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Old 09.03.2012, 13:22
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To file or not to file a US tax return...

Suppose I am a 34 year old US citizen. Suppose I graduated from college when I was 24 and I worked in the USA for the following 10 years. Now I move to country A, I get a job in country A, I become a citizen of country A, I plan to retire in country A, I do not own any asset in the USA and I never want to live in the USA again.

Question 1: Why should I file a US tax return every year?

Question 2: What will happen if I never file a US tax return again?

Thank you.
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  #2  
Old 09.03.2012, 13:24
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Re: To file or not to file a US tax return...

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Suppose I am a 34 year old US citizen. Suppose I graduated from college when I was 24 and I worked in the USA for the following 10 years. Now I move to country A, I get a job in country A, I become a citizen of country A, I plan to retire in country A, I do not own any asset in the USA and I never want to live in the USA again.

Question 1: Why should I file a US tax return every year?

Question 2: What will happen if I never file a US tax return again?

Thank you.
Answer 1: Because it's the law.
Answer 2: You'll be hunted down by the IRS like Leona Helmsley and locked away in Camp Cupcake like Martha Stewart, or assassinated like al-Awlaki.
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Old 09.03.2012, 13:26
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Re: To file or not to file a US tax return...

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Question 1: Why should I file a US tax return every year?
Because you are required to do so by law.

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Question 2: What will happen if I never file a US tax return again?
Nothing will happen as long as you don't set foot on US soil again. Otherwise you might be detained at border control if you are identified as a tax evader.
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Old 09.03.2012, 13:30
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Re: To file or not to file a US tax return...

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Nothing will happen as long as you don't set foot on US soil again. Otherwise you might be detained at border control if you are identified as a tax evader.
That's not entirely true if I am to understand what the ramifications of FACTA are. If the IRS wants to pursue you, they will and it won't be much fun. Two kinds of people you don't mess with...immigration and tax folks as both can make your life a living hell with very little effort.
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Old 09.03.2012, 13:39
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Re: To file or not to file a US tax return...

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That's not entirely true if I am to understand what the ramifications of FACTA are. If the IRS wants to pursue you, they will and it won't be much fun. Two kinds of people you don't mess with...immigration and tax folks as both can make your life a living hell with very little effort.
FACTA: Wiki

If he's a citizen of another country, (depending on which country of course), as far as I am aware they can't do shizzle It just means that he will live his life as a fugitive
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Old 09.03.2012, 13:42
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Re: To file or not to file a US tax return...

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FACTA: Wiki
Ummm, it's FATCA!

Tom
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Old 09.03.2012, 13:47
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Re: To file or not to file a US tax return...

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Ummm, it's FATCA!
LOL...I always wondered if was dyslexic. I think I like FACTA better as FATCA just makes me think of fat californians....
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Old 09.03.2012, 13:40
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Re: To file or not to file a US tax return...

If you never plan to go to the US again, dump your US citizenship, problem solved (unless your tax laibility in previous years is above $150k or so, or have assets above a certain amount, in which case you need to continue filing for a few years).

Tom
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Old 09.03.2012, 13:37
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Re: To file or not to file a US tax return...

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)
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Old 09.03.2012, 13:41
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Re: To file or not to file a US tax return...

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Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)
There is no filing deadline for income tax return under US laws if you do NOT owe any tax. So, do a few returns for all the years Joe was supposed to file income tax and see what comes up. If he had no liability in all years, then just file all the return and he'll be clean
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Old 09.03.2012, 13:44
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Re: To file or not to file a US tax return...

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Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)
Yes, you might (or might not) be fined. You can easily ask the IRS these kinds of questions. You would have to refile for the 'forgotten' years. It doesn't matter if you earn no income, you still have to file.
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Old 09.03.2012, 13:47
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Re: To file or not to file a US tax return...

They won't let you give up your american citizenship until your tax liability has been taken care of....
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Old 09.03.2012, 17:20
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Re: To file or not to file a US tax return...

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They won't let you give up your american citizenship until your tax liability has been taken care of....

Not true. At the renunciation ceremony they tell you that you are still liable for any taxes you may owe, etc., and they tell you to file form 8854 with your final 1040. That's it. You can renounce and then get caught up after you renounce. The IRS is only going to "come after you" if you actually owe the US any taxes.

If I were Joe and I had enough foreign tax credits to not owe anything to the US, then I would file the last seven years just to show them this and renounce my citizenship and be done with it. Easy. However, if I were Joe and I actually owe taxes after using FTCs and the income exclusion, etc., then I would consult a professional.
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Old 09.03.2012, 13:46
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Re: To file or not to file a US tax return...

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Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)
I don't know the entire story about Joe but, yes, he's in some serious shiite particularly for entering the US under a passport other than the US passport (seriously, as a dual holder myself, it can get complicated but the penalties are very serious if you get busted so I stay within the lines). As for non-filing...still, I recommend Joe speak with a good tax lawyer as there was an amnesty program me offered before FACTA got rolled out but that has passed and the hunting has begun. I don't know what kind of paper trail he's left in CH but...chances are, they will catch up eventually. Good luck to Joe.

Geez, and here I am panicking over forgetting to file a visa form for the green card before leaving the US thinking of all the worst-case issues....
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Old 09.03.2012, 13:49
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Re: To file or not to file a US tax return...

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I don't know the entire story about Joe but, yes, he's in some serious shiite particularly for entering the US under a passport other than the US passport
It's the 21st Century. Neary every valid passport has an eChip. Those that don't are expiring. Immigration systems are linked globally. If you're a USC and you try to enter under another nationality... you WILL get caught. I guarantee it.
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Old 09.03.2012, 14:00
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Re: To file or not to file a US tax return...

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It's the 21st Century. Neary every valid passport has an eChip. Those that don't are expiring. Immigration systems are linked globally. If you're a USC and you try to enter under another nationality... you WILL get caught. I guarantee it.
Nonsense.
Absolute nonsense.
My kids have Canadian passports and USA passports. They always travel with their Canadian passports, whether they are going to Europe or to the USA. They never had any problem. Same when they drive from Canada to the USA.

But to be on the safe side, I will advice them to use their US passports when they go to the USA...
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Old 09.03.2012, 18:18
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Re: To file or not to file a US tax return...

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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.
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Old 09.03.2012, 19:26
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Re: To file or not to file a US tax return...

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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.
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Old 09.03.2012, 23:37
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Re: To file or not to file a US tax return...

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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.
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Old 09.03.2012, 19:35
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Re: To file or not to file a US tax return...

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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.
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