# Renouncing. Advice?



## speck

Hi,

I'm looking for advice on my situation, and any info on the renouncing experience in Calgary. Trying to get an idea of costs, and how difficult this is going to be for me.

Backstory - Born in Canada, and have never lived in the USA, or earned any income in the USA. I applied for my American citizenship in 2006, because I have an American father, and thought a US passport would be a nifty thing to have. Boy do I ever regret doing that!!!

So, now that all this FATCA, FBAR BS has been rolled out, my Canadian husband is super paranoid about what this is going to mean for our investments and any future inheritance we get from our (Canadian) parents. Basically, we see no benefit for me having US citizenship, as we do not have any desire to live in the US.

I do not have a SSN from what I understand, or anything tying me to the tax system. I would love to just ignore the situation, but my husband thinks we need to officially renounce. 

I did receive an email from the US consulate here in Calgary, informing me of an information session on FATCA, so I'm on their radar, but I'm not sure if I'm on the tax radar. 

Anyways, does anyone have an idea how much renouncing will cost me? Can I renounce, and then deal with the tax filing at a later time?

Any recommendations for a Calgary US tax specialist? How much do you think it will cost to file back taxes? Do you think I will actually owe the US government taxes? I do sell Canadian shares every year, so I have capital gains.

I also am wondering if my husband's assets are at risk of being taxed. He owns some rental property, and has stocks and shares. My name is not on the rental propery deeds, and we do not have a joint investment account. Is his stuff safe from being taxed?

From what I understand I need to get a SSN before I can file my taxes, and THEN I can renounce. Is that correct?

Thanks in advance. We have been putting this off for way too long, and we want to get this whole ordeal over with.


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## Bevdeforges

OK, well renouncing will cost you at least $2350 - the current fee for the process.

Frankly, in your situation, it would be just as easy to stay off the radar. Unless your husband has US citizenship, the US isn't interested in his assets nor in his income. Joint accounts may be a different story - but if you have no US SSN and no US birthplace, it's kind of doubtful they're going to "find" you. 
Cheers,
Bev


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## Pacifica

@ Speck,

It’s really important to read a lot and think things over carefully before deciding exactly what to do, because everyone’s situation is a bit different. So, a person might choose to do nothing (presumably with a Canadian birthplace, a bank would not suspect a US connection). Or choose to renounce and not file taxes. Or to renounce, then file taxes. Or to file taxes, then renounce. 

Calgary has a good reputation for handling renunciations smoothly. Google Consulate Report Directory – in the current edition, there’s stories from around a dozen or so people who renounced at Calgary.

I have some information on this question:

*“Can I renounce, and then deal with the tax filing at a later time?”*

A person has until June 15th of the year following renunciation to wrap things up with IRS (form 8854, 1040s etc for the five years preceding renunciation and the partial year of renunciation). FWIW, if they never do this, their CLN remains valid and they remain a non-US-citizen. Anyway, to log out of the US tax system and avoid “covered expatriate” status with a 2015 renunciation, one has til June 15th, 2016, to complete filings with IRS.

So, depending on the time of year one renounces, they have 5-1/2 months to 17-1/2 months after renunciation to file everything with IRS. 

A person’s citizenship (or lack of it) is not dependent on their tax status. The consulate doesn’t want to see tax forms or ask/discuss about taxes. Not their department. Dept of States’s only involvement/connection with tax is the following:

(1) 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] …”

(2) 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).

(3) The questionnaire, DS-4079, at q. 13 (e) asks “Do you file US income or other tax returns?” [DS-4079 is used to determine if a relinquishment actually occurred when the person claims it did. DoS does not require the 4079 for renunciation, but allows consulates to use it for renunciation files as well, if they wish. So, some consulates use the 4079 for renunciations and some don't.] The tax question 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 time ago. But it has no relevance either way to a renunciation


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## BBCWatcher

By the way, I cannot see how it would hurt to attend the consulate's information session if you wish. It might be...informative.


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## maz57

We are working from a limited set of facts here, but if I were in your situation, I would do nothing. Why? Because with a Canadian birthplace and no SSN, you are a Canadian in Canada who is invisible to FATCA and invisible to the US tax system.

