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at 11:35 am #87127GreenbackExpatMember
Posted by GreenbackExpat , 2 replies
I work with Greenback Expat Tax Services. We specialize in taxes for American’s living abroad and we would be happy to help answer any tax questions you have.
Hi, I will appreciate your answers to the following questions concerning Renunciation of USA Citizenship:
1- After filing Form 8854 as a Non-Covered Expat, when (what month specifically) can I start selling my foreign (Panama) land lots and not have to pay US Taxes?
In fact, when (what month specifically) will I be entirely free from filing any Tax Forms with the IRS?
2- After the Renunciation Appointment, how soon (what month specifically) can you file Form 8854?
3- I have been the only account holder in our family but, my wife has filed 1040 jointly with me. She has no income nor assets. Does she also have to renounce Citizenship for her not to fill any taxes in the USA?
4- After I receive the Certificate of Loss of Nationality, when (what month specifically) do I have to leave the USA?
5- As a Non-Covered Expat, will I still receive THE SAME AMOUNT on my Social Security check which will be sent to Mexico?
I am a Not-Covered Expat because:
1- I have filed Income Tax Returns for the past (20+) 5 yrs.
2- My Average Tax Liability in the past 5 yrs. is much less than $165,000.
3- My Net Worth including my house and Land Lots in Panama is much less than $2,000,000.
4- I am a Dual Citizen but I have never been taxed in Mexico. I have only owned businesses in the US.
I will appreciate your answers ASAP.
Thanks for the questions and apologies for the delay, it seems Expat info Desk is not sending out reply notifications and I am just seeing your message.
The good news is that in most cases you can continue to receive your social security benefits even once you renounce (granted you need to have worked for at least 10 years in the USA to receive benefits). Your benefits can be limited though based on other income you are receiving. More details on how that all works can be read in the article below.
When it comes to renouncing, you will file the final exit paperwork once the tax forms are released. So for example if you renounced at the embassy in June 2020, you wouldn’t actually be able to file the dual status return and the 8854 form until January 2021 at the earliest (this is when the 2020 tax forms are released).
Your final tax return will include both the 1040 (for the earnings made before you renounce) and the 1040NR (for earnings made after your renunciation date). If you want to be completely clear of reporting anything to the USA then you should wait until the following tax year (2021 in the example above).
Remember that if you have any US source income or effectively connected US income you will need to continue to file a US return even after you renounce. Also, if you are still living in the USA you could pass the substantial presence test and that would require filing a US tax return too.
I hope this clarifies and feel free to check out our website for more renunciation tips.
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