Goodbye to IRS

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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exPenn
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Goodbye to IRS

Post by exPenn » Fri Sep 26, 2014 4:51 pm

My wife renounced her US citizenship in Sept. 2013 (before the price was raised from $450 to a usurious $2,350). We filed her final tax return in June 2014 (full year 1040 plus 8854). After almost a year, she finally received her COLN this month. We have the E-receipt from her final FBAR, and just received her IRS Statement of Account showing 0 taxes, 0 interest and 0 penalties owing up to Dec. 31, 2013. Is there anything else we should do before we say goodbye and good riddance to the IRS once and for all?

Phil Hogan, CA
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Post by Phil Hogan, CA » Sun Oct 05, 2014 6:16 pm

Does your wife receive any US source income?

Phil
Phil Hogan, CA, CPA (Colorado)
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exPenn
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Post by exPenn » Mon Oct 06, 2014 8:36 am

No. She has no US sourced income until 5 yrs from now when she will begin recieving US Social Security.

nelsona
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Post by nelsona » Mon Oct 06, 2014 9:37 am

Remember at that time that (a) SS is not taxable in US and only 85% reportable in Canada, and (b) you may be entitled to some as well, as her spouse.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

exPenn
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Post by exPenn » Mon Oct 06, 2014 3:03 pm

Right. I should be eligible for a spousal allowance of 1/2 of her SS benefit (which I will give to her). One problem will be the reduction of her SS benefit by appoximately 1/2 of whatever CPP she is receiving, due to the WEP provision. Previous posts have mentioned that some cross-border tax services have successfully fought against the application of WEP (I'm not sure on what basis). I will be looking into that when the time comes.

maz57
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Post by maz57 » Mon Oct 06, 2014 7:19 pm

If, five years from now, she is no longer a US taxpayer and doesn't file US tax returns how would the US government even know whether or how much she receives from CPP?

exPenn
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Post by exPenn » Mon Oct 06, 2014 10:17 pm

Because, when you apply for Social Security, one of the questions is what other pensions are you recieving, including pensions from "foreign" countries. Lying about it would eventually get you into trouble. There is a social security treaty between the US and Canada. They may exchange pension information.

nelsona
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Post by nelsona » Tue Oct 07, 2014 6:43 am

Not quite sure what you meant by 'giving her' your spousal benefit. What you do with your money is up to you of course, but what was the point of making that statement?

As to fighting WEP, the basis of any appeal is using the possible fact that one has worked 30 years under a combination of SS and a totalized system, like CPP.

Results have been inconsistent, and costly.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

exPenn
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Post by exPenn » Tue Oct 07, 2014 9:20 am

I made that statement because, never having lived or worked in the US, I was somewhat embarassed to be recieving a 'spousal benefit' from US Social Security that I have done nothing to earn. Even though it will be taxed in Canada in my name, it will go to partially make up for the reduction in my wife's pension income due to WEP (assuming WEP will be applied).
I suspected the elimination of WEP after "30 years of substantial earnings" rule was the basis for an appeal. She will certainly have more than 30 years of combined SS and CPP earnings. In fact, she will probably have more than 30 years of CPP alone.

nelsona
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Post by nelsona » Tue Oct 07, 2014 2:06 pm

I assume she has the 40 quarters of SS?
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

exPenn
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Post by exPenn » Tue Oct 07, 2014 2:20 pm

Yes. 17 years with SS contributions, and 13 years with 'substantial earnings' as defined for the WEP test.

nelsona
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Post by nelsona » Tue Oct 07, 2014 2:53 pm

Don't get too hung up on the 30 years thing. It's hit or miss and more often miss. You'll see when you get there that the cost of fighting it won;t be worth themoney.

You'd be better off just taking early CPP.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

exPenn
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Post by exPenn » Tue Oct 07, 2014 3:47 pm

If she waits until 65 to take an unreduced CPP, and 66 for an unreduced SS, the WEP will reduce her pension income by about $5K per year. Worth fignting for or not?

nelsona
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Post by nelsona » Tue Oct 07, 2014 4:02 pm

I think you'll have to wait to see the actual numbers, and how much lawyers will charge for a possible losing battle.

makes taking CPP earlier make more sense, though, since CPP will be 'reduced' more by WEP than by taking it early.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

ND
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Post by ND » Mon Oct 13, 2014 9:44 pm

I assume she's not a "covered expatriate". But note- in terms of being all done at your point- that IF one IS a "covered expatriate" after the expatriation year filing reporting requirements continue in that Form 8854 must continue to be filed for a number of years to comply with the annual information reporting requirements .

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