It sounds as if you didn't actually "apply" for US citizenship so much as "claimed" it. That's because if your father was a US citizen, depending on some complicated rules, you were very probably a US citizen from birth. Did you ever get a US passport? If you did it is not all bad news because your interaction with the US government is contained within the State Dept and likely hasn't spread elsewhere. If you never got around to the passport, your only interaction with the US government will have been that claiming process back in 2006 which is a lifetime for a big government bureaucracy. Obviously the Calgary Consulate has you on their mailing list, but it sounds as if the IRS doesn't know you exist and the IRS is the big concern here.

You could go back to the Calgary Consulate and blow US 2350.00 on the renunciation fee, but you would in effect be painting a big bulls-eye on your own back because when a US citizen renounces, eventually State Department notifies the IRS. 

The bottom line is this: renouncing or filing tax returns (or both) could well make things worse rather than better in your case particularly if you have substantial assets. (Not to mention be a lot of trouble and cost a lot of money.)

Reread Pacifica's first paragraph.


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## BBCWatcher

maz57 said:


> Obviously the Calgary Consulate has you on their mailing list....


Obviously. 

To elaborate on my earlier comment, attending their FATCA information session, at the consulate, amounts to exactly the same thing as being on their mailing list in terms of information disclosure. They're certainly not going to be collecting Social Security numbers at that meeting. Presumably they'll lay out all the facts, as dispassionately as possible, about the (few) obligations of U.S. citizenship in terms of tax and financial reporting. In the circumstances it'd be a great idea to go, I'd say. It should be highly educational and time well spent. Bring a pad of paper and take notes.

Then you can decide whether to panic or not.


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## speck

Thanks so much for the replies.

Bevdeforges, thanks. Nice to hear staying off the radar isn't a crazy idea. I've been going with this off radar plan for a while now, but my husband is so uncomfortable with all of this. We are also thinking of buying a revenue property together, which would have my name attached to it, so I do worry about that. Plus, if God forbid, he dies and all his assets are in my name, then I would have to pay tax on that I'm assuming… if they found me. My husband also mentioned he was worried of possible changes to the tax laws in the future. Since they were able to make these big changes, who knows what the future holds? He thinks maybe we should just get out while we can, and before we build up a lot of assets.

Pacifica, thanks for all the information. So I may be able to denounce, and not file taxes? That would be ideal for me, but then again I'd probably be paranoid at border crossings fro the rest of my life! I don't mind paying the renouncing fee, but the backlog of taxes seems so daunting, and costly. I hear what you are saying though, that renouncing will actually put me on the IRS's radar, with the CLN that they will receive from the state department. I'm a bit confused about the DS-4079, that would ask me if I file taxes. I don't, so I would just answer, no. Is that correct? Thanks again for the info. Interesting to know how much time I'd have to take care of my tax responsibilities, though I assume if I went late, it's just a matter of filing the following year? Paying a penalty maybe? 

BBCWatcher, I was too paranoid to attend. Probably would have been good, but I missed it. 

maz57, thanks for your reply. Yes, US citizenship was my birthright, because my father has been a US citizen and resident of the USA for almost his entire life. It was a lot of work for me to prove his whereabouts for his adult life, but I was eventually given a passport. That is my only link to being American. I tried to register to vote, but wasn't able to because of my "home" states laws. I am assuming I'm off the IRS's radar, but I don't totally understand what happened behind the scenes when I got my passport. I wonder if I was actually given a SSN or anything like that? I have a sibling who used my documentation to get their passport as well, but I have another sibling who has no desire to. In the eyes of the IRS, would this non-passport holding sibling technically be responsible for filing taxes? How can one be a US citizen by birth, when there is all this paperwork and an oath that has to be taken in order to get the passport? Anyways, thanks for the info and for your thoughts. I really appreciate it. 

I really don't know what we're going to do. I feel like sitting down with a US-Canada tax specialist is a good idea, but they would likely push us toward being compliant and freak us out. 

If I do choose to stay off the radar, what do I do in terms of opening bank accounts? How dangerous would it be to not claim my US citizenship on those bank forms? I have read a lot of news articles about how dual citizens should avoid using TFSA's and RESPS. So far I've done that, but I feel like it's really holding me back. I also want to open a new trading account but I feel stuck.


