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  1. Hi @Expat. I am traveling and won’t be able to get to this for a few weeks at best. Sorry. Greetings from an airport lounge. 🙂

  2. Phil,

    I still haven’t seen a reply to @J’s question and I have the same. I have looked to other sources and found that when filing a deceased’s last return, you can take the full standard deduction so I have done the same. Do you think this is right? And would a similar logic apply to the exemptions?

  3. No problem, thanks for letting me know. Hope you’re having a good time in Singapore (visions of “Crazy Rich Asians” dancing in my head right now) :D:D

  4. @J,

    Sorry but I’m on jet lag mode in Singapore right now and can’t get to the resource materials to answer your question. And my brain doesn’t have the answer. 🙂

  5. Hi Phil,

    Another Q, do we need to pro-rate the deduction and exemption (lines 40 and 42 of the 2014 1040) as expatriates?

    eg. I revoked my citizenship on Oct 31, 2014 so I was only a citizen for 242 days. Do I only get to claim $4,110 for the deduction [6,200 x 242/365] and only $2,619 [3,950 x 242/365] ?

    It occurred to me that the 1040NR also provides the same exemption ($3,950), and as I am filing both 1040 and 1040NR, if I don’t prorate, I will be effectively claiming the exemption twice. I suspect the IRS would not like that, but just wanted to confirm with your expertise on this matter.


    – J

  6. Some things are prorated. Some are not. (Gee Phil. Really helpful!). Eg, the Form 8938 cuts off as of expatriation date, but the IRS hasn’t said if the FBAR does.

    For income and expense, the general rule is “did you get/give cash?” If a paycheck hit your bank account while you were a U.S. Citizen, you report it. If you, on the other hand, expatriate on Wednesday and get paid on Friday, that paycheck is not taxed by the U.S. & A.

    Look at IRS Publication 519, Chapter 6 for discussions of tax returns when part of the year you are a resident and part you are not.

    And yes your 2014 tax returns are going to burn more brain cells than normal.

  7. Hi Phil,

    Awesome blog! Thank you so much for your advice! It has helped clear up many questions I have in filing the exit tax forms. One Q that I don’t think has been covered yet (I tried my best to scour the entire site to make sure I’m not asking a question that has already been answered):

    Do the supplementary forms, ie 8938, 8961 need to be prorated for the 1040 and 1040NR? Or is it possible to just tally the numbers for the whole year for the 8938 & 8961’s and put them in the 1040? Also, the 1099 dividend tax receipts cover the entire year so do I just prorate that as well? In essence, will we have to file four entire sets of tax returns (2 x 1040) + (2 x 1040NR), all complete with their supplementary forms? I can’t even start to imagine the headache with the PFICs…

    If it helps, my situation is this:
    Both my husband and I expatriated in the later quarter of 2014, and are both Canadians as well. We have been diligent and have filed all previous 5 year returns. We are pretty sure we are going to have file both the 1040 and 1040NR in addition to the lovely 8854.

    Many thanks in advance for your advice (and humour, love the humour ;D)

    – J

  8. Phil,

    I’ll give you the benefit of the doubt and assume you’re correct on all of this. Congratulations! You’re probably one of the few people on this planet who’ve gotten it right (excluding most other other tax professionals as well, I dare say). What you’ve described is so counter-intuitive that I’d be really surprised if any ex- US citizens are filing this way. Seriously, I’m not criticizing your interpretation, but it is pure madness and I can’t imagine anyone getting it right.

  9. @tdott,

    You are correct in multiple ways. Let’s start with the “My head hurts” stuff. Treaties are written by diplomats. Diplomats were not paying attention in 7th grade when basic grammar lessons were taught. The people who write treaties should be beaten about the head and shoulders with an Ernest Hemingway novel until they learn to write simply and clearly. 🙂

    But to your main point — what you need to do is look at the local law of the country, and decide what it says. What — under local law — is the first day that you were a resident of that country under its tax laws? Ideally the answer is January 1. Then you look at the treaty tie-breaker rules (Article 4) to see if they cause the result you want.

    After that you make the election on Form 8833.

    I am going to put this in my “articles ideas” bucket in Evernote for a future blog post and I will focus on the Canadian treaty specifically. Treaties are a black hole black art in tax work. Reading treaties is not everyone’s idea of a Really Good Time. 🙂

  10. Phil,

    If I’m reading the article correctly, you are saying that it is possible to renounce in, say, 2014 and be treated for tax purposes as a NRA for the *entire* 2014 year, not just for the portion of the year after renunciation. However, in order for this to happen, the relevant tax treaty must allow this, and you must make the appropriate election.

    Am I right so far? If so, can you say what key words or phrases one should look for in a tax treaty to see if this is allowed? I’ve looked at the Canada-US tax treaty (my interest is in Canada) and, to be frank, it hurts my head; hence my plea for short-cut key words/phrases.


  11. @John,

    This is true. If you do not have a filing requirement, you can file the Form 8854 as a standalone document.

    My practice is to file tax returns in these circumstances. I want to close the statute of limitations. Years from now I do not want to have the taxpayer reconstruct the past and explain to the IRS why no return was filed. It is far simpler to file with zero income.

    This is not always true of course. But I like to prevent future wreckage if I can do so with minimal brain damage now.

  12. Phil,

    If the renunciant’s income is below the 2014 filing limit I see no reason why a 1040 or a 1040NR needs to be filed. This could occur if the renunciation occurred early in the year (e.g. January) or if the renunciant was a stay at home spouse. The instructions to form 8854 are quite clear that if you are under the filing limits you “only” need to send the 8854 to the address in Philadelphia.

  13. Phil

    I’m sure the law will be on the US Government’s side for this question.

    What would happen to someone if they renounced say on 1 January 2015, the US accepts all the paperwork at the time and sends the CLN as usual. However, sometime over the next 6 years the IRS claims it was a false return (obviously wanting all the usual back taxes, penalties, and poss criminal proceedings), does the US ‘re-instate’ you as a US citizen for those years? Almost like someone fraudulently obtaining US citizenship but in reverse – fraudulent renunciation.

    Would you be liable to file US taxes until the US Government is satisfied the subsequent years?

    Does the US Government have a 6 year window (or whatever number of years) to have a go at someone?

    After 6 years the US Government can’t ‘re-instate’ you?

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.