Phil Hodgen’s Blog

Real questions about expatriation for our workshop


Please send your hardest questions about expatriation. This will help us prepare an upcoming workshop–we will know the real problems that are bugging you.


We are planning to put on a multi-part workshop in a couple of months. It will be highly technical–to the level of “this is how you answer Line 8″. Yes, that specific.

The workshop is going to be aimed at regular people–people with net worth under $2,000,000, so they (probably) will not be covered expatriates.

Workshop Mailing List

We have a special mailing list just to get information on expatriation topics only. Sign up for the Expatriation Only mailing list by clicking on that glorious hyperlink. :-)

Real Life Problems Needed

In order to prepare a workshop that is highly, highly useful to you, we need to know what problems you are facing.

Yes, we have worked with a gazillion people and talked through their exit tax problems. But there is always something new. I want to know about it.

And then there are the utterly common questions that are so obvious that we don’t even think about them. That’s dumb. They’re common problems to us, but not necessarily to you–this will be the first time you see the problem, when you expatriate. We need to be reminded of the obvious!

Please Send Your Problems

Please submit your comments, suggestions, or real-life problems so we can build these topics into the workshop. The easiest way is to use the Contact Us page. Or email me. My email addresses on on the Contact Us page.

Or you can use the comments on this blog post to write your question or vent about the problem you are having with expatriation.

I cannot guarantee it, but it is highly likely that as a reward for participating your precise question will be answered to the best of our ability. :-)

Questions Submitted Already

We already have many questions that have been submitted. Here they are. You can say “Me too” or tell me about some variation on the theme you see there–facts specific to you.

Certification Test

  • Do I have to have already filed amended tax returns I think I might need to file when I file Form 8854?
  • Are FBARs (and amended FBARs) covered under the certification test? Do I have to file those prior to filing Form 8854 to meet the certification test? (different due dates for 8854/tax return and FBARs)
  • What is the best way to amend an FBAR if the FBAR people and IRS told me not to report the account but we later found out that we needed to?
  • Can we use the foreign tax credit on the amended returns if we didn’t on the original returns? Is it better not to?
  • If you never owed any tax do you still have to file the five prior years of returns to meet the certification test or can you just sign off on the 8854?

Form 8854 Questions

  • Does renunciation have any effect on final tax return due date, or is it the date that you would normally file tax returns?
  • Do we have to complete Part V of Form 8854 (balance sheet and income statement) if we are not covered expatriates?
  • Is it possible to file Form 8854 prior to filing the tax return for the final year?
  • Should a married couple split assets in half (in other words, show each asset at 50% of its value) when computing a balance sheet for Form 8854?
    Are personal loans included as an asset on Form 8854?

Determining Whether You Are a Covered Expatriate

  • Why is there the need to calculate the net tax liability for the prior 5 years when determining whether I am a covered expatriate (referring to Phil’s blog post on the subject from April 25, 2013)? Why not just enter the taxes you owed as shown on 5 prior years of returns?
  • How is appreciated real estate valued for determination of covered expatriate status? Is it based on the current assessment or on the amount of appreciation since acquisition?
  • I am right near the covered expatriate mark; how do I make sure I’m below?
  • How do I value non-controlling shares of a foreign small business for determining whether I am a covered expatriate?
  • How do I value a term life insurance policy for determining whether I am a covered expatriate?


  • I have an IRA account; how do I get it out of the US? Are there any brokerage firms that will accept this type of account?
  • Should I roll over my 401(k) to an IRA or cash out when I leave? Or neither? What are the rules for IRAs on foreign addresses?
  • My employer allows me to take a loan against my 401(k). Should I take that and immediately default on it, thereby making it declarable income but with no withholding?
  • My child is a dual citizen (US-UK). I want to open a child ISA. I will be the custodian. There are no withdrawals allowed until the child is 18. What are the rules for this as relates to income/capital gains?
  • Are there benefits to liquidating US pensions (IRAs, 401(k)s) just after expatriation? Are there benefits to taking distributions over time with the 30% withholding? What is the best option?