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## BBCWatcher

My general reaction here is you need to stop panicking and start to understand the facts of your situation. Possession of U.S. citizenship isn't like the ebola virus.  So let's calm down, together, and take your concerns in the order you presented them.



speck said:


> We are also thinking of buying a revenue property together, which would have my name attached to it, so I do worry about that.


OK, let's start with that one.

There is absolutely no impediment to buying a property together and having both your names on it. There is no real property reporting obligation to the United States -- nothing even like FinCEN Form 114 ("FBAR") reporting.

In terms of U.S. tax law, you would only owe U.S. income tax on your share of the revenue (rent, less various deductions and expenses) if all of the following conditions hold:

1. The U.S.-Canada tax treaty allows the United States to tax such income received by U.S. citizens;

2. Your net effective Canadian tax on that income is lower than your hypothetical U.S. tax on that income;

3. Your U.S. tax deductions, credits, and exemptions -- notably your personal exemption and standard deduction -- do not fully shield that income from U.S. tax.

When the property is sold, there may be a capital gain, and you may have a share of that gain (usually 50% for spouses). The gain is calculated after accounting for all allowable costs, and there are many. If you remodel the bathroom in that property, for example, your share of that expense reduces the gain. Then, same thing: all three conditions above must hold for you to owe the U.S. any tax whatsoever on that gain, if there is a gain. (And maybe not even then if the property qualifies for the $250K exemption.)



> Plus, if God forbid, he dies and all his assets are in my name, then I would have to pay tax on that I'm assuming…


No. There is zero U.S. tax when inheriting assets. The U.S. does not have an inheritance tax. It has an estate tax. (There is one exception. When a U.S. citizen inherits assets from a person who renounced U.S. citizenship then there may be an inheritance tax. That's something to think about if you have siblings with U.S. citizenship -- _they'd_ be whacked if you've renounced and you attempt to leave them an estate in your will.) When you inherit your husband's assets there will be zero U.S. tax.

You will have to file a simple report when that event occurs: IRS Form 3520. But there will be no tax owed.

When you pass away, you can leave your estate to anyone you wish (or any combination of parties) with zero U.S. tax if your estate is worth $5.43 million or less (2015 dollars, increased annually for inflation), subject to the caveat above if you decide to renounce U.S. citizenship. For the portion of your estate above that amount your Canadian estate tax, if any, is fully creditable against U.S. estate tax obligation.

Renunciation is a rather strange way to try to avoid that problem because there's an Expatriation Tax if you face that particular estate tax problem, though you might have a shot at avoiding the Expatriation Tax if it even applies.



> My husband also mentioned he was worried of possible changes to the tax laws in the future.


Sure. But that's an excellent reason to hold two or more citizenships within a household. Canada could change its tax laws tomorrow, and they could be "horrible."



> Since they were able to make these big changes....


FATCA is not a "big change," truly.



> ....who knows what the future holds?


Exactly. Good thing you have two excellent citizenships in your household!



> Pacifica, thanks for all the information. So I may be able to denounce, and not file taxes?


No. Renunciation is a separate process from tax compliance, so you will be able to renounce U.S. citizenship if you choose (and for $2350). But renunciation means you will be known to the IRS. You have whatever tax compliance issues you have, but renunciation means the IRS becomes more aware of them.

Isn't there also a question on the form, sworn under penalty of perjury, that you are (and will be) tax compliant? Somebody can correct me if I'm wrong on that. But, if I'm right, the legal jeopardy increases with renunciation. In short, renunciation requires a _clean_ break as a practical matter.



> That would be ideal for me, but then again I'd probably be paranoid at border crossings fro the rest of my life!


Evidently I cannot help you with paranoia. 



> I don't mind paying the renouncing fee, but the backlog of taxes seems so daunting, and costly.


Let's just zero right in the facts, shall we?

*If you genuinely owe zero U.S. tax* -- and that's highly likely your situation as a resident of Canada, a comparatively high tax jurisdiction -- then the penalty for failure to file a U.S. income tax return is zero. That's right, zero. Perhaps you've failed in your obligation, and....there's no penalty.

