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Old 03.03.2015, 14:47
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US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

There's an overwhelming amount of information in EF dealing with US citizens, US tax obligations and (Swiss/International) banking regulations. Call me ignorant, scared, upset, emotional and a novice....they are all correct. And now (still scared, but think) I am ready to get US tax compliant and US Passport free.

I am a US citizen who has been in Switzerland for more than 15 years, I became a Swiss citizen in 2007 and do not intend on ever going back to the US - I consider myself Swiss and feel at home in Switzerland. I pay taxes in Switzerland but since moving here I have not paid US taxes, I have no US assets, I never voted in the US and for lack of any good reason I'm not tax compliant. I am married to a Swiss natural citizen and never had the guts to find out how much of his money earned in Switzerland he may have to pay to the US (I got scared off by horror stories) because he is married to me. We are a family with 2 small school-aged children, where I have made less than 85kCHF since 2008 and will no longer have any income starting in the Fall of 2015.
Because I will be moving my Pensionkasse from my employer to my Swiss bank, I have started an inquiry which results in me either complying with FATCA or providing proof of being a non US Person. So time to make decisions and act on them. I have read the information about renouncing my US citizenship with the fee of 2350.- USD plus various questionnaire , oaths and forms - and the fact I will at a minimum have to provide 5 years of filing taxes.
Does anyone know if this still true for 2015, since the forms only identify persons renouncing up to and including 2014.
And does anyone know of the process and potential fees for relinquishing my US Passport? I can not seem to find information on this that I can understand as I am not in any financial, regulatory or legal branch.

If someone could recommend the least self-inflicting misery path to tax compliance and giving up the US passport to hat would really help! My thoughts were to:
1) e-mail the US embassy in Bern for the renouncing info packet
2) contact a U.S. Tax Consultant or Advisor in St. Gallen (any experiences out there for SG?) as this is where I pay Swiss Canton Taxes or Zürich to do 5 years of back taxes and submit them to the US
3) decide about renouncing or relinquishing (if I can understand the differences and either one can be done I my case)
4) go through with getting my US Citizenship certifiably removed and US Passport invalidated
5) support my children making an educated decision to either keep or not to keep their US Passports as they get older and can make their own decision.

This whole topic makes my stomach ache to my backbone, it is a hard decision to take and feel confident the complete set of circumstances are known.
Is there something or someways I could make the reduce my misery and be a bit more distanced from the the process without paying 10's of thousand of Francs?

Thanks in advanced for your advice!
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Old 03.03.2015, 15:13
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

I just read another thread, more good information from2014.
US State Dept hiking renunciation fees to $2,350
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Old 03.03.2015, 15:24
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

The answer is very simple.... Give up your US citizenship. Its not worth the hassle and (tax) expenses to be a US citizen if you feel you have nothing to do with the states.


Bye
Z.
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Old 03.03.2015, 15:31
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Have you used your US passport since acquiring Swiss citizenship?

If so, you can only renounce rather than relinquish.

If you have little or no income yourself, filing taxes is easy, but what may get complicated is the FBARs.

Tom

Last edited by st2lemans; 03.03.2015 at 15:42.
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Old 03.03.2015, 15:41
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Yes, I used my US Passport 2 times in 2012 to travel once thru the U.S. To Jamaica and once to the U.S. visiting my ill grandparents.
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Old 03.03.2015, 15:45
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

If you have a total of more $10k or more in your name or shared accounts at any time during the year, then you have to fill out FBARs as well as do tax returns.

Any accounts that are only in your husbands name don't have to be declared.

Tom
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Old 03.03.2015, 15:50
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

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If you have a total of more $10k or more in your name or shared accounts at any time during the year, then you have to fill out FBARs as well as do tax returns.

Any accounts that are only in your husbands name don't have to be declared.

Tom
Thank you Tom! Since I have a 3.Pillar for many years, yes, I have more than 10kCHF. And will add FBAR to the list. That is good news accounts only in my husbands name are not required to be reported on the FBAR, does that also go, for the U.S. Taxes since here in Switzerland we can not file separately?
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Old 03.03.2015, 16:31
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Back when I was still a US citizen and filing US taxes, I always filed US taxes as "married, filing separately".

