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-   -   To file or not to file a US tax return... (https://www.englishforum.ch/general-off-topic/140932-file-not-file-us-tax-return.html)

runningdeer 09.03.2012 18:18

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508612)
I am not 34 years old and I am not a US citizen. But let's continue the game anyway. Let's say we are talking about Joe.

Everything is true except for a few major details.

So Joe left the USA in the summer of 1993.
He filed a US tax return for the year 1993 because he had worked in the USA during the first half of 1993 and he has a good conscience.

Now Joe has not filed a US tax return since 1993.
That's like 18 or 19 years!
He has gone back to the USA on numerous occasions (on average once a year) and he has never run into any problem.
Actually, since he's become a citizen of country A, he has travelled to the USA with his Country A passport... which might be against US law...

Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)

Ok, assuming Joe became a natuarlised citizen in country A, he performed an expatriating act. He would have to bring such documents to a US embassy, explain that he "Relinquished" his US citizenship on XX.YY.ZZZZ (the date of his acquiring citizenship in country A), and fill out a form. He does not have to pay any fees etc. Assuming date XX.YY.ZZZZ was before US law changed in 1994 he would also not be subject to any back tax filing or owe any exit taxes. He should thereafter receive a CLN from the state dept., hopefully will the date of XX.ZZ.ZZZZ. If Joe took an oath to country A or Country A does not allow dual nationals, his case is even more clear cut.

Read up on the Issac Brock Society Blog for more tips, link noted above.

Quebecman 09.03.2012 19:26

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by runningdeer (Post 1508934)
Ok, assuming Joe became a natuarlised citizen in country A, he performed an expatriating act. He would have to bring such documents to a US embassy, explain that he "Relinquished" his US citizenship on XX.YY.ZZZZ (the date of his acquiring citizenship in country A), and fill out a form.

Nonsense!
Thousands of people have duel Canada/USA citizenship.

KeinFranzösisch 09.03.2012 19:35

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by runningdeer (Post 1508934)
Ok, assuming Joe became a natuarlised citizen in country A, he performed an expatriating act. He would have to bring such documents to a US embassy, explain that he "Relinquished" his US citizenship on XX.YY.ZZZZ (the date of his acquiring citizenship in country A), and fill out a form. He does not have to pay any fees etc. Assuming date XX.YY.ZZZZ was before US law changed in 1994 he would also not be subject to any back tax filing or owe any exit taxes. He should thereafter receive a CLN from the state dept., hopefully will the date of XX.ZZ.ZZZZ. If Joe took an oath to country A or Country A does not allow dual nationals, his case is even more clear cut.

Read up on the Issac Brock Society Blog for more tips, link noted above.

One does not un-become a citizen just because he says so. similarly, he does not acquire citizenship just because he says so, neither. There are formal processes to both, and to both, they are subject to the application being approved.

You can't stomp your foot three times and say "I divorce thee, I divorce thee, I divorce thee."

well.
You could.

But it won't help.

runningdeer 09.03.2012 23:37

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508982)
Nonsense!
Thousands of people have duel Canada/USA citizenship.

Acutally I believe the official count is in the millions.

The key is that when you took the oath to become a citizen of Canada you did so with the intent of relinquishing US citizenship. Under US law, naturalising as a citizen of anonther country can be a expatriating act (if you want it to be). In fact, under previous Canadian law, believe before the 1980s, the oath required when you became a citizen of Canada and made the pledge to the Queen, that you also renounced allegiance to any foreign state.

If you did nothing after becoming a Canadian citizen that indicated you indended to remain a US citizen (dual national) like filing tax forms, traveling on a US passport, etc... it is indeed possible to do this. Many Canadian duals have already done this and are using this procedure today to rid themsleves of unwanted US tax and citizenship burdens.

runningdeer 09.03.2012 23:49

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by KeinFranzösisch (Post 1508986)
One does not un-become a citizen just because he says so. similarly, he does not acquire citizenship just because he says so, neither. There are formal processes to both, and to both, they are subject to the application being approved.

I was referring to performing an expatriating act, and there is no formal process to be approved in doing so. Of course if you want to be sure you lost your nationality it is in your interest to get a CLN, but even some would argue a CLN is not absolutely necessary. Once you inform them you performed an expatriating act, there is no approval or judgement, just the fact.

Furthermore, there was a time not so long ago when the State Dept. was aware that when you took on another citizenship, they assumed you did so with the intent of relinquishing US citizenship. If you wanted to be a dual national, you had to prove or affirm you wanted to keep US citizenship, otherwise non-action implied loss of US citizenship.

NicoleCZ 10.03.2012 06:22

Re: To file or not to file a US tax return...
 
I understand, and was told so by a tax lawyer in Geneva, that people who don't make enough to be taxed in both countries need to file to prove they are not taxable, but that it will only become a problem should I move back forever to the US- at which point I will need to prove I have been paying taxes.

What may make individual cases different are the presence of assets/inheritance/401k in the US etc. Perhaps the reason I was advised to "file if I felt like it" yearly, or just decide to file a pile of back taxes when I move back, is because I have no us-based assets, only have w-2s for three or four years in the US, and under the tax laws at the time, never made enough to file even when I had W-2.