What there _is_ a penalty for is failure to file these two financial reporting forms (if you're required to file them):

1. FinCEN Form 114;
2. IRS Form 3520 (or 3520-A).

Those are the forms to worry about, and those are the forms to get caught up filing (if they apply), _renunciation or not_, in my view. There is no tax owed with either form -- they're strictly informational returns narrowly describing certain aspects of your financial life. (Not your real property holdings.) The good news is that the U.S. Treasury Department and IRS aren't currently imposing penalties on late filing of those forms as long as you file truthfully, you provide an adequate explanation for late filing ("I didn't know is popular"), and you contact them with your filings before they contact you. FATCA means the U.S. Treasury Department is more likely (though not guaranteed) to start to get financial data concerning your accounts, so now would be a good time to clean up those late filings. No, you don't have to hire anybody to do that -- it take a few minutes. (FinCEN Form 114 is filed electronically.) No, filing either/both of those forms doesn't mean you're obliged to file a U.S. tax return -- they're entirely separate requirements.

By the way, on occasion the IRS hands out free money. They did so in tax years 2009 and 2010, as examples, with the Making Work Pay Tax Credit. But you cannot collect the free money you're eligible for from the IRS without a tax filing. Speaking to your husband's concern again, President Obama has proposed increasing the free money. Is free money from the U.S. government a problem for you? I hope not. 

May or may not apply, but it does apply to some people. The U.S. does have a negative income tax rate in certain situations -- free money paid to citizens.



> I hear what you are saying though, that renouncing will actually put me on the IRS's radar, with the CLN that they will receive from the state department.


Yup.



> I wonder if I was actually given a SSN or anything like that?


You can contact the U.S. Social Security Administration. You can ask for a replacement Social Security card as a starting point, and that'd answer whether you have an SSN.



> In the eyes of the IRS, would this non-passport holding sibling technically be responsible for filing taxes?


Yes. Possession of U.S. citizenship -- and its associated rights, privileges, and obligations -- is a legal status. Millions of U.S. citizens do not have U.S. passports.



> If I do choose to stay off the radar, what do I do in terms of opening bank accounts?


You would probably have to lie about your U.S. status, eventually. That may or may not be a criminal offense (offence?) in Canada. Kind of pointless to do that if you're spending the few minutes every June filing your FinCEN Form 114. (Just a friendly suggestion.)



> I have read a lot of news articles about how dual citizens should avoid using TFSA's and RESPS. So far I've done that, but I feel like it's really holding me back.


Yes, about those Canadian tax-advantages accounts. There's a lot of hyperbole about that issue. As far as I can tell, and as a generalization, those "alphabet soup" accounts are fairly well treaty-protected, even for U.S. citizens. You likely have the option, if you wish, of opening and contributing to a U.S. tax-advantaged account, and such accounts are fairly well treaty-protected on the Canadian side. So again, you can play both, one, or neither side of that tax border, as you choose and as the circumstances merit. My wife and I practice some variation of this basic concept, and it works well within a household. It makes better sense for her to do certain things, financially speaking in terms of savings, and for me to do other things. The combination, as a household, ends up being a very good result, better than if we didn't have two citizenships. Your mileage may vary, but it's actually an advantage in our household.


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## BBCWatcher

One brief technical correction to what I posted. Under current U.S. tax law the estate tax flips to an inheritance tax (and with a heavier tax blow) when U.S. persons inherit from a "covered expatriate," as defined in the tax code. Covered expatriates represent a subset of individuals who renounce U.S. citizenship, not all those who renounce. That said, it's probably quite correct to say that all (or at least very nearly all) individuals who have this problem, of having an estate to bequeath worth non-trivially more than $5.43 million (2015 dollars), would also be covered expatriates if they were to renounce. The estate tax exemption is more than double the covered expatriate threshold. It depends on how quickly they die and what windfalls they receive, but it's not common.

