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Renouncing USA citizenship

Renouncing USA citizenship

Old Dec 20th 2023, 2:57 am
  #16  
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Default Re: Renouncing USA citizenship

Originally Posted by Jerseygirl
Doesn't answer the filing issue, but worth a glance for those with 401Ks, IRAs, Roth IRAs etc - note the HMRC get themselves in a mix at one point and correct it all on page 3.
https://community.hmrc.gov.uk/custom....gov.uk&page=1

Last edited by Cape Blue; Dec 20th 2023 at 3:07 am.
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Old Dec 20th 2023, 10:40 am
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Default Re: Renouncing USA citizenship

Hope I'm not throwing confusion into the mix, but as a non-US citizen, non-US resident, I don't file a US tax return. I left the US in 2006 and have lived in the UK ever since. Since returning, I have gradually drawn down all of my 403(b) except a sum in my TIAA Traditional "fund". I currently receive a small monthly amount from my TIAA Traditional "fund" (part of the 403(b), and will continue doing so until I can start drawing it down t age 70 (I think).

I have had to complete a W-8BEN on occasion but other than erroneous tax withholding early on, I've never had US tax withheld on payments from my 403(b). (I do pay UK income tax on these payments via self-assessment, though). I've also received payment for visiting scholar work, similarly free of US tax withholding via a W-8BEN form, and similarly taxed by HMRC via UK self-assessment..

Maybe I'm comparing apples and oranges, but thought I'd put it out there.
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Old Dec 20th 2023, 11:50 am
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Default Re: Renouncing USA citizenship

Originally Posted by dunroving
Hope I'm not throwing confusion into the mix, but as a non-US citizen, non-US resident, I don't file a US tax return. I left the US in 2006 and have lived in the UK ever since. Since returning, I have gradually drawn down all of my 403(b) except a sum in my TIAA Traditional "fund". I currently receive a small monthly amount from my TIAA Traditional "fund" (part of the 403(b), and will continue doing so until I can start drawing it down t age 70 (I think).

I have had to complete a W-8BEN on occasion but other than erroneous tax withholding early on, I've never had US tax withheld on payments from my 403(b). (I do pay UK income tax on these payments via self-assessment, though). I've also received payment for visiting scholar work, similarly free of US tax withholding via a W-8BEN form, and similarly taxed by HMRC via UK self-assessment..

Maybe I'm comparing apples and oranges, but thought I'd put it out there.
Just for clarity, is your US income below the tax free deduction by chance? Being a USC myself I don't really know the rules for non-resident aliens so am curious.

For the 2024 tax year, the standard deduction is $29,200 for married couples who file jointly and $14,600 for both single filers and married filers who file separately. The standard deduction for heads of household is $21,900.
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Old Dec 20th 2023, 2:25 pm
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Default Re: Renouncing USA citizenship

Originally Posted by durham_lad
Just for clarity, is your US income below the tax free deduction by chance? Being a USC myself I don't really know the rules for non-resident aliens so am curious.
Yes, my US income these days is less than $1,000 p.a. - but when I was drawing down my 403(b), the annual amounts were considerably more. I essentially used that income to replace my UK work salary, which I ploughed almost entirely into workplace pension, AVCs and SIPPs (it was a roundabout way to effectively "transfer" my US occupational pension into a UK pension - all perfectly legal and above board.)

[Edited to add: I just checked my records, and over 2 US tax years, I definitely withdrew more than the US tax free deduction. I do remember they automatically withheld tax from some of the withdrawals during the first year and I had a real pain of a job to get it back, but in the second year I received it all without any US tax withheld.]

Last edited by dunroving; Dec 20th 2023 at 2:31 pm.
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Old Dec 20th 2023, 2:35 pm
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Default Re: Renouncing USA citizenship

Originally Posted by dunroving
Yes, my US income these days is less than $1,000 p.a. - but when I was drawing down my 403(b), the annual amounts were considerably more. I essentially used that income to replace my UK work salary, which I ploughed almost entirely into workplace pension, AVCs and SIPPs (it was a roundabout way to effectively "transfer" my US occupational pension into a UK pension - all perfectly legal and above board.)

[Edited to add: I just checked my records, and over 2 US tax years, I definitely withdrew more than the US tax free deduction. I do remember they automatically withheld tax from some of the withdrawals during the first year and I had a real pain of a job to get it back, but in the second year I received it all without any US tax withheld.]
Great, thanks for that.
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Old Dec 22nd 2023, 9:25 pm
  #21  
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Default Re: Renouncing USA citizenship

Originally Posted by dunroving
Hope I'm not throwing confusion into the mix, but as a non-US citizen, non-US resident, I don't file a US tax return. I left the US in 2006 and have lived in the UK ever since. Since returning, I have gradually drawn down all of my 403(b) except a sum in my TIAA Traditional "fund". I currently receive a small monthly amount from my TIAA Traditional "fund" (part of the 403(b), and will continue doing so until I can start drawing it down t age 70 (I think).

