# Help!Need Tax and Renouncement advice



## asti (Apr 30, 2014)

Hello,
I´m an American citizen, my spouse is a German citizen, living in Germany for the past 24 years. I never worked in Germany and therefore never had enough income to have to file a US tax return. Recently, I found out through a bank that US citizens are not able to open certain accounts and wondered why. The bank couldn´t answer the question, so I searched for answers online. To my shock, I discovered infos over FATCA and worse, information about FBAR filings and the penalties for not filing. I had never before heard of either of these so I called my sister in the US, luckily a CPA, who confirmed my fears. 

My sister has taken it upon herself to prepare my last 6 years of FBARS and also the last 4 years of 1040NR´s (my income for each of the last 4 years is below the threshold for married filing separately), additionally she will be meeting with a tax lawyer in St. Louis who will consult us through the filings... However, this lawyer has already stated that he can not help me in another issue. Renouncement

I have lived in Germany so long and built up my life here, we have our children here, we pay our taxes here, I will receive NO pension or have other financial ties to the States and I would like to renounce my US citizenship as soon as my application for the German citizenship has gone through. If I need another lawyer to help me expatriate, who should I be turning to. I don´t know who to turn to and live further away from larger cities in Germany. I would like to go 'out' as an uncovered expat, but my hang up could be that I haven´t filed tax returns the last 5 years. (?) Then again, I didn´t need to and see myself as compliant in this... However, the FBARS were missing... I have no idea to whom I could turn for consultation. Can anyone give me a direction. Has anyone gone through renouncing and can tell me how it works. Are there Expat lawyers in Germany that someone can recommend? I live east of Dortmund. I´d be thankful for any help.


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## Nononymous (Jul 12, 2011)

See reply to same post on the expat tax forum.


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## caminokris (Apr 2, 2014)

*why 1040NR*



asti said:


> Hello,
> I´m an American citizen, my spouse is a German citizen, living in Germany for the past 24 years. I never worked in Germany and therefore never had enough income to have to file a US tax return. Recently, I found out through a bank that US citizens are not able to open certain accounts and wondered why. The bank couldn´t answer the question, so I searched for answers online. To my shock, I discovered infos over FATCA and worse, information about FBAR filings and the penalties for not filing. I had never before heard of either of these so I called my sister in the US, luckily a CPA, who confirmed my fears.
> 
> My sister has taken it upon herself to prepare my last 6 years of FBARS and also the last 4 years of 1040NR´s (my income for each of the last 4 years is below the threshold for married filing separately), additionally she will be meeting with a tax lawyer in St. Louis who will consult us through the filings... However, this lawyer has already stated that he can not help me in another issue. Renouncement
> ...


My question is why did you file a 1040nr? Even though you are not living in the US, you still would file the regular 1040 and you would file a foreign earned income exclusion. 

Unless your income and holdings are extremely high, I fear that you are over worrying. 

I am an Enrolled Agent, licensed by the IRS, so I am replying within my scope of training and experience.

I am currently abroad in Spain, but after July 15th, I will be available for any further questions you might have.

Sincerely,
Kris


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## asti (Apr 30, 2014)

Hello Kris,

The 1040nr that I typed was a mistake. As I said, I´m completely new at this never having filed in the last 24 years I still need to become familiar with the US forms. Tax forms frazzle me !!! We break out in a sweat with form filling of any kind, which is why my hubby and I have a German tax accountant for it all over here. We hand him our collected piles and he gets paid. My sister in the states and CPA, of course sent me 1040´s to review before filing... As if I could figure anything out - can´t even figure out our German ones. Ha

Actually, I think my US filing is rather boring... Have no income from wages, maybe 1ooo for my share of interest on joint accounts, and I get 750 in rent a month but still have a joint loan on this rental of over 120,ooo €. This rental property had cost us quite a bit over the last couple of years in repairs because the house settled so much and needed new heating systems after only 13-14 years, so my half of the German tax return for 2013 came out at about -1500. I won´t be owing any taxes to the US and that´s not my concern. Ok, back filing the fbars worries me a bit, everything flows from year to year, but will I get fined for not knowing ? hmm

Anyway, I can´t get my head around the procedure for renouncing and taxation or exit tax. My husband and I have worked all of these years to fill the gap of me not receiving a pension. I have an estimation of 170 €/mo. for having two children here and my husband might get 1500. Not really much.

My husband inherited a small registered farm back in 1989. In 1994 he decided to give up the registration which came with high taxes. After recovering from this, we built a duplex to rent out in order to, some day, have a bit more 'pension' to fall back on. In 2006 the area where the old farm house once stood got developed for a small subdivision. Nothing like in the States, some lots are VERY small. My husband had 7 lots here that we were able to sell off over the last 7 years. Subsequently, we FINALLY have some savings - and yes, these savings are mostly joint accounts... We had to keep in mind, that if something happened to my husband before me, according to German law, a wife can only inherit 500,ooo tax free. Since my husband still has other properties, he jointed my name on our own house, the rental, two empty lots and a couple of accounts just to help lessen the blow IF something happened to him.... Whew, that was just a short rundown. Many taxes, loans and paying off siblings of my husband for their share of inheritance ran on the side.

This is where my concern comes in with an exit tax. I asked my sister CPA and the tax lawyer in a Skype conference yesterday if I could file all of the last 5 years of returns right now. They say, eeeh no, it might be best to go with just the 2013 and the 3 years before. So just 4 years. That means, I have to file 2014 next year too - fine - but then, in order to be considered uncovered, I can first renounce in the year after this, so 2015. How long does it take for a renouncement to go through? Can it take a year? I´m trying to get a view on how this works because, after applying for the German citizenship one only has 2 years time to prove the US renouncement - after this you get your German citizenship.

So, if I want to speed up the process and renounce and go in covered. Is there a big difference afterwards vs. uncovered? .... And then there is the 8854 !!!... Another form to freak me out !!! Finding out the Net Value of everything you own. Well, this worries me co-owning 2 homes, 2 lots and having savings. It won´t come to 2 Million, but what´s with the 663,ooo value I have read a couple of times. 2 houses can top that amount. And how does one determine ones net value? Do I have to hire more people to find this out for me?

Sorry people, it´s easy to stay calm if you know what the heck you are doing. I don´t, form filling is horror and I´m afraid to do something the wrong way to screw up almost 25 years of working toward seeing a light somewhere at the end of a very long tunnel.


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## Nononymous (Jul 12, 2011)

Relax. Slow down.

Nobody* gets fined for delinquent FBARs. It's not an issue.

Get over the form stress, and maybe talk to someone experienced in dealing with expats. Why can't you file five years at once? Because of the streamlined program thing? Maybe that's not an issue. 

For the net worth, just ballpark it as best you can, if you're well under 2 million it doesn't matter if you're off by a few tens of thousands. (The 650k number is another thing - not an issue of you've caught up on filing.)

If you do make a mistake, you'll be asked to clarify and correct. You won't be fined, and even if you were, it's not easy to collect outside the US.

*It happened once to someone already under investigation, or something, apparently. But not to people like you.


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