Note also that the exemption for estates passed from one U.S. citizen to his/her U.S. citizen spouse (same or opposite sex) is unlimited. I point that out because many very wealthy couples in fact choose to solve this particular happy estate planning problem through the non-citizen spouse's acquisition of U.S. citizenship. The exact opposite of renunciation, but there you go. It's a very well known and perfectly legal estate tax avoidance strategy. Unfortunately we don't have this >$5.43M problem to solve in our household, but I can remain optimistic.


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## maz57

BBCWatcher said:


> No. Renunciation is a separate process from tax compliance, so you will be able to renounce U.S. citizenship if you choose (and for $2350). But renunciation means you will be known to the IRS. You have whatever tax compliance issues you have, but renunciation means the IRS becomes more aware of them.
> 
> Isn't there also a question on the form, sworn under penalty of perjury, that you are (and will be) tax compliant? Somebody can correct me if I'm wrong on that. But, if I'm right, the legal jeopardy increases with renunciation. In short, renunciation requires a _clean_ break as a practical matter.


The function of the Consular official will be limited to making sure you understand the finality of renouncing US citizenship, actually administering the oath, and getting the paperwork off to DC. Some consulates use Form DS 4079 as a pre-renunciation questionnaire, some don't. There is the question "do you file US taxes" on that form but that form is designed more for those who are trying to claim US citizenship, not those who are getting rid of it. (You may well have filled out the same form back in 2006.) Filing US tax returns would be considered to strengthen a claim to US citizenship. Answering "no" won't hinder your renunciation. Practically all US government forms require you to swear under "penalty of perjury"; that is one of the US government's favorite phrases.

Citizenship and taxes are entirely separate matters. State Dept. is only concerned with citizenship. The most they might do is advise you that you will have to contact the IRS for information about your tax obligations. They are well aware of the godawful mess that FATCA, CBT, and Obama and his offshore jihad has created for US expats. They know that is probably the real reason most people renounce their citizenship but they are powerless to do anything about it and really don't want to talk about it.

BBC may be thinking about the question on Form 8854 (the expatriation tax form) where you must certify (under pop, naturally) tax compliance for the 5 prior years. That is one of the tests one must meet in order to not be a "covered" expatriate, i.e. not subject to the exit tax. You are a dual from birth and therefore not subject to the exit tax anyway, even if your net worth exceeds the threshold.

I'd still vote for the "don't try and fix it if it ain't broke" method of dealing with this situation, but you must do what makes you personally comfortable. If you think that subjecting yourself to the full bureaucratic process (and expense) will finally bring you certainty, ultimately there is no such thing when dealing with the IRS and the rest of the US government. There are many who moved from the US to Canada years ago who were told by the US government at that time that naturalizing as a Canadian would "irrevocably" terminate their US citizenship only to have it later unilaterally re-instated by a US court decision.


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## speck

*BBCWatcher*, ha ha. It’s true. I think my husband and I look at it like it’s a disease, so I appreciate your reply as we need to hear some other perspectives. 

Thanks for sharing info on the revenue property thing. I will pass that on to my husband for him to look into. I believe Canadian tax is much higher than US, so I imagine we would not meet condition 2.

Very interesting stuff about the inheriting tax, or lack of it. We are nowhere near to having an estate worth 5.43 million, so that would not apply to us. And I never considered the advantages that some of the American tax advantaged accounts might have for us. Definitely something we should consider. 

Thanks for the clarification on renouncing requiring a clean break. I think I’ve come up with a list of our options:

1.	Hire accountant, file back-taxes, then renounce.
2.	File taxes and FATCA forms annually and stay legit, and keep citizenship.
3.	File FinCEN and IRS Form 3520 annually to stay FATCA compliant. Don’t file taxes. Keep citizenship.
4.	Head in sand. Ignore and hope it never becomes a problem down the road.


*Maz57*, it’s comforting to hear you reiterate that the state department is only concerned with citizenship. I’ve even been paranoid to use my US passport to enter the states. It’s easy to get caught up in the paranoia after reading tons of scary articles on the topic, and I was picturing the IRS getting the state department’s info on who they had recently granted citizenship to in Canada. Another quick q about renouncing… I keep reading that you are not allowed to renounce for tax purposes, so what reason do people usually give when they say they are renouncing? Because the whole tax thing is the only reason I would be renouncing. After hearing what you all have to say on this topic, I think a sit down discussion with an expert would be helpful in calming my DH’s fears on what the US gov’t can and can’t do in terms of our assets. I have been fine to ignore the situation for a few years now. 

