Query about taxes and renunciation - form 8854

Firstly I want to thank those who have contributed to this forum, which I have found very useful.
 
I realised this year that as a dual US/UK citizen I was subject to US tax even though I have lived in the UK for all my life. To prepare for renouncing my US citizenship, I have spent several months piecing together five years worth of tax-related information, much of which has never been required by the UK tax authorities. (For instance, I have held PFICs in an ISA, so things that do not even appear on a UK tax return have had to be laboriously gathered, requiring about 200 sheets of paper.) Anyway, I have mailed the tax returns to the IRS.
 
My question is, what happens next? Will the IRS acknowledge receipt of the tax returns, let alone comment on them? When do I submit form 8854, which I understand is needed to end my liability for US tax and to prevent me becoming a covered expatriate? The current version of form 8854 refers to 2016 as the year of expatriation and requires tax returns for the five years ending before the date of expatriation. My expatriation will be in 2017 and I have provided tax returns for 2012-2016. The next version of the form will not be produced until the end of 2017. Can I use before then the 2016 version of the form, amending ‘2016’ to ‘2017’ throughout? Will I be required to provide yet another tax return, for 2017?
 
The embassy said that I should ask the IRS. I found nothing on the IRS website, so I tried their telephone help line; after a long wait they said that I should ask a tax adviser. A tax adviser has said that I should ask the IRS.

You will file your 8854 in 2018, say in January if you are keen to be done with all this asap. You will also file in 2018 your dual status tax return for the tax year 2017, reporting worldwide income for the part of that year when you were still a USC, i.e. up to the day before your renunciation, and any income after that date on which a nonresident alien has US tax liability, such as 15% tax on dividends from US company shares. The way people do this is by using a 1040NR form as your main tax reporting form, and using a 1040 form as an attachment with which to record your income in 2017 prior to renouncing.

Since all this further reporting will not happen until 2018 you can wait for the 2017 version of 8854 to be published by the IRS.

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p.s You will not receive any receipt from the IRS about your 2012-16 returns, or 2017 return, or 8854. No news is good news. They only get in touch if they notice an error.

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Excellent summation by RW.

One small footnote, you need to file two (2) 8854's - one with the 1040NR return, and one (on its own) to Philadelphia. If you want to be certain they receive it, use a courier service. FEDEX (or similar) to Austin is no problem, but the IRS gives no hint as to an address for Philly, but this might help. Note: the post it is 2 years old, so hope it still applies.

https://hodgen.com/filing-form-8854-by-fedex-a-success-story/

 

Presumably you owed some US tax on some PFIC income (including any excess distributions). You will know when the returns have been processed, because the IRS will cash your cheques for the tax you paid.

One assumes that you (sensibly) delivered all 5 tax returns & 6 or 7 years of FBARs through the IRS streamlined procedures. Is this correct?

If you are correct that you have a claim to US citizenship and you renounce that citizenship this year, then at some stage next year, you will a final dual-status return; pay any tax (including PFIC tax) that you owe for 2017 and file Forms 8854.

Incidentally, you could have renounced before filing any US tax returns; so long as these were completed at some stage before filing Forms 8854.

Many thanks for those very helpful replies. They give me hope that there will be life beyond this dreadful episode.

What is not dreadful about this situation? You live your life outside the US and in some cases are only a US citizen by accident. You many not have a passport or a social security number. One day you find out about the extraterritorial tax issues imposed by the USA. You are suddenly exposed to huge compliance costs and risks. Your investments become PFICs. You can't save for retirement in your country of residence where you are also a citizen. You have problems banking, investing, getting a job. You put your non US citizen family at risk too.

Where were you supposed to learn about this in the past? You didn't learn this at school, you were living in a foreign country your whole life with no access to US tax information no reason to be searching for tax information in a place you don't work or live. The US doesn't even educate their citizens that are a part of their society never mind the ones who aren't. Should you even be a US citizen in the first place? Being born there shouldn't change the outcome of your life.

The benefits you describe are not benefits if they hinder you living a normal life anywhere but there.

The benefits you describe are not benefits if they hinder you living a normal life anywhere but there.

We seem to have a post that mysteriously disappeared. Don't worry, Same Boat, others remember it.

OP yes there is life after this dreadful episode, I am living proof there is. and never looked back. I was in the same boat as you two years ago. The advise given about filing your final paperwork is correct. You will be doing that next year. i did mine myself using my 5 years filing as a guide and read up on how to do the form 1040NR. You can always come back here when the time comes for advise.

yes the post I made referring to benefits, the one I was responding to was removed, but I am leaving my post in case someone else wants to come and preach about benefits to poor unsuspecting people being caught up in this unfair situation.