Welcome Home

Taxes!  This post is about taxes.  If that statement makes you feel queasy or if your eyes started to glaze over while reading that last sentence then I will understand if you want to click away and read something more pleasant.  If you are willing to hang on and see where I am going with this then great; just don’t forget I warned you.

But first, am I the only one who wells up a bit when I cross the border into my home country (mine being Canada) and the customs official says, ‘welcome home’?   It affirms for me who I am and where I belong.  It reminds me of how proud I am to belong to Canada. That sense of belonging has gone double for my husband who is lucky enough to have dual citizenship.  He was raised in Canada and I think of him as primarily Canadian but I will never forget how surprised I was when we went through customs in his home country and he puffed up with pride when the customs official said, ‘welcome home.’   Mr. Flapper Pie is proud of where he came from.  He looks for opportunities to talk about where he was born.  He is quick to defend his birth country’s people and its government.

This must all be told so that you can understand that it has been a very hard week in our household as my husband has come to terms with the realization that he will likely have to renounce his citizenship of birth.

And this is where the taxes come into the equation.  We found out this week that my husband is required to file tax documents that he was unaware of.  These are not your run of the mill tax documents; they are extra documents to do with foreign income.  Because he had not filed them in the past he will be forced to pay very hefty penalties.  As well, these documents are proving to be very complicated and in order for my husband to avoid more major penalties we will likely need to hire a tax lawyer.  Needless to say the bills are mounting.  To be clear, Mr. Flapper Pie has lived in Canada since he was six months old.  He is an honest tax-paying citizen in Canada.  These taxes are not from Canada but from his country of birth where he has never worked or earned income nor holds any assets.  He has never even lived there outside of the first few months of his life.  And yet, the tax man cometh.  There are other major tax implications that have recently come to our attention that involve our ability to save for retirement and the taxes that might be due at my husband’s death.   These long term tax issues are for weightier then the filing of some overlooked tax documents but these are issues that are far too complicated to get into here.  Simply put, because my husband was born in one of only two countries in the world to tax world-wide income my family is facing an inordinately large tax burden.

I am sure many of you will have figured out that my husband was born in the United States.  Many of you are probably familiar with the major tax problems faced by US citizens living abroad.  My husband’s tax problems are small compared to many Americans living all over the world.  This is a very big issue for US expats.  The web is full of the stories of expats who have had major issues with the IRS not because they were trying to avoid taxes but because they really didn’t know and understand the tax code and its implications for foreign based citizens.

My husband will pay the penalties and will make sure he is in good standing with the IRS but because of the way the US taxes its foreign based citizens my husband will likely have to renounce his citizenship of the United States.  As things stand right now, the only way for our family to have a reasonable hope of financial stability in the future is for Mr. Flapper Pie to abandon a major piece of his identity and to renounce.

I watched my husband grieve this week.  I stood by and watched my husband who seemed so sad at first become so angry.  The country that he loved and thought he was part of turned its back on him.  There is really no choice for him to make.  If he maintains his citizenship he is jeopardizing not only his own but also my ability to retire at any point in the future.  Under other circumstances, he wouldn’t consider giving up a privilege that so many other people would give so much to have.  He feels bullied into making this choice.

I find myself wondering what it would be like to have to give up citizenship.  I know that I would be devastated if I could no longer be Canadian.  Yet, people all over the world do give up the nationality of their birth.  They do so happily and yet maintain their dual identities.  Unlike many refugees, my husband can go to the US to visit his parents even if he does renounce his citizenship.  He can still claim to be born in the US.  He will always have that piece.  But maybe it is a bit like a marriage certificate.  Having the paper, being official, is different than just living together.  Never again will the border guard welcome him home when we cross into the United States.

We here at MotherSugar (both contributors and readers) are an international bunch.  Amongst us there must be many people who had to give up one citizenship for another.  Many of you are American expats.  Several of you are foreign nationals working in the US.  Some of you are probably facing similar US tax issues.  What do you think?  How was it to give up your citizenship?  Were you sad or indifferent? How much of your identity is connected to where you are from and is that dependent on being a citizen?

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13 thoughts on “Welcome Home

  1. What’s the second country?

    My husband is Australian and became Canadian as well last year. We live in Canada, and he wanted to be able to vote, so it was a fine choice. He never would have done it though, if he had had to give up his Australian citizenship.

    • He is dual Canadian-American. How lucky for your husband to hold citizenship in those two countries. We always saw my husband’s dual citizenship as a benefit and for people like your husband it probably is. Unfortunately for dual American citizens that status is no longer beneficial unless you live in the US.

  2. FP, your family has been hit with quite a blow on many levels! It sounds like you’ll be okay, but I can’t imagine having to pay a life’s-worth of taxes. Especially to a country I’ve never really lived in. And I do feel for Mr. FP giving up his citizenship. I’ve never really thought of myself as nationalistic, but I would probably struggle with giving up my Canadian citizenship, if I had to.

    Hugs from me! xoxo

    • Thanks BH. The truth is he probably doesn’t owe any taxes. It is the penalties for not filling a certain set of documents that we are being hit with right now and the expense of having professionals deal with these documents.. The bigger issues have to do with the taxation of earned interest (including in RRSPs). The tax stuff is dry.
      It is funny you say you are not nationalistic. Do you really mean that? I am so passionately Canadian. I recognize that this country isn’t perfect but I still love her dearly.

