Jack A Bass for Tax Haven Guru writes: A reader called to say that I have some outdated information – specifically after renunciation you no longer file the next ten years ( as was the case).
Once you have filed renunciation you are still required to file US tax returns for the final return – for the part of the year when you were still a citizen. That final return also includes Form 8854, which lists what, if any, exit tax is due.
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Five Steps to Renouncing US Citizenship
Contrary to popular belief, renouncing US citizenship is not a highly complex tasks that is fraught with obstacles and barriers. It is, in fact, achievable in just five simple steps.
Contrary to popular belief, renouncing US citizenship is not a highly complex tasks that is fraught with obstacles and barriers. It is, in fact, achievable in just five simple steps.
STEP 1: Get a Second Passport
In order to renounce your US passport you will need a second passport and you are required to bring this with you to your renunciation appointment. Even though expatriation is your right, the State Department will deny anyone the right to renounce their US citizenship if they don’t have a second passport. Ensure that the passport you acquire is directly issued by the government in question and never be tempted to purchase one off the Internet.
In order to renounce your US passport you will need a second passport and you are required to bring this with you to your renunciation appointment. Even though expatriation is your right, the State Department will deny anyone the right to renounce their US citizenship if they don’t have a second passport. Ensure that the passport you acquire is directly issued by the government in question and never be tempted to purchase one off the Internet.
Please review our other columns on second passports – we can assist you – contact information is at the end of this article:
STEP 2: Review the Renunciation Forms and Prepare DS-4079
The documents listed below are the ones required by the State Department to process your renunciation. You only need to fill out DS-4079 before your appointment. DS-4080, 4081, 4082 and 4083 are forms that you should review beforehand but complete at the appointment, since they just have a few check boxes, dates and signatures.
The documents listed below are the ones required by the State Department to process your renunciation. You only need to fill out DS-4079 before your appointment. DS-4080, 4081, 4082 and 4083 are forms that you should review beforehand but complete at the appointment, since they just have a few check boxes, dates and signatures.
DS-4079: Questionnaire – Information for Determining Possible Loss of U.S. Citizenship, US State
DS-4080: Oath of Renunciation of the Nationality of the United States, US State Dept.
DS-4081: Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of U.S. Citizenship, US State Dept.
DS-4082: Witnesses’ Attestation Renunciation/Relinquishment of Citizenship, US State Dept.
DS-4083: Certificate of Loss of Nationality of the United States, US State Dept.
STEP 3: Book Your Renunciation Appointment
Ideally you would book your appointment at the embassy or consulate in the country (and possibly city) where you plan to live once you renounce your passport. However, other embassies and consulates will take you, so it pays to “appointment shop” as the wait times can fluctuate greatly among locations. When you book the appointment, make sure to indicate how many people are renouncing US citizenship, if it’s more than one. If you don’t want to book the appointment yourself, you can have your expat lawyer do it for you. However, having a lawyer book the appointment for you can delay the process in some places, as they may require written proof that your lawyer represents you. They ask for this proof via Form G-28.
Ideally you would book your appointment at the embassy or consulate in the country (and possibly city) where you plan to live once you renounce your passport. However, other embassies and consulates will take you, so it pays to “appointment shop” as the wait times can fluctuate greatly among locations. When you book the appointment, make sure to indicate how many people are renouncing US citizenship, if it’s more than one. If you don’t want to book the appointment yourself, you can have your expat lawyer do it for you. However, having a lawyer book the appointment for you can delay the process in some places, as they may require written proof that your lawyer represents you. They ask for this proof via Form G-28.
STEP 4: Attend Your Renunciation Appointment
Make sure you take both of your passports to your renuncation appointment. Bring your birth certificate and if you have a certificate of naturalization from the country of your second passport, bring that too. There may be a long line just to get inside the embassy or consulate. If there is, politely let them know you have an appointment booked.
Make sure you take both of your passports to your renuncation appointment. Bring your birth certificate and if you have a certificate of naturalization from the country of your second passport, bring that too. There may be a long line just to get inside the embassy or consulate. If there is, politely let them know you have an appointment booked.
Be prepared to complete many copies of each form at the appointment and keep them organized in stacks. Proofread everything you and the official put on the papers. Make sure the signatures are in the right place.
At the end of renunciation appointment you will be provided with DS-4083, called the CLN for Certificate of Loss of Nationality. Keep this in a safe place and do not lose it, as it is the one piece of physical proof that you’ve completed the process for renouncing US citizenship. It’s signed and affixed with an official seal at the appointment. Technically the CLN will need to be approved by the State Department but this can take several months and in the meantime you will need evidence of the day you formally signed renunciation.
STEP 5: File Your Final U.S. Tax Return
Your final tax return will be from January 1st through the day you expatriate. However, the fair market valuation for all your assets is as of the day before. That’s because on the day you renounce, you are no longer a taxable person to the IRS. If your renunciation date is any day other than December 31st, you’ll be filing Form 1040 and 1040NR (if applicable) for your final return: IRS Form 8854, the Expatriation Information Statement, is the exit tax form, and it’s filed along with your final return. It’s not especially difficult, but you want to make sure you do it right.
Here are the instructions and the form itself: http://www.irs.gov/instructions/i8854/
IRS forms are periodically updated, so make sure you have the most recent one.
The 8854 is targeted at “covered expatriates.” A covered expatriate is someone who meets the wealth criteria established by the IRS. It’s based on having a net worth of $2 million or more, or a threshold annual tax liability from the preceding five years. To read the full definition and see if it applies to you, go here. If you’re a “covered expatriate,” complete 8854 with the assistance of an accountant, preferably one who has done them before. If you have any questions that might be sensitive, consult a tax attorney first. You have attorney-client privilege with your lawyer – not your accountant. If you have foreign accounts already extant before you expatriate, you’ll also need to file a U.S. Treasury form called the “FBAR” (FinCEN Form 114). You may have done this before since the form applies to all U.S. citizens and is not related to expatriation.
As with any major decision, ensure that you are fully confident that renouncing US citizenship is the right thing to do for you and your family.
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