Filing IRS Form 8854 after renunciation

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formerpatriot
Posts: 37
Joined: Mon Feb 23, 2015 4:13 pm
Location: Montreal

Filing IRS Form 8854 after renunciation

Post by formerpatriot » Sat Jan 12, 2019 5:53 pm

My wife renounced her US citizenship in 2018.
I am trying to fill Form 8854 "Initial and Annual Expatriation Statement".
In her case, this will be an "Initial" as well as final expatriation statement.

I am posting my questions below.
Perhaps some people here can help.


Since expatriation occurred in 2018, we must fill parts I, IV and V of Form 8854.
My wife has been fully compliant with the IRS.
She is not rich enough to be a covered expatriate.
Her situation is quite simple: no business in the USA, no business in Canada, no TFSA, no RESP, no investment outside RRSPs and a 401(k), no property in the USA, no rental properties, etc. etc. A salary from her job in Canada and some interest from some bonds in Canada.

Now on to Form 8854:

Part I: General Information
This part is pretty straightforward except for one detail: On line 5, I must check the box "Citizen" and I must provide the "Date notification given to Department of State". What date is that? Is it the date at which my wife took the oath of renunciation at the US Consulate or is it the date at which the Department of State stamped (and dated) the Certificate of Loss of Nationality?

Part IV: For Persons Who Expatriated During 2018
Line 1: US income tax liability (after foreign tax credits) for the 5 tax years ending before the date of expatriation.
Am I correct in assuming that this is the "total tax" amount on line 63 of the 1040? (If that's the case, the amount is 0$ for each of the 5 tax years thanks to the Foreign Earned Income Form 2555).

Part V: Balance Sheet and Income Statement
Schedule A: Balance Sheet
At first it looks intimidating but maybe it is not. I think that the only non-zero lines will be lines 1, 6, 7, 16, 20 and 25. Lines 20 and 25 are simply a sum and a difference, respectively. This leaves me with lines 1, 6, 7 and 16. Here they are:

Line 1. Cash, including bank deposits.
Here I will include the total value (as of date of renunciation) of two bank accounts and a bunch of fixed-rate bonds and step-up bonds at Épargne Placement Quebec. I can't think of anything else. The two bank accounts are held jointly. Do I go 50%? Do I ignore column (b) (US adjusted basis)?

Line 6. Pensions from services performed in the United States.
She has a 401(k). Do I enter the total 401(k) value? Do I ignore column (b)?

Line 7. Pensions from services performed outside the United States.
She has two RRSP accounts, one spousal RRSP (with me as the contributor), and one Defined Contribution Pension Plan. Do I enter the total value (as of expatriation date) of these 4 accounts? Do I ignore column (b)?

Line 16. Real property located outside the United States.
Her car and the house? Book value for her car? Half of house value (since it is jointly owned with me)? What about column (b)? Do I put (half of) the price we paid for the house?

Part V: Balance Sheet and Income Statement
Schedule B: Income Statement
Lines 1 to 8: I have zeros everywhere!
Line 9. Gross income from all other sources.
She has only 2 types of income: salary from her job here in Canada and interest on those fixed-rate bonds and step-up bonds. Do I simply write down on line 9 the total as of the date of renunciation?

++++++++++++

It seems quite simple.
Am I missing something?
Should I consult an expert?

Thank you
FormerPatriot in Montreal

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