Tom
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Old 03.03.2015, 16:45
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

"Because I will be moving my Pensionkasse from my employer to my Swiss bank, I have started an inquiry which results in me either complying with FATCA or providing proof of being a non US Person."

You might consider moving your pension funds to the Auffangeinrichtung. I believe that they have to take your funds with no questions asked about your national origin. This quasi-governmental stiftung is specifically exempt from Fatca reporting.

http://www.chaeis.net/en/stiftung-au...htung-bvg.html

Regarding becoming US tax compliant, you might wish to review the new Streamlined Foreign Offshore procedures. This process requires you to file for the past three years, including FBARs for six years:

http://www.irs.gov/Individuals/Inter...-United-States

To avoid becoming a "covered expat" for US tax purposes when you renounce/ relinquish, you will need, however, to have filed for five years, excluding the short-year when you renounced/ relinquished. Possible options:

a. File five years (instead of three) under the Streamlined Foreign Offshore procedures (plus six years of FBARs). Then renounce in 2015 and file a short-year tax return, including 8854, by June 2016.

b. File three years under the Streamlined Foreign Offshore procedures (plus six years of FBARs). Then file tax returns for 2015 and 2016 and then renounce/ relinquish in 2017. (For 2017 you would then file a short-year tax return, including 8854, by June 2018.) Also would need to file FBARs for 2015 to 2017.

It might be useful to review the website Isaac Brock Society (isaacbrocksociety.ca).
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Old 03.03.2015, 17:07
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

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"You might consider moving your pension funds to the Auffangeinrichtung.

http://www.chaeis.net/en/stiftung-au...htung-bvg.html
Thank you for this tip, unfortunately I've already started th avalanche at my Swiss Bank regardless of actually moving my Pensionskasse there or not.


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"
Regarding becoming US tax compliant, you might wish to review the new Streamlined Foreign Offshore procedures. This process requires you to file for the past three years, including FBARs for six years:

http://www.irs.gov/Individuals/Inter...-United-States

To avoid becoming a "covered expat" for US tax purposes when you renounce/ relinquish, you will need, however, to have filed for five years, excluding the short-year when you renounced/ relinquished. Possible options:

a. File five years (instead of three) under the Streamlined Foreign Offshore procedures (plus six years of FBARs). Then renounce in 2015 and file a short-year tax return, including 8854, by June 2016.

b. File three years under the Streamlined Foreign Offshore procedures (plus six years of FBARs). Then file tax returns for 2015 and 2016 and then renounce/ relinquish in 2017. (For 2017 you would then file a short-year tax return, including 8854, by June 2018.) Also would need to file FBARs for 2015 to 2017.

It might be useful to review the website Isaac Brock Society (isaacbrocksociety.ca).
Super summary of options, thanks! I'm thinking rather a. to get this show on the road and finished as soon as possible. I'd had several looks at the Isaac Brock Society and will do a bit more reading with the links you've provided.

Related to yet another post I was just reading on this EF, I think I will contact the Geneva or Zürich branch of "US Tax & Financial Services" for expatriation and th such - unless there are some others out there with a good contact in SG.
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Old 03.03.2015, 17:29
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

This was posted by a US citizen mom in Switzerland who renounced last fall on Isaac Brock Society. Switzerland is thought to have the highest rate of renunciation of US citizenship in the world as a result of the ongoing persecution of Americans here:

"SurelyUJest says
January 23, 2015 at 4:43 pm


My four children and I were dual citizens of Switzerland and the USA since I moved here 26 years ago and married their father. After a few years of debate and many more years of paying H&R Block to file tax returns, I finally took the plunge last summer when my Swiss bank (Postfinance) began harassing me about my citizenship as if I had been hiding it. I’m sure you all know how it goes. You receive a package of documents in the mail to fill out with all your U.S. citizenship and tax identification. The tone was not friendly and it was made clear that my accounts no longer would be private but instead reported to the IRS.
So in the autumn, after a few family discussions and a lot of consulting this Isaac Brock Society website, my youngest son (18) and I renounced our U.S. citizenship in Bern. The waiting room was full (about 20 people) and the weary receptionist asked if anyone present was NOT there to renounce their citizenship. No one answered her…
Four months later, my new year started with CLN. And after all those years of doubting whether or not to take the plunge and be “just Swiss” I felt such a sense of freedom and relief but also, believe it or not, I still feel American. What I mean to say is that no having a passport does not take away your childhood memories nor your American family over in the U.S. But I am also Swiss, because I have been here all my adult life, voted here (it is a direct democracy, far more democratic than the U.S.), worked here, raised my family here. I just wanted to share those emotions with anyone who wondered “how does it feel” to lose your American nationality. You know who you are. It’s not a piece of paper that defines you. Thanks again for all the helpful information and support."
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Old 03.03.2015, 17:44
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

