Dual Citizens Subject to U.S. Tax Reporting

U.S. Citizen by Birth or Through a U.S. Citizen Parent

An individual who is born outside of the United States may be a U.S. Citizen at birth if either of their parents are or were U.S. citizens.  The U.S. laws have changed over the years, but an individual can be born in a country outside of the U.S., having never even been in the country, yet still be considered a U.S. citizen. In other words, an individual can be a U.S. citizen without ever taking any affirmative action to become one.

There are also cases where people are born in U.S., but don’t consider themselves U.S. citizens.  This could occur if their Non-U.S. citizen parents were travelling through the United States at the time of their birth.


Why Should People Living Abroad Care About Their U.S. Citizenship?

The United States is one of the very few countries that taxes its citizens on worldwide income.  Although there are certain credits and exemptions available for U.S. citizens living abroad, they are still required to comply with all annual rules and regulations established by the U.S. and the Internal Revenue Service. For example, a U.S. citizen living abroad may be required to file the following forms:

For example, the typical U.S. citizen living abroad might have to file the following forms:

  • Form 1040
  • Form 114 Foreign Bank Account Report – FinCen
  • Form 8938 Statement of Specified Foreign Financial Assets
  • Form 5471, information Return of US Persons With Respect to Certain Foreign Corporations
  • Form 8865, return of US Persons With Respect to Certain Foreign Partnerships
  • Forms 3520 and 3520A concerning foreign trusts


Are You an “Accidental U.S. Citizen”?

Many U.S. citizens living abroad are unaware of their U.S. tax filing obligations until a major event occurs.  This could be the death of a U.S. citizen parent, or an inquiry from a U.S. treasury or governmental office.  The latter case is gaining in frequency, due to the expanding FATCA program.  FATCA is a United States initiative that requires certain financial institutions to report information about U.S. account holders, which has resulted in the discovery of U.S. citizens living abroad who are obligated to comply with U.S. tax laws.


Live Abroad and Need Guidance Concerning U.S. Tax Reporting?

Freeman Tax Law specializes in all international tax matters – from Federal tax compliance to international wealth and estate planning.  If you have any questions or concerns regarding your finanical or tax obligations, please contact us to schedule a free, no-obligation consultation.