after you renounce, however the bank may restrict your trading on account as a non resident.


well this has been the case for a couple of years and I haven't seen any repercussion yet.



Cross_Border_Tax said:


> Also note that any withdrawals from the IRA (non periodic) will most likely attract a 30% withholding rate at source.


I intend to wait until I can officially get it.



Cross_Border_Tax said:


> You will however be able to take a foreign tax credit on your domestic return is applicable.
> 
> Cheers
> 
> Phil


Thank you Phil for your answer!


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## Phil Hogan

No problem, good luck.

Phil


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## Bevdeforges

Cross_Border_Tax said:


> Hi
> 
> I won't be too difficult to hold US account after you renounce, however the bank may restrict your trading on account as a non resident.
> 
> Also note that any withdrawals from the IRA (non periodic) will most likely attract a 30% withholding rate at source.
> 
> You will however be able to take a foreign tax credit on your domestic return is applicable.
> 
> Cheers
> 
> Phil


Not sure what you mean by "non-periodic" because as far as I understand it, ALL withdrawals from an IRA made by a non-US citizen are supposed to be withheld at the 30% rate. I believe it may be possible to file a non-resident tax return, however, to recoup the excess withholding. (Not sure about that, but it would pay to take a look at the IRS publication on non-resident returns.)
Cheers,
Bev


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## BBCWatcher

The financial institution probably isn't going to know that you're supposed to file a W-8BEN to replace your W-9 when you renounce -- I'm not sure anybody tells them automatically -- so the institution may not withhold. Regardless of whether there's withholding or not, taxes may be owed.

A more interesting question is whether you're legally required to send W-8BENs to your U.S. financial institutions when you renounce. Another question is what's the penalty if you don't -- could your assets be frozen and back withholding seized, for example? (Probably.) I think those are important questions to answer.

If we're keeping score, this is one of the disadvantages of renouncing U.S. citizenship. While excess withholding may be recoverable by filing a tax form (eventually), the IRS doesn't pay interest on excess withholdings.  It might make sense to move U.S.-based financial assets elsewhere if there are such concerns.


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## Phil Hogan

Bevdeforges said:


> Not sure what you mean by "non-periodic" because as far as I understand it, ALL withdrawals from an IRA made by a non-US citizen are supposed to be withheld at the 30% rate. I believe it may be possible to file a non-resident tax return, however, to recoup the excess withholding. (Not sure about that, but it would pay to take a look at the IRS publication on non-resident returns.)
> Cheers,
> Bev


Hi Bev

I've helped clients using both methods. If the bank has withheld 30% we've filed a 1040NR to recover the difference.

If we know the payment is coming we issue them a W8Ben and they will only withhold 15%.

Keep in mind however that not all banks will comply with a W8Ben and you'll need to file a 1040NR regardless.

Cheers

Phil


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