First, take a huge deep breath - I know this stuff is SUPER stressful, but the good news is your situation is relatively simple.

The first step is I'm pretty sure you need to backfile your US taxes for 5 years at least and maybe 15 (or what Mulhollander said) - I know this isn't pretty, and it's going to take a week or two of sorting out papers and such, but you will sleep better in the long run. H&R Block as I think someone else mentioned now has an Expat division, is used to people not having filed for 10+ years, and will do the whole batch for you for a relatively reasonable fee. You may have to pay some US back taxes, but just think of it as stuff you already owed/price for your freedom/never having to think about it again. Lots of others are in the same situation, so you are definitely not alone! Also, definitely file as Married, filing separately if you want to keep your husband out of it as much as possible.

Then, focus on the renounciation bit - I believe you can't really renounce until your taxes are done (or even if you do, you are still liable for your back taxes anyways). So call H&R Block's expat division today, and they'll start to take it out of your hands. Feel free to PM me as well.
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Old 03.03.2015, 17:52
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Very comforting information, advice and offers to help!
Dearest thanks to you all and yes, my deep breathes are getting a good workout lately!

I didn't think about H&R Blocks expat division, but I'll look right into this as I too am getting the impression I need to get the taxes sorted first. I truly hope I only need to go back 5 years, but if it's more, then so be it...
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Old 03.03.2015, 17:55
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Aha - it was in an email sent through the Internations network a few days ago - here's the link: https://www.hrblock.com/expat-tax-pr..._mcm_9185_2000 .

I also know of a few other good firms if you talk to them and decide you don't like them, just PM me.
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Old 03.03.2015, 18:20
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

I've sent inquiries to H&R Block expat services and to US Tax & Financial Services in Zürich. I will gladly inform the forum of my experiences with these institutions.
And to get the US Embassy in Bern process engaged, requested the Informational Packet for Renounciation. I'll track duration times here too, although to be fair, the I'll remove the time I take to decide when I do it.
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Old 03.03.2015, 19:09
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Apologize in advance for the lengthy post. I cannot help you on renouncing/relinquishing - I am sure someone will come along to advise - but I recently looked up the FATCA/FBAR info for a friend of mine, who is a dual US-German citizen, and was not at all aware of the two sets of requirements (and was in for a shock, poor soul!). Below some useful links. I would even call the IRS and ask - based on my personal experience, they have been quite helpful every time I called (and I call them often, although more for professional reasons).

Tax return
U.S. citizens, U.S. individual residents, and a very limited number of nonresident individuals who own certain foreign financial accounts or other offshore assets (specified foreign financial assets) must report those assets in for 8938
http://www.irs.gov/Businesses/Corpor...or-Individuals
Specified foreign financial assets: http://www.irs.gov/Businesses/Typeso...bleonForm-8938
Taxpayers with a total value of specified foreign financial assets below a certain threshold do not have to file Form 8938
• If the total value is at or below $50,000 at the end of the tax year, there is no reporting requirement for the year, unless the total value was more than $75,000 at any time during the tax year
• The threshold is higher for individuals who live outside the United States
• Thresholds are different for married and single taxpayers
Threshold information: http://www.irs.gov/Businesses/Corpor...-U-S-Taxpayers

FBAR
FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”).
An individual may have to file both forms and separate penalties may apply for failure to file each form.
Comparison of filing requirements: http://www.irs.gov/Businesses/Compar...R-Requirements
FBAR guidance:
United States persons are required to file an FBAR if:
• the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
• the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).
http://www.irs.gov/Businesses/Small-...-Accounts-FBAR
Must be done electronically here: http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
There are instructions if you click the links on the right side of the page above.

