[quote="testone"]I agree that you need to file the 8854, but if you expatriate in 2010 and fail to file the 8854 your are not obligated to file US tax returns in 2011.[/quote]
Yeah, I just went looking through the 2008 amendments to the expatriation act, and it is spelled out in there.
basil - you still need to get the 2010 8854 files as soon as possible. There is a $10k penalty for filing late, so the sooner you can get it filed after receiving your Loss of Nationality Certificate, the better chance you'll have of getting the penalty waived due to reasonable causes (assuming you don't have any exit tax due upon renunciation). But you don't need to worry about filing anything for 2011 unless you have some US source income.
Completing IRS form 8854
Moderator: Mark T Serbinski CA CPA
Update on filing of 8854
[quote="Dalthien"][quote="testone"]The rule that you had to file 8854 to stop being subject to US tax was in section 7701(n). This rule was repealed in 2008.[/quote]
Yeah, but it was simply replaced with Section 877A and the amended section 7701. The very first part listed under the current instructions for 8854 for Who Must File is that you must file in order to establish that you have expatriated for tax purposes. It's a grey area at the moment, but with the wrong IRS agent handling the case you could still be held liable under US tax law until you have established that you are no longer a citizen.
Not to mention that there is a $10,000 fine that now accompanies failure to file 8854, and there are issues with non-grantor trusts and deferred exit tax payments which can keep you on the hook having to file IRS forms for another 30 years after you expatriate.
The simple act of expatriating does not end your tax obligations. You still have to follow up with the proper IRS procedures to remove yourself from the tax side of the equation.[/quote]
We made it very clear to the Consul officer when we went through the process that our request for expatriation HAD NOTHING TO DO WITH TAX ISSUES. That is somethinsg that an applicant must make very clear. We will also make it very clear on Form 8854 and the accompanying documentation that we are not expatriating for any reasons assocaited with taxation either now or in the future.
Yeah, but it was simply replaced with Section 877A and the amended section 7701. The very first part listed under the current instructions for 8854 for Who Must File is that you must file in order to establish that you have expatriated for tax purposes. It's a grey area at the moment, but with the wrong IRS agent handling the case you could still be held liable under US tax law until you have established that you are no longer a citizen.
Not to mention that there is a $10,000 fine that now accompanies failure to file 8854, and there are issues with non-grantor trusts and deferred exit tax payments which can keep you on the hook having to file IRS forms for another 30 years after you expatriate.
The simple act of expatriating does not end your tax obligations. You still have to follow up with the proper IRS procedures to remove yourself from the tax side of the equation.[/quote]
We made it very clear to the Consul officer when we went through the process that our request for expatriation HAD NOTHING TO DO WITH TAX ISSUES. That is somethinsg that an applicant must make very clear. We will also make it very clear on Form 8854 and the accompanying documentation that we are not expatriating for any reasons assocaited with taxation either now or in the future.