Already renounced, never filed? There's relief for that.
The IRS Relief Procedures for Certain Former Citizens are the closest thing to a true amnesty in U.S. tax. If you qualify, you file six years of returns, and the IRS doesn't collect the tax, interest or penalties for those years.
1Who qualifies
You must meet every one of these:
- You relinquished U.S. citizenship after March 18, 2010.
- You have no prior U.S. filing history as a citizen or resident. (A Form 1040-NR filed in good faith as a nonresident doesn't count against you.)
- Your net worth is under $2 million, both when you renounced and when you file.
- Your total U.S. tax for the five years before renouncing and the year you renounced is $25,000 or less, after credits like the foreign tax credit.
- Your average annual income tax for the five years before renouncing was under the exit-tax threshold (adjusted each year).
- Your past failure to file was non-willful.
Lots of accidental Americans fit this exactly.
2What you file
- Proof you renounced: your approved Certificate of Loss of Nationality (Form DS-4083).
- ID: a valid passport, or a birth certificate plus a government ID.
- The year you renounced: a dual-status return with Form 1040-NR, a Form 1040 for the part of the year you were a citizen, and Form 8854.
- The five years before: Form 1040 for each year, with any required information returns, such as Form 8938.
- FBARs, if they were required, filed electronically.
No Social Security number is required, and there's no preclearance step.
3Why it matters
If you qualify, you're not treated as a "covered expatriate," so the exit tax doesn't apply, and you're not liable for unpaid tax or penalties for those years or earlier ones. If you don't qualify but file anyway, the IRS processes the returns normally and you owe the tax, interest and penalties. So it pays to check carefully first.
Common questions
I renounced before 2010. Can I use it?
No. The procedures cover people who relinquished citizenship after March 18, 2010. Earlier renunciations need a different look, so tell us your dates.
Do I need to pay the tax first?
No. If you qualify, no payment is required for the covered years.
What if my net worth is just over $2 million?
There's no exception to the $2 million limit. You'd need a different route, and planning around the exit tax becomes important.
Renounced and never filed? Let's see if you qualify.
We'll check the net worth and tax tests with you before anything is filed.
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Reviewed by Lewis Grunfeld, CPA. Based on the IRS's published Relief Procedures for Certain Former Citizens. General information, not advice for your specific situation.