Offshore Voluntary Disclosure Program
On January 9, 2012, the IRS reopened its Offshore Voluntary Disclosure Program (http://www.irs.gov/uac/2012-Offshore...losure-Program) following continued interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program offers people with unreported taxable income from offshore financial accounts or other foreign assets an opportunity to fulfill their tax and information reporting obligations, including the FBAR. Although the program does not have a closing date, the IRS may end the program at any time.

Streamlined Filing Compliance Procedures
On September 1, 2012, the IRS implemented new streamlined filing compliance procedures that were available only to non-resident U.S. taxpayers who failed to file required U.S. income tax returns. Taxpayer submissions were subject to different degrees of review based on the amount of tax due and the taxpayer’s response to a risk questionnaire.

On June 18, 2014, the IRS announced the expansion of these procedures. The expanded procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, certain U.S. taxpayers residing in the United States; reference IR-2014-73. For eligible U.S. taxpayers residing outside the United States, all penalties will be waived. For eligible U.S. taxpayers residing in the United States, the only penalty will be a miscellaneous offshore penalty equal to five percent of the foreign financial assets that gave rise to the tax compliance issue. For more information, go to Streamlined Filing Compliance Procedures (http://www.irs.gov/Individuals/Inter...nce-Procedures).

Delinquent FBAR Submission Procedures
Taxpayers who have not filed a required FBAR and are not under a civil examination or a criminal investigation by the IRS, and have not already been contacted by the IRS about a delinquent FBAR, should file any delinquent FBARs according to the FBAR instructions and include a statement explaining why the filing is late. All FBARs are required to be filed electronically through FinCEN’s BSA E-Filing System. Select a reason for filing late on the cover page of the electronic form or enter a customized explanation using the ‘Other’ option. If unable to file electronically you may contact FinCEN’s Regulatory Helpline at 800-949-2732 or 703-905-3975 (if calling from outside the United States) to determine acceptable alternatives to electronic filing.

The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.
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Old 03.03.2015, 19:49
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

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There's an overwhelming amount of information in EF dealing with US citizens, US tax obligations and (Swiss/International) banking regulations. Call me ignorant, scared, upset, emotional and a novice....they are all correct. And now (still scared, but think) I am ready to get US tax compliant and US Passport free.

I am a US citizen who has been in Switzerland for more than 15 years, I became a Swiss citizen in 2007 and do not intend on ever going back to the US - I consider myself Swiss and feel at home in Switzerland. I pay taxes in Switzerland but since moving here I have not paid US taxes, I have no US assets, I never voted in the US and for lack of any good reason I'm not tax compliant. I am married to a Swiss natural citizen and never had the guts to find out how much of his money earned in Switzerland he may have to pay to the US (I got scared off by horror stories) because he is married to me. We are a family with 2 small school-aged children, where I have made less than 85kCHF since 2008 and will no longer have any income starting in the Fall of 2015.
Because I will be moving my Pensionkasse from my employer to my Swiss bank, I have started an inquiry which results in me either complying with FATCA or providing proof of being a non US Person. So time to make decisions and act on them. I have read the information about renouncing my US citizenship with the fee of 2350.- USD plus various questionnaire , oaths and forms - and the fact I will at a minimum have to provide 5 years of filing taxes.
Does anyone know if this still true for 2015, since the forms only identify persons renouncing up to and including 2014.
And does anyone know of the process and potential fees for relinquishing my US Passport? I can not seem to find information on this that I can understand as I am not in any financial, regulatory or legal branch.

If someone could recommend the least self-inflicting misery path to tax compliance and giving up the US passport to hat would really help! My thoughts were to:
1) e-mail the US embassy in Bern for the renouncing info packet
2) contact a U.S. Tax Consultant or Advisor in St. Gallen (any experiences out there for SG?) as this is where I pay Swiss Canton Taxes or Zürich to do 5 years of back taxes and submit them to the US
3) decide about renouncing or relinquishing (if I can understand the differences and either one can be done I my case)
4) go through with getting my US Citizenship certifiably removed and US Passport invalidated
5) support my children making an educated decision to either keep or not to keep their US Passports as they get older and can make their own decision.

