Thursday, June 18, 2015

Renunciation of U. S. Citizenship: The Final Chapter

ראש החודש הרביעי תשע״ה

Disclaimer: I am not an accountant. I am simply relaying my own personal experiences, and what I did. I am not giving tax advice. You would do well to consult a Certified Public Accountant [CPA].*

On Monday, I sent in the last forms to the U. S. Government, I will ever need to send it. At least, I hope this the case. In the spring of last year, I renounced my U. S. citizenship. I did so, not for tax reasons, but for ideological ones. You can about the saga of my renunciation up until now, by clicking here.

As a single person, with only one source of income, and absolutely no investments, nor any other assets, and never more than a few thousand shekels in a checking account and very small pension fund, the forms I had to file included a 1040 (not a 1040A or 1040 EZ), plus the foreign earned income exemption. In my case, this was a 2555-EZ form. I also filed Foreign Bank and Financial Accounts Report [FBAR], for one year in which my combined bank account and pension fund actually reached above the $10,000 threshold.

To convert your shekel amounts to U. S. dollars, use the IRS’s Yearly Average Currency Exchange Rates Table for current and previous years.

In addition, I filled to fill out an 8965 form claiming an exemption from this for the year 2014. Would you imagine that the U. S. Government was considering obligating U. S. citizens living abroad to pay for ObamaCare coverage, even someone like me, who has not set foot on U. S. soil, save for embassies and consulates, since 1997?

Such hutzpah!

U. S. citizens living abroad do receive an automatic extension of the normal April 15 deadline for income tax reporting, making it June 15. My main concern, though, was the last form I had to file, as one who renounced citizenship in the previous year, was the 8854 form. As far as I know, the penalty for submitting an 8854 form, with a postmark after June 15, 2015, is $10,000, if it is determined that filing late was avoidable.

I might add that the 8854 form was never, I repeat never, mentioned to me, certainly not by any U. S. Government official involved in the processing of the renunciation of my citizenship.

I used to laugh at various individuals, both U. S. and non-U. S. citizens, who have criticized the U. S. for its imperialistic policies. Well, I do not know if I would call the U. S. Government’s far reaching, financial policies toward U. S. citizens, present and former, imperialistic. However, the U. S. does appear to assert control over them for as long as it can. Apparently, among all of the nations of the world, only the U. S. and Eritrea tax their citizens, who are living abroad (Isaac Brock Society).

The U. S. Government can, theoretically, still intrude into my life. Does that sound crazy and paranoid? Is that redundant?

If IRS officials do not believe in what I have reported to them, from what I understand, they can audit me, and request information and even request that my Israeli, as in foreign to the U. S., bank account be frozen, if I do not comply. Quite frankly, I believe this would be silly on their part, since I do not owe them any money, do not have any money, and it would cost them one heck of a lot more to audit and investigate me, than they would eventually be able to claim from me, which would be nothing, since that’s what I owe, and that’s what I have. Nothing.

Of course, if the U. S. Government decides to make an example out of me, as one of those ungrateful individuals who has dared to spend the required $450, now $2350, fee to renounce his precious U. S. citizenship, then they may do just that. But, the U. S. Government would never do anything like that. Or would it? For what? My 2¢ blog? Now, if you ask me, that would be just plain silly.

Did I fill out the forms correctly? I certainly believe that I did. I sure studied the procedures long enough.

Well, there is nothing I can do about it now.


Israeli Post Office Information:
If you are worried about making it to the post office on time, in order to get your document filled envelops postmarked with a specific date, you should know that the pot office does have branches which are open later than 5:00pm. Agrippas and the main Yaffo St. branches are open until 6:00pm, and the Menta convenience store at the Pat Junction gas station is open until 10:00pm. Make sure to double check that they offer international registered mail during its late hours of operation. I guess people who had previously complained about picking up their mail at a gas station (link) won’t be complaining now, huh?

Of course, if you are really running late, you can always make the trek out to Ben-Gurion Airport, where you will find a branch open until 11:59pm.

I recommend sending any forms and supporting documents by registered mail. This way, you can not only prove that you sent them on time, but you also track and trace them.

I have mixed feelings about recommending consultation with a CPA. I feel that I am darned if I do, and darned if I don’t. In order to get things done correctly, and thus keep the U. S. Government off of our backs, it would to our benefit to obtain professional assistance. On the other hand, are CPA’s, in their own way, passive collaborators with the U. S. Government?

Think about it. The more complicated tax regulations become, the more we need them, and thus, the more money they make.

On the other hand, even how supposedly simple my reporting obligations were, I cannot possibly imagine how I could have completed the process on my own, as I did, without the assistance of the two CPA’s who were kind enough to answer my questions without charging me.

Additional Resources:

IRS Out Of Israel

Isaac Brock Society

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