Expatriate Taxes
Moderator: Mark T Serbinski CA CPA
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Gofigure49
- Posts: 12
- Joined: Fri Oct 29, 2004 9:03 am
Expatriate Taxes
Am trying to find out reporting requirements for a "renouncer" who is NOT subject to the U.S. expatriate alternate tax regime...ie., below the thresholds and not expatriating for tax reasons. Already submitted 8854 on expatriation day in November. Know that an NR is not required for go-forward because not subject to 877 but what is the requirement for 2004? Does one have to file a 1040 as a U.S. citizen for the first 10 months? It is not clear in the Income Tax Act nor is it clear in the Immigration and Naturalization Act. Very clear for dual status and dual resident but do not fit either of those definitions as already citizen of Canada for over 4 years and resident only of Canada for over 40 years. No U.S. income at all.
<b>If you were a US citizen:</b>
Unless you request a ruling that you did not renounce your citizenship for tax avoidance purposes, you are required to submit a 1040 for the next 10 years, including 2004. Your US income is not a factor here.
Your 2004 return, therefore, will look pretty much like your 2003 1040. As will your 2005 1040, unless you get the ruling.
A US citizen is presumed to be under expat tax unless he gets this ruling. This is not the same rules as for GC-renouncers.
If you were in Canada for instance, and were a Cdn citizen, as you say, then this should not be a problem to get this ruling, but you do need it.
So when you state you are "NOT subject to the U.S. expatriate alternate tax regime...ie., below the thresholds and not expatriating for tax reasons", this is not something that a fmr USC can determine. IRS will decide this.
<b>If you merely renounced your GC:</b>
LTRs get to 'decide for themselves' whether they meet expat tax thresholds (subject to IRS review of course).
But for 2004, you are dual status, as if you left in 2004, and can file either a dual-status 1040/1040NR or a 1040 full-year, your choice.
In any event, you wouldn't be filing a 1040NR to satisfy expat tax, if it applied to you: you would have to file a full-blown 1040.
Whether you file a US return in future will depend on income in those years, just like for any other Cdn living in Canada with US activity.
<i>nelsona non grata</i>
Unless you request a ruling that you did not renounce your citizenship for tax avoidance purposes, you are required to submit a 1040 for the next 10 years, including 2004. Your US income is not a factor here.
Your 2004 return, therefore, will look pretty much like your 2003 1040. As will your 2005 1040, unless you get the ruling.
A US citizen is presumed to be under expat tax unless he gets this ruling. This is not the same rules as for GC-renouncers.
If you were in Canada for instance, and were a Cdn citizen, as you say, then this should not be a problem to get this ruling, but you do need it.
So when you state you are "NOT subject to the U.S. expatriate alternate tax regime...ie., below the thresholds and not expatriating for tax reasons", this is not something that a fmr USC can determine. IRS will decide this.
<b>If you merely renounced your GC:</b>
LTRs get to 'decide for themselves' whether they meet expat tax thresholds (subject to IRS review of course).
But for 2004, you are dual status, as if you left in 2004, and can file either a dual-status 1040/1040NR or a 1040 full-year, your choice.
In any event, you wouldn't be filing a 1040NR to satisfy expat tax, if it applied to you: you would have to file a full-blown 1040.
Whether you file a US return in future will depend on income in those years, just like for any other Cdn living in Canada with US activity.
<i>nelsona non grata</i>
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Gofigure49
- Posts: 12
- Joined: Fri Oct 29, 2004 9:03 am
I don't believe you need a ruling if you are under the thresholds...only if you are over and can verify that you are not expatriating for tax reasons. The American Jobs Creation Act changed the rules and thresholds in June 2004.
The 10 year rule is only for U.S. source income (not world-wide) unless you're in the States for over 30 days per year. And you only file a 1040NR not a full 1040 for the 10 years. This regime though is ONLY for those who are subject to the Expatriate Tax Regime. There is no requirement to file 1040NR for those who are below the thresholds.
The 10 year rule is only for U.S. source income (not world-wide) unless you're in the States for over 30 days per year. And you only file a 1040NR not a full 1040 for the 10 years. This regime though is ONLY for those who are subject to the Expatriate Tax Regime. There is no requirement to file 1040NR for those who are below the thresholds.
If the rules have changed for expat tax, so be it. You are obviously more involved than I. I thought they were making the rules stricter, not more lax, but obviously this was not the result.
Getting back to your 2004 tax situation however, you are dual-status, as you only renounced in November (couldn't take the election results, eh?)
So you do need to file a dual-status return, just like any other Cdn leaving US in November, or any other Cdn citizen/resident renouncing their GC in November.
Any expat rule changes did not impact this procedure.
IRS Pub. 54 is your guide.
Like I said, your 2004 return should look exactly like your 2003 return (FEIE and no tax liability).
<i>nelsona non grata</i>
Getting back to your 2004 tax situation however, you are dual-status, as you only renounced in November (couldn't take the election results, eh?)
So you do need to file a dual-status return, just like any other Cdn leaving US in November, or any other Cdn citizen/resident renouncing their GC in November.
Any expat rule changes did not impact this procedure.
IRS Pub. 54 is your guide.
Like I said, your 2004 return should look exactly like your 2003 return (FEIE and no tax liability).
<i>nelsona non grata</i>