I have had to complete a W-8BEN on occasion but other than erroneous tax withholding early on, I've never had US tax withheld on payments from my 403(b). (I do pay UK income tax on these payments via self-assessment, though). I've also received payment for visiting scholar work, similarly free of US tax withholding via a W-8BEN form, and similarly taxed by HMRC via UK self-assessment..

Maybe I'm comparing apples and oranges, but thought I'd put it out there.
It's the situation I am in and I haven't filed a tax return on the small amount of interest I've been getting in the US (circa $2Kpa), just added it to my UK self assessment for the purposes of paying tax.

I haven't started on my 401k, but I must admit I was not expecting to have to file a tax return in the US for it.
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Old Dec 28th 2023, 2:20 pm
  #22  
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Default Re: Renouncing USA citizenship

You may want to invest a little money and time in seeking the advice of a UK/US tax advisor. My understanding is that as a NRA you will be taxed at a 30% withholding rate, and depending on which country you live in you would then look to the treaty position to see if you get any relief. The UK tax treaty with the US allows the NRA to claim it all back.by filing a NR tax return at the end of the year. Usually you would have submitted a W8BEN to the organisation you are receiving the funds which tells them that you are a NRA and to not withhold anything but sometimes they do it anyway ( that's where the NRA filing comes in) I beleive you have to file a W*BEN every three years but as I said earlier it might be best to seek professional advice as this is just my understanding and i am not in any way shape or form a tax expert. Please do not take any part of this post as tax advice - merely my understanding and i may very well be wrong. The other card in the renouncement process is the dreaded 8854 - are you a covered expat question.
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Old Dec 30th 2023, 10:12 am
  #23  
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Default Re: Renouncing USA citizenship

Originally Posted by brokenhearted.
You may want to invest a little money and time in seeking the advice of a UK/US tax advisor. My understanding is that as a NRA you will be taxed at a 30% withholding rate, and depending on which country you live in you would then look to the treaty position to see if you get any relief. The UK tax treaty with the US allows the NRA to claim it all back.by filing a NR tax return at the end of the year. Usually you would have submitted a W8BEN to the organisation you are receiving the funds which tells them that you are a NRA and to not withhold anything but sometimes they do it anyway ( that's where the NRA filing comes in) I beleive you have to file a W*BEN every three years but as I said earlier it might be best to seek professional advice as this is just my understanding and i am not in any way shape or form a tax expert. Please do not take any part of this post as tax advice - merely my understanding and i may very well be wrong. The other card in the renouncement process is the dreaded 8854 - are you a covered expat question.
That was exactly my experience. Although I completed a W-8BEN, TIAA withheld tax and I had to file a tax return to get it back. All sounds fine, except that the withdrawals were early in the calendar year (to occur before end of the UK tax year) ... which meant that (a) all my calculations went to pot, and (b) I had to wait over a year to get the tax refunded (because Jan/Feb was the beginning of the US tax year). My interactions with TIAA staff fell far short of being acceptable - they just regurgitated the same song about filing a tax return to get it back. I think it took the best part of a year before they finally stopped withholding tax from my withdrawals. In the meantime, my finely-calculated UK tax strategy went completely to pot.
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Old Dec 30th 2023, 11:26 am
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Default Re: Renouncing USA citizenship

Originally Posted by dunroving
In the meantime, my finely-calculated UK tax strategy went completely to pot.
I've certainly been there and done that.
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Old Jan 17th 2024, 12:49 am
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Default Re: Renouncing USA citizenship

I’m beginning to wonder if there any particular benefits to remaining a USC or green card holder, other than being able to go back if unable to settle in the UK? I will be moving back to the UK this summer after living in Florida since 1999. I have a green card and have been contemplating applying for citizenship but maybe I would be wasting my time and money. I have an IRA and will claim SS in two or three years, so assume I will have to pay US taxes regardless. I remember reading somewhere that it’s easier to claim your SS if a USC but maybe that’s not true.
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Old Jan 17th 2024, 10:27 am
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Default Re: Renouncing USA citizenship

