Expatriated now have to complete final tax return - stupid question!

Hi Everyone

This is my first post, but I've found this forum really helpful so far in answering my tax questions
I expatriated in 2016 (17th March to be precise). I'm just getting round to completing my final (yippee) tax return. So far, I've always paid someone else to do them for me, but this last time I want to do it myself (to save the ££).
So, my stupid question is: on my tax return do I include my pro-rated salary for 1st-16th March? Or do I not include it because I didn't actually get my salary paid to me that month until 29th March (i.e. after I had expatriated)?

Thanks 

This return is the most important US set of US tax returns you will ever file; because the way that the questions are answered and the forms completed will determine if you are a covered expatriate.

I'd suggest professional advice from an adviser who has dealt with hundreds of other expatriation cases.

Thanks. I'm not a covered expatriate. My situation is relatively simple, and I have my 5 years of previous returns (completed by a UK-based accountant who specialises in US taxes also) to help me in completing 2016's. I simply can't afford this year the £2500 to pay them to complete this final tax return, so I have to do it myself.

I thought my question was a relatively straightforward one, and one that others who've expatriated will have encountered. I think the answer is that I don't include my March salary because I wasn't paid it until after I expatriated and the IRS doesn't count income until you actually receive it. But I just want to double-check and am hoping that some knowledgeable person on here might have the answer

Hi,
I was in the same boat as you, renounced last year but in July 2016. I didn't want to pay for an accountant again and did the final returns myself.

I filed my final return weeks ago and wasn't a covered expatriate either. and yes I understood the income to be as you described if using a cash method. anything received after the renunciation date (if foreign source income) regardless of when it was earned is not included.

Anyway this is what I did. I had the same as you, a payment end of July of wages I didn't include because it was after I renounced. even if I had included it, i would not have owed anything.

You expatriated, or renounced your US citizenship, in 2016? If you just moved abroad, it may not be your last US tax return - expats have to file, too...

$2500 sounds like a lot, anyway. We pay less than $400 a year for a tax return from an online expat tax services specialist firm, who are great. PM me if you would like the details.

An online tax preparation firm might conceivably be located in China or Russia or store data in an offshore location, so be an unsafe place to send data. If you really need professional advice, there are some excellent US qualified tax advisers located in the UK and regulated in the UK.

Unless the final return and Forms 8854 are correctly filed and sent to correct IRS offices you'll automatically be considered a covered expatriate even if you meet the other exclusions from being considered a covered expatriate.

The OP said they have straight forward circumstances. also has past returns so knows most likely where to file them. and the address to send the form 8854 is in the instructions.

A covered expatriate is created by looking at historic facts
That's what Phil Hodgen has to say anyway

"This means that the certification test does not care at all about what you say on the tax forms you file for your expatriation year, or when you file them. There are consequences for filing nothing, filing bad forms, or filing late. But the certification test – and covered expatriate status – will be unaffected by any of these."

https://hodgen.com/filing-late-form-8854-covered-expatriate/

The OP said they have straight forward circumstances. also has past returns so knows most likely where to file them. and the address to send the form 8854 is in the instructions.

A covered expatriate is created by looking at historic facts
That's what Phil Hodgen has to say anyway

"This means that the certification test does not care at all about what you say on the tax forms you file for your expatriation year, or when you file them. There are consequences for filing nothing, filing bad forms, or filing late. But the certification test – and covered expatriate status – will be unaffected by any of these."

https://hodgen.com/filing-late-form-8854-covered-expatriate/

Thanks; Glad Phil Hodgen concurs with me. If the forms are bad or missing or incomplete the filer would become by default a covered expatriate.

No I don't think Phil Hodgen's is saying that one becomes a covered expatriate by not filing the final forms correctly or filing the form 8854 late or even filing to the wrong place.

If you read the whole link, he is saying "A covered expatriate is someone who meets the requirements of one (or more) of three tests"
no more or no less and it's historic and involves the 5 years prior to the final year. The final year's filing don't enter into the certification test.  You have to read the whole entry under “The Certification Test” and conclusion.

Unless I am interpreting this wrong. In any case, someone without any US ties or assets has very little to worry about when checking out of the system. Just make a good faith and honest effort and check your numbers. if the IRS have any questions, they will ask.

Thanks for the tip; I was at an airport when replying before, but now had the chance to look at Internal Revenue Code Section 877A. The worst that could happen if a Form 8854 is wrong is a fixed $10,000 penalty. I agree that getting the 8854 wrong does not make one a covered expatriate; although $10,000 would of course be a darned expensive penalty...

To those who have expatriated..did you use an immigration lawyer at all? I have a tax professional taking care of all tax forms but I would like to get the expatriation forms filled in to start the process at the embassy in London. A couple of the forms are straightforward but there is one that isn't.

Hi Cotinus Grace

I renounced last year but did all the embassy paperwork myself without any help from an immigration lawyer. I found them all straight forward to complete.

If you have a specific question, feel free to ask however I am not a tax professional or immigration lawyer, just someone who has gone through it all and it's done and dusted for me.

I also found the renouncing process incredibly simple and just did it myself.

And in response to question above. I renounced my US citizenship in 2016. I've lived outside the US most of my life (bar about 4 years in the early 2000s). Once I've filed this final tax return I am done 

It's not a stupid question. Nothing about US taxes is easy. You do not include your March income.  Reference on request. I read it 10 times before it made sense


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Thanks DukeofDevon. Glad to have it clarified that I don't include March income. I've just filed an extension request as even though I'm pretty sure I can sort out my tax return myself, the ridiculous number of forms I need to complete (16!) means it's going to be a long and tedious process. Still, worth it to not pay the accountants £2.5k!