Affordable Renunciation: Power of Recovery Rebate Credit

Jul 9, 2023

Are you concerned about the costs involved in renouncing your US citizenship or becoming tax-compliant? We have great news that can make this process more affordable. In this blog, we will explore the remarkable opportunity presented by unclaimed stimulus checks issued by the IRS during the COVID-19 pandemic. Learn how these checks have significantly alleviated the financial burden for many, making renunciation and compliance more accessible than ever before.

At our firm, we have witnessed firsthand the positive impact of unclaimed stimulus checks. Many individuals who were initially worried about the costs found relief when they discovered that they were eligible to claim up to $3,200 through these checks.

Understanding the Expenses of Renouncing US Citizenship

A. Government Renunciation Fee

Renouncing US citizenship comes with a government fee of $2,350, making it one of the most expensive renunciations among other countries. The fee includes administrative costs and the review process conducted by lawyers in Washington, DC. The US government considers the fee necessary for proper case review and approval. There have been discussions about potentially lowering the fee to $400, but it seems unlikely to happen in the near future.

B. Compliance Costs

Before renouncing their citizenship, expats must become tax-compliant. This means meeting certain requirements, including filing tax returns for the prior 5 years and 6 years of Foreign Bank Account Reports (FBARs). Achieving tax compliance is crucial, and failure to do so may result in penalties or other consequences.

Related: Being an Accidental American: A Tax Perspective

Our firm offers a comprehensive renunciation package designed to assist expats in becoming tax-compliant. For those who have failed to file tax returns due to a lack of awareness, we recommend taking advantage of the Streamlined Foreign Offshore Program. This amnesty program offered by the IRS waives penalties for those who were unaware of their tax obligations to the US.

The Window of Opportunity: Claiming Stimulus Checks

Stimulus checks, issued by the IRS during the COVID-19 pandemic, have provided essential economic relief. Every American has the right to claim these checks, which can be done as a recovery rebate credit on their 2020 and 2021 tax returns. It’s important to note that the amount you receive is subject to limitations, particularly for high-income earners who may receive a partial amount.

For US expats who have yet to file their 2020 and 2021 tax returns or claim their stimulus checks, there exists a short window of opportunity. Typically, the deadline to file these tax returns and claim the checks is April 15th, 2024 but as an expat, you have until June 15th, 2024 to meet this requirement. Once the statute of limitation expires, you can no longer claim the 2020 recovery rebate credit.

By seizing this window of opportunity and claiming your unclaimed stimulus checks, you can significantly lower the overall costs of renouncing US citizenship. The potential amount you can receive through the recovery rebate credit is up to $3,200. Considering the renunciation fee of $2,350 and the varying compliance costs, these checks can offer substantial financial relief.

To ensure accurate and compliant filing, we strongly recommend hiring a professional tax preparer specializing in US expat taxation. Their expertise will maximize your chances of claiming the full amount of stimulus checks you are eligible for, saving you time and potential errors.

Act promptly within the designated timeframe and seek professional guidance to optimize your financial benefits and ensure compliance with IRS guidelines. By claiming your unclaimed stimulus checks, you can confidently navigate the renunciation process with reduced financial burdens.

Our Renunciation Compliance Package is priced at $2,600. This package includes the preparation and filing of 5 years of delinquent tax returns and 6 years of FBARs, along with a certification statement. Additionally, it covers all necessary forms, regardless of the number of financial foreign assets or rental properties you have. We strive for transparency, ensuring that you won’t encounter unexpected charges. [Please note that there may be additional fees for specific forms if you own a foreign corporation (Form 5471), foreign trust (Form 3520), or invest in Passive Foreign Investment Companies (Form 8621)].

You might also be interested in: Exit Tax Explained: A US Expats’ Guide to Expatriation Tax




Written by

Kasia Strzelczyk, EA

A certified accountant and IRS enrolled agent with over 8 years of experience working with US expats. With a deep understanding of the unique financial challenges faced by expats, Kasia is dedicated to helping clients navigate complex tax laws and regulations.

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