So, in short, I have never paid US taxes. The time I would waste filing and mailing crap and getting stuff signed is worth the couple of grand I will pay some accountant dude to file all my crap in one shot if I ever decide to go back (never) or I ever got a contract here for Queen of the Universe which pushes my Swiss income up into the taxable bracket.

I would also hope that in Switzerland, little peons like us making less than 100k a year are not what the IRS wants to go after in this country. Or, in my case, the reason could be that because I was never an important tax entity in the US, I'm not on a database somewhere for people to go after me.

runningdeer 10.03.2012 11:39

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by NicoleCZ (Post 1509165)
... I'm not on a database somewhere for people to go after me.

Actually you likely already are. The federal agencies have finally linked up IRS and Dept. State so that when you go for passport renewal there will be cross checks.

Everyone to their own, but if you contribute and your employer contributes to a retirement fund here, you have a bank account or investments, even your meager income here could easily push a low earner over US tax threshholds, especially given the exchange rate in recent times which only makes it even worse.

st2lemans 10.03.2012 11:53

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by runningdeer (Post 1509145)
I was referring to performing an expatriating act, and there is no formal process to be approved in doing so. Of course if you want to be sure you lost your nationality it is in your interest to get a CLN, but even some would argue a CLN is not absolutely necessary. Once you inform them you performed an expatriating act, there is no approval or judgement, just the fact.

Furthermore, there was a time not so long ago when the State Dept. was aware that when you took on another citizenship, they assumed you did so with the intent of relinquishing US citizenship. If you wanted to be a dual national, you had to prove or affirm you wanted to keep US citizenship, otherwise non-action implied loss of US citizenship.

I was told (by the embassy in Bern) that since I used (twice) my US passport (to enter the US) after obtaining CH citizenship, obtaining CH citizenship was not considered an expatriating act.

Tom

miniMia 10.03.2012 12:34

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 1509280)
I was told (by the embassy in Bern) that since I used (twice) my US passport (to enter the US) after obtaining CH citizenship, obtaining CH citizenship was not considered an expatriating act.

Tom

Of course it's not. It's always the assumption that you are not intending to lose your US citizenship. If you do want it to be an expatriating act then you need to declare it so and basically go through the renunciation process.

It's not easy to lose your US citizenship, unlike what RD is trying to suggest.

poptart 10.03.2012 12:38

Re: To file or not to file a US tax return...
 
Yeah, if it were so easy, there'd be a lot fewer expats in abject panic and terror mode who haven't filed for years and who are now popping up on the IRS' radar. I start sweating just thinking about being in such a situation....

hoberhobs 10.03.2012 13:51

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508648)
As I said, I am not Joe and I am not a US citizen.
Joe is a US citizen (as well as a citizen of Country A).

It is true that I never want to live in the USA again, but Joe might want to go back some day. Thus Joe should file for the last 18 years!!!! Joe paid lots of income tax in Country A and Joe never made more than 100K per year. We strongly believe that Joe has no US tax liability.

So Joe should download 18 years of tax forms, fill them all and send them to the IRS. I'd like to see the face of the IRS agent who will open the envelope...

Well, you are right, Joe will never have a US tax liability. Please note that for US Citizen who earns salary outside of USA... they normally get around US90,000 Foreign income exemption... thus income over than US90k are taxed in USA/Federal. If Joe only has 100k income every year... he does not have to pay any taxes at all (since he will also get credited for the foreign income tax paid in Country A). The only thing is, there might be administrative fee for late filing (a nominal amount).

good luck.

hoberhobs 10.03.2012 13:53

Re: To file or not to file a US tax return...
 
Also, Joe may also be liable for Social security payments in arrears... if he plans to use/secure the USA Social Benefit when he retires....

Quebecman 10.03.2012 14:38

Re: To file or not to file a US tax return...
 
Joe wants to come clean with the IRS.

She is a US citizen, with dual citizenship (USA-Canada).
Her husband is Canadian but is not, has never been and will never want to be a US citizen.

They lived and worked in the USA for some 8 years or so, after which they moved to Canada. They have lived in Canada for some 18 years. Joe has not filed with the IRS during those 18 years.

When they lived in the USA, Joe's husband was a permanent resident of the USA. They used to file a joint return. Since they moved to Canada, they only had income from Canada and they filed tax returns only with Canada (and appropriate province). They paid way more income tax in Canada than one would pay in the USA on a similar salary. Furthermore, Joe's income has always been well below the foreign earned income exclusion limit.

Now that Joe wants to come clean with the IRS, she can file alone, right? Uncle Sam does not have to know about Joe's husband's income and financial affairs, right? Filing jointly would be a lot more complicated than simply having Joe file alone. Are there reasons why Joe and her husband should consider filing jointly? [Joe's husband is not required to file. According to IRS Publication 54, Joe has the choice: she can file alone or she can file jointly; her husband is then considered a "resident" in the eyes of the IRS].