This whole topic makes my stomach ache to my backbone, it is a hard decision to take and feel confident the complete set of circumstances are known.
Is there something or someways I could make the reduce my misery and be a bit more distanced from the the process without paying 10's of thousand of Francs?

Thanks in advanced for your advice!
1) the embassy is usually pretty quick in sending the info through so that shouldn't be a problem.
2) It doesn't matter where your tax accountant is based. I used US Tax & Financial Services in Geneva as that was the nearest to Fribourg. They're not cheap. It cost me around CHF3,500 to do 6 years of FBAR's (didn't need to do income tax as I have no income), Streamlined form and the 8854 form the following year. You don't have to sort out the tax side before you renounce if you don't want to. I renounced first and then dealt with the tax.

Iirc H&R Block doesn't have that good a rep over on the Isaac Brock Society website. They seem to give out a lot of crap info so make sure you do your research before committing yourself.

Whatever you do DON'T allow any accountant to push you into the OVDP. Streamlined seems to be okay, but the other program is aimed at people who tried to gip the system and that isn't you.

Also research here for your US tax obligations.

http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad

3) Relinquishing is where you commit an expatriating act such as gaining Swiss citizenship with the intention of losing the American one. This is what Tina Turner did. However, as you've renewed (I assume) and used your American passport since you gained Swiss citizenship it's unlikely you could make a case for relinquishment. Therefore your only option is to renounce which means standing in front of the Consul at the embassy and swearing to the Oath of Renunciation to formally lose your American citizenship. The various ways to lose your citizenship are outlined here:

http://travel.state.gov/content/trav...tionality.html

If you could relinquish you would save the $2,350 fee as there is no cost for this. However, renunciation does incur the fee so that's what you'll have to pay. The Oath and the Statement of Understanding are here:

http://www.state.gov/documents/organization/81606.pdf

http://www.state.gov/documents/organization/81607.pdf
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Old 03.03.2015, 20:14
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

Danke danke!!!
I'll be following links and reading more after putting my girls to bed :-))

I too like to be informed and not be "pulled over the table by so-called experts" - that saying you all have really helped in areas of what is necessary, what to watch out for and direct links to the source information --> PERFECT.

I'm curious how the 2 different institutions respond and if I do not have a solid feeling with one or both I'll come back to those of you who offered to refer other firms.
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Old 04.03.2015, 17:50
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

US Embassy in Bern response time info...I requested the Renounciation Info Packet 3.Mar 14:35 and received it all via e-mail on 4.Mar 09:00.

US Tax & Financial Services Sarl in Zürich response time info... I requested a quote and/or contact to determine a quote 3.Mar 17:00 and received an e-mail response 4.Mar 09:10 with 3 time slot possibilities for a first visit and/or conference call. I should get an idea of what the Tax Manager thinks needs to be completed and a quote tomorrow afternoon.

H&R Block has not responded to my online contact request from 3.Mar 17:15.
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Old 04.03.2015, 22:30
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Re: US-CH citizen: tax compliance and renounce vs. relinquish US citizenship

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US Embassy in Bern response time info...I requested the Renounciation Info Packet 3.Mar 14:35 and received it all via e-mail on 4.Mar 09:00.

US Tax & Financial Services Sarl in Zürich response time info... I requested a quote and/or contact to determine a quote 3.Mar 17:00 and received an e-mail response 4.Mar 09:10 with 3 time slot possibilities for a first visit and/or conference call. I should get an idea of what the Tax Manager thinks needs to be completed and a quote tomorrow afternoon.

H&R Block has not responded to my online contact request from 3.Mar 17:15.
Do keep us posted. I am also considering renouncing. Well, I have for a while and I was wondering what's causing me to stall. It's not so much nostalgia for the U.S., though there is some I must admit, but I like the idea of having two passports! I will NEVER live in the U.S. again and I'm very disappointed in the country, so it's not just the tax situation for me. I'm more of a "conscientious objector" in a way. However, I'm going to have to make up my mind. I guess if I had three citizenship's, I would drop the U.S. citizenship like a hot potato! Anyways, I will have to decide soon and I'm about 75% there! Good luck to you!
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dual citizen taxes, fatca, us citizen, us passport, us tax




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