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  1. #1
    Join Date
    Oct 2011
    Posts
    1

    Default IRS Form 8854 and Renunciation

    Hi EL,

    I am an expat living in China for 7 years.
    I have filed taxes every year up until 3 years ago.
    I just forgot to do so.

    I've also had a bank account in China for the entire 7 year duration.
    I mostly use it to make funds transfers for a family relative, so the funds inside are not technically mine, nor is it income, nor have I reported it.

    I just found out that even though its not income, you are still supposed to report these funds.
    I didn't come forward under the new program that just ended, because there is no way I would be paying a penalty of the funds in the account since they arent mine to begin with.

    Now, I want to renounce the citizenship and will be getting a St. Kitts passport soon.
    I know that I will have to file the past 3 years of taxes, which I will do accurately, as well as the 8854 form.

    I am thinking that an audit will likely happen as a result of the 8854 form and they will find out about the bank account.
    However, I will maintain that these funds were not mine and I was just moving them around for a relative. I guess that will have to be a something I need to try to prove.

    I was wondering if there was a better way to avoid this altogether.
    For example, if I were to cancel the bank account and transfer the funds back to my family relative and then wait 5 years then renounce, would I be in a better position because the previous 5 years, I would have not had any accounts in my name?

    Thanks,
    John

  2. #2
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: IRS Form 8854 and Renunciation

    As I understand it, you have already past the required declaration filing. Therefore you are in the penalty phase. You need to consult the IRS.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: IRS Form 8854 and Renunciation

    You need to discuss your situation with your accountant. Your accountant should be able to help you correct past returns, submit the returns you failed to file, and advise you about the account based upon the amounts at issue and the manner in which you managed and used the funds.

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