Note. Joe's husband remaining "financial tie" with the USA in some significant amount of money in a TIAA-CREF retirement account.

meloncollie 10.03.2012 14:45

Re: To file or not to file a US tax return...
 
I've told this story many times, but it bears repeating:

Upon entry to the US some years ago, I presented my passport. The officer swiped it, looked at his screen, and said:

"Thank you for paying your taxes, Mrs Meloncollie."

:eek:


So my advise to Joe:

At times like these you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

;)


Seriously, Joe needs to speak with a tax pro.

miniMia 10.03.2012 15:04

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1509362)
Joe wants to come clean with the IRS.

She is a US citizen, with dual citizenship (USA-Canada).
Her husband is Canadian but is not, has never been and will never want to be a US citizen.

They lived and worked in the USA for some 8 years or so, after which they moved to Canada. They have lived in Canada for some 18 years. Joe has not filed with the IRS during those 18 years.

When they lived in the USA, Joe's husband was a permanent resident of the USA. They used to file a joint return. Since they moved to Canada, they only had income from Canada and they filed tax returns only with Canada (and appropriate province). They paid way more income tax in Canada than one would pay in the USA on a similar salary. Furthermore, Joe's income has always been well below the foreign earned income exclusion limit.

Now that Joe wants to come clean with the IRS, she can file alone, right? Uncle Sam does not have to know about Joe's husband's income and financial affairs, right? Filing jointly would be a lot more complicated than simply having Joe file alone. Are there reasons why Joe and her husband should consider filing jointly? [Joe's husband is not required to file. According to IRS Publication 54, Joe has the choice: she can file alone or she can file jointly; her husband is then considered a "resident" in the eyes of the IRS].

Note. Joe's husband remaining "financial tie" with the USA in some significant amount of money in a TIAA-CREF retirement account.

If Joe's husband is still a permanent resident, he is also required to file.

If you want to "come clean" find a good tax attorney to file last 7 (or 10) years for you. If you go to them with a "whoopsie, my bad" usually they won't throw the book at you. Or so I've heard.

Quote:

Originally Posted by meloncollie (Post 1509365)

"Thank you for paying your taxes, Mrs Meloncollie."

That's because you owe and pay taxes. If you have no liability they aren't going to say "Thanks for not owing any taxes" are they? :D

Quebecman 10.03.2012 15:27

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by miniMia (Post 1509371)
If Joe's husband is still a permanent resident, he is also required to file.

Joe's husband is no longer a permanent resident.

Quote:

If you want to "come clean" find a good tax attorney to file last 7 (or 10) years for you. If you go to them with a "whoopsie, my bad" usually they won't throw the book at you. Or so I've heard.
Why a tax attorney? The situation is quite simple, really. Plus, Joe and her husband have always filed without the help of a tax attorney (in the years that they did file that is...) Why only the last 7 or 10 years? Why not all 18 years?

Joe's husband is downloading Publication 54, Form 1040 and the Instructions for Form 1040 for the last 18 years. He needs to buy a good pencil and a good eraser...:D
And 18 years of Form 2555,
And 18 years of Instructions for Form 2555.

Quebecman 10.03.2012 16:01

Re: To file or not to file a US tax return...
 
If I edit a post at 16h00, why does it say it was edited at 11h00?

miniMia 10.03.2012 16:20

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1509378)
Joe's husband is no longer a permanent resident.

Why a tax attorney? The situation is quite simple, really. Plus, Joe and her husband have always filed without the help of a tax attorney (in the years that they did file that is...) Why only the last 7 or 10 years? Why not all 18 years?

Joe's husband is downloading Publication 54, Form 1040 and the Instructions for Form 1040 for the last 18 years. He needs to buy a good pencil and a good eraser...:D
And 18 years of Form 2555,
And 18 years of Instructions for Form 2555.

I said that assuming Joe's husband was also liable. But if he's no longer a permanent resident, then I suppose she could do it on her own. Personally, I'd feel more comfortable consulting an attorney in case there is some problem.

To get up to date you don't have to file all 18 years. I think that's been mentioned above before. You have to file either 7 or 10 years, I can't remember which.

Quebecman 10.03.2012 16:27

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by miniMia (Post 1509394)
To get up to date you don't have to file all 18 years. I think that's been mentioned above before. You have to file either 7 or 10 years, I can't remember which.

But what if you want to file for all 18 years?

poptart 10.03.2012 18:20

Re: To file or not to file a US tax return...
 
Joe's husband, if he was a green card holder, based on my own present experience is that he's off the hook if he has been outside the US for more than 1 year and hasn't re-entered the US on the green card (and it has most likely expired anyway).

Again, I'd seek a pro's opinion just because she may be able to only file for the last 7 years and be done with it. Certainly a pro will be of immense help if the IRS decides to penalize her for anything, particularly the failure to report and disclose bank accounts of 10k or more has been biting the arse of many lately (fines can be up to 1/3 the balance of the account...no shit). This is scary stuff so, download those forms but....a pro will know best how to proceed.

Oh, and the form for the FBAR (not for the IRS, but rather the Treasury so it doesn't get filed with the taxes) is at http://www.irs.gov/pub/irs-pdf/f90221.pdf


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