I am considering renouncing my US citizenship. Tthe Serbinski article at https://serbinski.com/taxation-abroad/t ... d-taxation lists the tests for being declared a "covered expatriate." One states: [i]You expatriated before 2015 and have deferred the payment of tax, have an item of eligible deferred compensation or have an interest in a non grantor trust.[/i]
Does that mean I'd get stuck with CE status because my annual 1040 filings included form 8833 on which I elected for tax treaty deferral on my RRSP? The market value of my RRSP is C$222,108 over the book value shown on my brokerage statement.
Thanks
Renunciation and RRSP
Moderator: Mark T Serbinski CA CPA
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victoriaguy
- Posts: 54
- Joined: Sun Oct 26, 2014 12:03 am
- Location: Victoria, BC, Canada
walter, google revenue procedure 2014-55. You don't have to file 8833's to defer tax on income inside RRSP's. All you have to do is file your taxes, and then declare income from them when they convert to a RRIF. (Of course, you have to report them on the FBAR, and on 8938 if you meet the thresholds there, which you do).
I believe what they mean by deferring the payment of taxes, is just that... deferring payment of taxes that are due. I have vague memories or reading of such scenarios and don't remember them. You could google those. Under the tax treaty, and Rev Proc 14-55, these taxes are NOT DUE.
That is my interpretation. I helped my mother and sister renounce, and they had no problem.
I believe what they mean by deferring the payment of taxes, is just that... deferring payment of taxes that are due. I have vague memories or reading of such scenarios and don't remember them. You could google those. Under the tax treaty, and Rev Proc 14-55, these taxes are NOT DUE.
That is my interpretation. I helped my mother and sister renounce, and they had no problem.
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victoriaguy
- Posts: 54
- Joined: Sun Oct 26, 2014 12:03 am
- Location: Victoria, BC, Canada
I should correct one statement I made...
Under the tax treaty, and Rev Proc 14-55, these taxes are NOT DUE, unless you fail to meet the criteria in Rev Proc 14-55. And if you do, you can come to MEET them through the Streamlined Procedure as long as you qualify for that program. But get help from an accountant with the streamlined certification.
Under the tax treaty, and Rev Proc 14-55, these taxes are NOT DUE, unless you fail to meet the criteria in Rev Proc 14-55. And if you do, you can come to MEET them through the Streamlined Procedure as long as you qualify for that program. But get help from an accountant with the streamlined certification.
Victoriaguy, thanks for your replies. I'm fully compliant with 2014-55. My concern is the extent to which the IRS will tax my accrued RRSP earnings if I renounce. I'm not clear on whether:
-- No tax will be due, or
-- Tax will be due on the full value of accrued earnings, or
-- Tax will be due only as withdrawals are made with the financial institution withholding 30% for remittance to IRS.
What happened with your mother and sister? Again, please note that my net wealth and average income are too low to be considered a covered expatriate and my tax filings are up to date. Thanks again.
-- No tax will be due, or
-- Tax will be due on the full value of accrued earnings, or
-- Tax will be due only as withdrawals are made with the financial institution withholding 30% for remittance to IRS.
What happened with your mother and sister? Again, please note that my net wealth and average income are too low to be considered a covered expatriate and my tax filings are up to date. Thanks again.
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victoriaguy
- Posts: 54
- Joined: Sun Oct 26, 2014 12:03 am
- Location: Victoria, BC, Canada
No tax was due for my sister or mother. The only time tax comes due is in response to a return. You've elected to defer taxation on the RRSP income, and maintain that election until the moment you expatriate.
When you expatriate, you only pay the exit tax if you are a covered citizen ($2m assets or so much income per year). And you only file your last return for the part of the year that you are a citizen (though in both my sister's and Mom's case, they weren't going to owe anything anyways, and the calculations were just easier to do for the whole year, so we did that).
When you expatriate, you only pay the exit tax if you are a covered citizen ($2m assets or so much income per year). And you only file your last return for the part of the year that you are a citizen (though in both my sister's and Mom's case, they weren't going to owe anything anyways, and the calculations were just easier to do for the whole year, so we did that).