      • Oh I see! Sounds terribly complicated and infuriating. 🙂

        Nationalism – it’s not so much about my feelings about Canada, but the concept in general. Blame a Colonial and Post-Colonial literature class I took once – but I guess I see a lot of nasty things that have been done in the name of “love of country”. So I tend to be cautious about it. I do feel very lucky to have been born in Canada, and as far as countries go, I think it’s a pretty good one. It’s true that I feel relieved coming through customs after travelling, but I think that has more to do with being familiar with the language, culture, knowing where things are, etc., than anything else. That’s all intellectual, though. On another level, I do get teary-eyed during the Olympics and I did used to secretly love a certain beer commercial, so I’m definitely not immune to national pride.

    • OK, I think that we feel similarly about nationalism. Patriotism can devolve into some pretty nasty things. Still, I do have deep pride in where I am from and the accomplishments of other Canadians.

  3. Flapper Pie, that is one bitter piece of apple pie. Fine people exorbitant amounts of money for not being intimately acquainted with tax law in a country we left at six months of age? I am so sorry for both you and Mr. FP and I hope that your post crosses the desk of at least one person of influence. For a country that places so much emphasis on the importance of patriotism it is ironic that the policy is driving people to renounce their citizenship. I think being forced to renounced my citizenship as a result of some dry sub-article of the tax law would make me want to renounce my identity along with it. “It’s tax law, you can’t take it personally,” people would tell me. But no citizen wants to believe their homeland would break them financially while people like Warren Buffet are begging to be taxed. But that is treading far too close to the morass of political debate. Suffice to say, I am sorry that you are bearing this unexpected financial burden and also sorry for Mr. FP’s personal loss.

  4. Good lord! FP, what a frustrating and complicated situation. Every time I do my taxes, I am at least halfway paranoid that I’m missing a step or a form or the right check in the right box– the whole process seems so insanely opaque and convoluted, especially considering every single person is required to know how to do exactly the right thing and follow volumes worth of incomprehensible laws. Your situation sounds nightmarish– I’m so sorry.

    I only have one passport, so I cannot speak to your questions about renouncing citizenship. Like you, I feel very tied, in a private way, to my citizenship, and I think I would probably feel quite disconnected if I were to have to give it up for some reason. As backwards as things can often seem in the US, and as much work as there is to do in many crucial areas, I do feel lucky to have been given a few fundamental rights just by being born here– and those things, which have everything to do with citizenship, are certainly precious to me.

    In fact, I’ve always wondered about dual citizenship, about how that might work and feel. (Perhaps I’ve also always been a little jealous of people who have two different passports to flash to get them in the faster lines on both sides of customs.) Does a dual citizen vote in two countries? Have twice the rights and responsibilities? Is the dual citizen able to choose from everything that both countries have to offer? I’m so curious.

    • La Z: Typically, the dual citizen must commit to one country at a time. So you enter Canada as a Canadian, you follow Canadian rules. You then go to france: if you show your Canadian passport, you come in as a Canadian, a tourist. You have no french rights. But if you show your French passport, then you follow those rights and rules but cannot take advantage of any Canadian touristic priviledges. It’s like choosing which hat to wear: you can’t really where both at the same time. The American is a special case though, because technically I think you are not supposed to have another citizenship. And because they tax world wide income, you are always paying for that citizenship whether you have another one or not. this is different to many other countries. Now, if you grow up in the US, you learn this. But in Flapper’s hubby’s case, how could he have known?

      tha tyou hav

      • The US allows dual citizenships but you cannot enter the US with any other passport than your US passport. So if you are in the US you are American, period! Mr. FP has been remiss here too. He has not had a US passport in over a decade but we still go back and forth over the border as Canadians. Despite the law, he has never been stopped at the border and the border guards regularly welcome him home when they see his place of birth on his Canadian passport.

  5. In my profession, I’ve met a lot of Americans, born and raised, who have struggled with this set up of going abroad and having continual tax commitments. But of course, that is still very different to what is happening to Mr. Flapper Pie. I’ve thought about it, I’d hate to give up my citizenship. Did you know there was some talk about Canada doing the same as the US, taxing world wide income? That would affect me significantly. I am hoping never to have to make the choice. My inlaws often ask if I will get my Belgian passport, and even that seems odd to me, like I’m splitting loyalty. Our kid will have both though no matter what- he will be lucky. But I hope that wherever he lives, he’ll find the same attachment to my native land as Mr. Flapper Pie has for his.

    • The US and Canada just entered into talks to negotiate the sharing of tax information of citizens living in each country. To be clear, the US would get info from Canada about Americans in Canada and vice versa. Some people feel that this may be an indication that Canada is looking more seriously at citizenship based taxation. I’m no expert; I really don’t know. In my completely uneducated opinion it seems crazy to do taxes like this in a world that is so globally connected.
      I thought that you had begun the naturalization process for Belgium? I thought that is why you had to miss your graduation.

      • No, I have permanent residence here, but not citizenship. I can apply for citizenship after living here for 4-5 months or so, I think. Used to be I was automatically eligible as a Belgian spouse, but they took that away.
        given the choice, I’d rather stay Canadian!

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