Does anyone know if it might be worth it to me to hire an American accountant to handle my annual taxes, instead of a Canadian accountant who specializes in US taxes? Or do you think I should hire someone who has a firm grasp on Canadian taxes too? I would be willing to drive to Montana to work with an accountant once a year, or even combine it with a vacation to California, as we go every year. Someone I know pays her accountant in Canada about $1000 per year to file her American taxes, and that sounds a bit steep to me. I pay an accountant much, much less than that to do our Canadian taxes every year. 

And is there any hope that under a new administration, that this whole FATCA stuff would go away? Or they’d raise the limits on who has to report? 


Thanks again everyone. This stuff does not come easily to me, and I really appreciate the info.


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## Bevdeforges

> Another quick q about renouncing… I keep reading that you are not allowed to renounce for tax purposes, so what reason do people usually give when they say they are renouncing? Because the whole tax thing is the only reason I would be renouncing.


I'm not certain that they actually ask you "why" when you renounce. (They certainly don't when you take on a new nationality!) But there's nothing wrong with renouncing because of the tax situation. The only "gotcha" is that if the IRS believes you're renouncing "for tax reasons" they used to be able to require you to file for a few more years. When they introduced that "expatriation" tax, I believe they did away with the extra years of filing. And in any event all that only applies to those with fairly high incomes or net worth. 



> And is there any hope that under a new administration, that this whole FATCA stuff would go away? Or they’d raise the limits on who has to report?


Afraid that one is a pretty vain hope. But the good news is that, under most circumstances, the IRS doesn't actually have much of a handle on your foreign sourced income - other than bank interest and such. For salary and local benefits, etc, it's pretty much the honor system from the word "go." They make a big fuss about all the penalties and whatever, but unless you obviously owe them a whole lot of money, they have no particular reason to even audit your returns and almost no way of going after you for failure to file. There are too many legitimate reasons why you wouldn't have to file anyhow.
Cheers,
Bev


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## Pacifica

speck said:


> Pacifica, thanks for all the information. So I may be able to denounce, and not file taxes? That would be ideal for me, but then again I'd probably be paranoid at border crossings fro the rest of my life! I don't mind paying the renouncing fee, but the backlog of taxes seems so daunting, and costly. I hear what you are saying though, that renouncing will actually put me on the IRS's radar, with the CLN that they will receive from the state department. I'm a bit confused about the DS-4079, that would ask me if I file taxes. I don't, so I would just answer, no. Is that correct? Thanks again for the info. Interesting to know how much time I'd have to take care of my tax responsibilities, though I assume if I went late, it's just a matter of filing the following year? Paying a penalty maybe?


That’s how I see it, too. One can renounce and not file taxes, but due to the inter-agency reporting requirements renouncing does put the person on IRS’ radar and could have consequences. Whether IRS actually does, or will do, anything with all those CLNs they receive, I have no clue. And people with no US assets or SSN are probably more hassle than they’re worth for IRS. But you never know. 

I know a few people who opted not to file and are quite comfortable with that decision, but to me I think I’d be concerned about not having a sense of closure (I don’t know for sure how I'd feel as my circumstances are different than theirs). This whole situation seems to present us with a bunch of decisions to be made, all of which are somewhat unique to each of us, based on our circumstances and risk tolerance.

Re the 4079, if you haven’t been filing taxes at the time of renunciation, just answer no. It’s fairly common, as many people only recently learned about US tax (or even, in some cases, that they were US citizens). Whether one is tax compliant at time of the renunciation itself does not affect the renunciation (Dept of State); and as for IRS, the key date for them is tax compliance by June 15th of the year following the renunciation.

In the case of a renunciation, the relinquishing act takes place concurrently with applying for the CLN, so both parties are accepting that the person was a US citizen at the time they filled out the 4079, so the questions in 12 and 13 of the 4079 (which help the consulate determine if a person is or is not a US citizen) don’t really affect anything.