  • I live in a country with a different tax year (not calendar year like the US). How is that handled, particularly for a final year tax return?
  • At what point does a green card holder (with a US citizen spouse) no longer have an obligation to file a US tax return?
  • A green card holder planning to expatriate who has a US citizen spouse who is not expatriating is going to split up their assets and move them to separate accounts. What is sufficient to make the split “real” for US tax purposes? Should they do this prior to filing Form 8854? Does the timing affect to whom the assets belong?
  • Is Form 1040NR filed for the entire portion of the year in which I am a nonresident?
  • Is timing of income payments important? Is pro-rating an option, or do I just report the entire year of US income even though I expatriated in the middle of the year?
  • How is W-8BEN filed? Does it go directly to the brokerage firm/other or to the IRS?
  • If I have no US source income in the years after expatriation, should I still file a nonresident return for those years?
  • If I expatriate and I am a nonresident at year end, do I need to file an FBAR for the year of expatriation?
  • What happens with S-corps at expatriation? Can I own a C-corp or LLC after expatriating? Do I need to wind up US companies before expatriating?
  • If there is a 30% withholding on dividend payments after expatriation, do I still have to file a nonresident return since the full tax due has been withheld?
  • I am the sole trustee and, according to an attorney I spoke with, a “contingent beneficiary” of an irrevocable trust. How does the IRS view this and how would it be handled for expatriation purposes?

How Many Appointments in Buenos Aires to Expatriate?

I heard from someone that it takes four appointments to successfully expatriate in the Buenos Aires Embassy. (He found it expedient to go to another country to expatriate).

The normal expatriation procedure at the moment is a two-meeting process.

  • The first appointment at the Embassy is designed to install a guilt-bomb in your brain, and the delay between the first and second appointment is supposed to give enough time for you to regret your decision and remain an American.
  • The second appointment is where the fun happens and you cease to be a U.S. citizen.

When I first started doing these expatriations under the new rules we had a one-appointment process. Do the paperwork, show up. If the paperwork was wrong, they’d fix it on the spot. Then the Embassy official would generate the other documents. Sign, date, swear out, and you’re done.

Then the two-appointment process started to appear. For a while some locations were one-appointment and others were two-appointment places. And even within that we would see variations. We would see “yes we have two appointment but we’ll informally just finish it all in one appointment” expediency in some situations.

But now “four appointments”? Wow.

The State Department’s uniform procedures are not, it appears, equally applied across the planet. :-)

Anyway, I’m curious about trends. What have you seen in Argentina, or elsewhere for that matter, that deviates from the “two appointments to expatriate” procedure?

Quite apart from the bone-headed bureaucracy of it all, requiring multiple appointments can put a real travel strain on a person who wants to expatriate. Someone living far from the Embassy will have to drive, fly, etc. a long way to scratch the State Department’s itch if two appointments–carefully spread out–are required. I can’t imagine more than that.

Delay in approving renunciations at State Department?

I get emails:

Have you noticed that the US State Dept is taking a very long time to approve renunciations? I have been waiting 9 months. Someone from the embassy where I renounced went to DC a couple of months ago for a training and asked them why it was taking so long. They said it was the job of only one person and that it was not a priority. I think they are doing this to punish the renouncers. What do you think?

Anyone out there have any clue? I have not seen any undue delay in issuing CLNs.

International Tax Lunch – PFICs

What: Passive Foreign Investment Companies (PFICs) — Presentation and discussion
When: Friday, January 10, 2014 at Noon (Pacific Time)
Where: HodgenLaw PC Conference Room, 80 S. Lake Avenue, Suite 680, Pasadena, CA 91101
Who: Elena N. Redko, CPA at HodgenLaw PC

Just in time for tax season, Elena will help you better understand PFICs. At the recent 2013 CalCPA International Tax Conference, she talked about PFICs with line-by-line directions on how to prepare Form 8621, and how to pull numbers off a Swiss bank account statement and plug them into a tax return. 

To register, please contact Olivia Park at olivia.park (at) or call +1-626-689-0060 extension 106.

Seats are limited to 10 in person and dial-in capacity is also available.

Presentation and Q&A: Global Real Estate Transactions

What: Global Real Estate Transactions — Presentation followed by Q&A
Time: Tuesday, January 14, 2014 from 1:00 PM to 2:00 PM
Where: Malibu Public Library — 23519 Civic Center Way, Malibu, CA  90265
Host: Malibu Association of Realtors – Global Committee

Phil will be part of a presentation and Q&A session along with Mitch Creekmore, SVP with the Stewart Title Guaranty Company.

If you are interested in joining the event, please contact Olivia at olivia.park (at)