Originally Posted by Frankie0089
I’m beginning to wonder if there any particular benefits to remaining a USC or green card holder, other than being able to go back if unable to settle in the UK? I will be moving back to the UK this summer after living in Florida since 1999. I have a green card and have been contemplating applying for citizenship but maybe I would be wasting my time and money. I have an IRA and will claim SS in two or three years, so assume I will have to pay US taxes regardless. I remember reading somewhere that it’s easier to claim your SS if a USC but maybe that’s not true.
You will need to file a US return once you start receiving SS and making IRA withdrawals but you probably won't pay any US taxes for a couple of reasons. Your SS will be taxed exclusively in the UK so the taxable box on the 1040 (Line 6) should show zero, and if you limit your IRA withdrawals to less than your IRS deduction then you won't pay any US tax on them. You will have to pay UK taxes on your IRA withdrawals unless you convert your IRA to a Roth IRA before moving back, pay the US taxes due and then it is tax free in both countries. I did this over a period of 6 years starting the year I retired at age 55. (I moved back at age 61). The US-UK tax treaty states that any pension income that is tax free in one country is also tax free in the other, which is why Roth IRAs are tax free in the UK, and also the non-taxable portion of SS is tax free in the UK. My wife is receiving her SS and at our income level 15% of that would be tax free in the USA so she only gets taxed on 85% of her SS in the UK - you may find that a larger portion of that is tax free in your case.

I don't believe it is any more difficult claiming SS as a non-citizen and you can claim it through the Federal Benefits Unit (FBU) at the US Embassy in London. In fact when my wife claimed hers through them the process was almost done and dusted (telephone interview) when they realised that she was a US citizen. The very helpful agent said that it made no difference whether or not she was a USC to the amount she was going to receive but asked her to send in her US passport as proof of citizenship so they would have it recorded in their system. We did this a couple of weeks later for both of us, as I was also not recorded in their system as a USC, and our passports were returned within a couple of days. Silly me, I assumed that because the IRS knows that we are citizens I assumed that the SSA knew as well.

Last edited by durham_lad; Jan 17th 2024 at 10:29 am.
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Old Jan 17th 2024, 9:06 pm
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Default Re: Renouncing USA citizenship

Originally Posted by durham_lad
You will need to file a US return once you start receiving SS and making IRA withdrawals but you probably won't pay any US taxes for a couple of reasons. Your SS will be taxed exclusively in the UK so the taxable box on the 1040 (Line 6) should show zero, and if you limit your IRA withdrawals to less than your IRS deduction then you won't pay any US tax on them. You will have to pay UK taxes on your IRA withdrawals unless you convert your IRA to a Roth IRA before moving back, pay the US taxes due and then it is tax free in both countries. I did this over a period of 6 years starting the year I retired at age 55. (I moved back at age 61). The US-UK tax treaty states that any pension income that is tax free in one country is also tax free in the other, which is why Roth IRAs are tax free in the UK, and also the non-taxable portion of SS is tax free in the UK. My wife is receiving her SS and at our income level 15% of that would be tax free in the USA so she only gets taxed on 85% of her SS in the UK - you may find that a larger portion of that is tax free in your case.

I don't believe it is any more difficult claiming SS as a non-citizen and you can claim it through the Federal Benefits Unit (FBU) at the US Embassy in London. In fact when my wife claimed hers through them the process was almost done and dusted (telephone interview) when they realised that she was a US citizen. The very helpful agent said that it made no difference whether or not she was a USC to the amount she was going to receive but asked her to send in her US passport as proof of citizenship so they would have it recorded in their system. We did this a couple of weeks later for both of us, as I was also not recorded in their system as a USC, and our passports were returned within a couple of days. Silly me, I assumed that because the IRS knows that we are citizens I assumed that the SSA knew as well.
Thanks so much for this very helpful information, much appreciated!
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Old Jan 31st 2024, 11:42 pm
  #28  
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Default Re: Renouncing USA citizenship

Originally Posted by Slalomdude
Now that the US has lowered the cost back down to a realistic $450 has anyone reconsidered renouncing. I am retiring back to the UK after 25 years in Florida. The cost and hassle of annual tax filings to the US and the restrictions from UK investment companies on US citizens has me thinking about my wife and I renouncing. I wouldn’t do it for a few years as I would want to keep the option of returning open if I can’t deal with UK weather etc. I have one adult child living on either side of the pond, but would probably be happy with the 3 month visitor option for when I want to visit the US.
My retirement will put me in the 40% tax bracket in the UK and would benefit from being able to explore the tax benefits of ISA’s.
Anyone else reconsidering now that’s its way cheaper
Wow - I was surprised to see this news so as I'd not heard..I decided to look to see if I could find a date of when this because or will become effective but from what I'm seeing online, supposedly the state department are still considering lowering it down to $450 - they've not actually approved the change and implemented it: https://americansoverseas.org/en/new...nciation-fees/

Is that everyone else's understanding?
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