At one time Calgary didn’t use the 4079 for renunciation (only for relinquishments under the other subarticles of s. 349(a) of the _Immigration and Nationality Act_), but they started using it last year. I think all the consulates in Canada do now, but not sure.


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## Pacifica

BBCWatcher said:


> sn't there also a question on the form, sworn under penalty of perjury, that you are (and will be) tax compliant? Somebody can correct me if I'm wrong on that.


No, that’s not on any of the renunciation forms. 

On the 4081, Statement of Understanding of Consequences, point 10 is that you understand that renunciation “may not exempt me from US income taxation.” This form is a list stating 12 consequences of renunciation in point form, so the person can be sure of what the effects of their renunciation will/won’t be. It’s probably also something of a CYA document (a proof that the consulate officer made sure the person knew the consequences of what they were doing, as they have a duty to do that.)

The 4079 questionnaire, which some, but not all, consulates use for renunciations, has q. 13(e), “Do you file US income or other tax returns?” as one of a series of questions used to determine if a person is a USC or not (which isn’t relevant to a renunciation, since in a renunciation they’re not trying to determine if the person is a USC or not – so nothing hinges on it and they don’t seem to care one way or the other.)

The third form is the 4083, Oath of Renunciation, and it has no reference to tax.


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## maz57

speck said:


> I keep reading that you are not allowed to renounce for tax purposes, so what reason do people usually give when they say they are renouncing? Because the whole tax thing is the only reason I would be renouncing.



You are not required to give any reason for renouncing, although some consular officials may ask. A favorite some give is: "it just seems to me it would be simpler that way", which is unquestionably true. Others just decline to answer the question, which is their right. (As I mentioned before, the Consular officials already know the reason anyway. There really isn't any other logical explanation for why one would give up an otherwise good citizenship unless that person is some weirdo trying to make a political statement.)

The Consular officials are only there to make sure you: (1) are a US citizen, (2) intend to lose your US citizenship, (3) are of sound enough mind to form that requisite intent, and (4) understand the consequences.

Regardless of how you choose to deal with this situation remember this as a guiding principal: the IRS will only know what you choose to tell them.


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## Pacifica

speck said:


> I keep reading that you are not allowed to renounce for tax purposes, so what reason do people usually give when they say they are renouncing?


They generally don’t ask why you're renouncing. You’re not required to give a reason. Nevertheless if you are asked – it has happened – I think it’s best to just answer. Just have a neutral one-liner in mind, something to the effect of my entire life takes place and will take place only in Canada and/or I want to simplify my life and/or something along those lines, short and neutral.

They generally don’t ask much of anything, mainly that you’re aware of the consequences. These consulate meetings usually take about 10-15 minutes of face time, most of which is signing and pushing papers back and forth. Calgary has done a lot of a renunciations and people report they’re pleasant and professional handling renunciations there and that things have gone quite smoothly.


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## BBCWatcher

BBCWatcher said:


> In terms of U.S. tax law, you would only owe U.S. income tax on your share of the revenue (rent, less various deductions and expenses) if all of the following conditions hold:
> 
> 1. The U.S.-Canada tax treaty allows the United States to tax such income received by U.S. citizens;
> 
> 2. Your net effective Canadian tax on that income is lower than your hypothetical U.S. tax on that income;
> 
> 3. Your U.S. tax deductions, credits, and exemptions -- notably your personal exemption and standard deduction -- do not fully shield that income from U.S. tax.


I should have also provided condition #4, because there are actually 4 conditions that all must hold to owe any U.S. tax:

4. You do not have excess U.S. Foreign Tax Credits (FTCs) from prior tax years (up to 10 years in the past) in the same category of income that you can use to offset any remaining U.S. tax liability. The U.S. gives you a "bankable" credit for any higher foreign -- in this case Canadian -- tax that can then be "spent" in the future to offset U.S. tax liabilities in the same income category. Even if you didn't file you can still go back to those prior tax years, run the calculation(s), and determine if you have FTCs available -- there's no time limit to do this except the 10 year "spend" limit as far as I know. (For some prior tax years it was a 5 year limit, but it changed to 10 years.)

Getting past all 4 conditions to owe any U.S. tax is _unusual_ for a resident of Canada. Not completely impossible in all circumstances but "rather difficult."


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## Nononymous

Joining this rather late. 

To the OP, one point wasn't raised earlier, concerning your husband's worries about being taxed or penalized for any reason. As things currently stand, the US cannot collect money from Canadian citizens living in Canada, even duals who also have US citizenship. The Canadian government considers FBAR fines to be "administrative penalties" not covered by the tax treaty and will not facilitate collection. For any tax debts owed, under the terms of the tax treaty Canada will only assist on collection against US citizens who are not dual (and even then I believe that only applies to debts incurred prior to living in Canada). 

So in the highly unlikely event that you were non-compliant but owed the US money for taxes and the IRS actually knew about it, or the even more unlikely event that you were assessed FBAR fines, the US cannot collect a dime. I might not feel comfortable travelling south under those conditions, but your savings should be safe from the clutches of Uncle Sam.


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## BBCWatcher

Nononymous said:


> JI might not feel comfortable travelling south under those conditions....


And I would also not feel comfortable having assets or even business interests in the United States. Obviously the IRS can reach U.S. assets without much trouble. That would include future assets and income, such as U.S. Social Security retirement benefits. Conceivably the IRS could also intercept payments from U.S. entities.

But yes, Nonymous makes a fair point that the IRS is not omnipotent.


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## Nononymous

BBCWatcher said:


> And I would also not feel comfortable having assets or even business interests in the United States. Obviously the IRS can reach U.S. assets without much trouble. That would include future assets and income, such as U.S. Social Security retirement benefits. Conceivably the IRS could also intercept payments from U.S. entities.
> 
> But yes, Nonymous makes a fair point that the IRS is not omnipotent.


Agreed. It rather goes without saying that if you have economic ties to the US, be it bank accounts, retirement accounts, social security credits built up from working south of the border, business interests, property, or investments, you are in a much more vulnerable position vis-a-vis the IRS. 

However, as an ordinary decent Canadian "accidental" with no US income or assets, you are (currently) safe from any form of US collection. 

(Which is why Boris Johnson could still have told the US to eff-off if his job didn't require occasional travel to the US; he could also afford to pay the bill.)


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## Nononymous

Nononymous said:


> I might not feel comfortable travelling south under those conditions, but your savings should be safe from the clutches of Uncle Sam.


Another clarification is in order. I'd be perfectly comfortable travelling to the US without being compliant - I do it all the time. I'd be less comfortable doing so if I was in the middle of some sort of legal process with the IRS. For now, though, there is no evidence that tax compliance status is ever checked at the border.


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## Nononymous

speck said:


> Backstory - Born in Canada, and have never lived in the USA, or earned any income in the USA. I applied for my American citizenship in 2006, because I have an American father, and thought a US passport would be a nifty thing to have.


So a couple of points here on the subjects of FATCA, and travel - advice for the OP.

FATCA you can ignore. Don't worry about it. Never tell any Canadian financial that you are a US citizen. This is a lie but so what, you have a Canadian birth certificate. Problem solved.

Presumably your US passport expires in 2016. Did you ever use it for travel to the US?

The law states that US citizens must use their US passport to enter the country, but this has not been rigorously enforced. If you have a Canadian passport with a Canadian birthplace, there's no reason for the US to believe that you are anything but Canadian, unless there's some sort of flag raised that matches your personal details to an existing US passport. I'm not sure how well the various databases work, or how much border agents actually care. (Not much, in my experience - I continued using a Canadian passport with US birthplace after having been warned not to, with no ill effects.) 

If you decide to renew your US passport, there's no real evidence that the IRS follows up to check renewals against tax records. (I chose to renew my US passport while at a temporary address during a half-year stay in Europe, so that any attempts to contact me would disappear into a void.)


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## BBCWatcher

All subject to change, of course. I think Nonymous is fairly describing the _current_ practices.


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## Nononymous

BBCWatcher said:


> All subject to change, of course. I think Nonymous is fairly describing the _current_ practices.


Indeed. For absolute security going forward, become fully tax compliant and renounce. But based on current practices there's not much risk to non-compliance for the OP, particularly with her Canadian birthplace.


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