To NOT want my children to get US passports?

(139 Posts)
Daffodilly Sat 16-Feb-13 20:45:25

DH is American (by birth) but also has British citizenship. We met, live and had our children in UK. No current plans to move to US.

Children are entitled to get US passports as well as UK ones. But my understanding is that at same time they are issued with a social security number too and being US citizens has implications for future tax situation. US citizens are taxed on worldwide income, regardless of where they live.

I feel this could be a huge burden to place on our children when they may never choose to live or work in US. DH places significant value on US citizenship for them.

megandraper Mon 18-Feb-13 11:00:43

I had dual US and UK nationality from birth. I eventually gave up my US passport in adult years. This was a difficult and expensive process, and you can't just choose to give it up - you must be able to prove you have one of a few specific reasons. I did not give it up for tax reasons, but for other personal reasons (it is illegal to give it up for tax reasons). You must also pay an one-off 'expatriation tax' on all your property/savings above a certain amount.

Yes, you have to file a tax-return every year. It is very difficult to understand all the rules and I paid a firm to do it, which wasn't cheap, and I always had tax to pay although my income wasn't unusually large (I had a good professional job). I received an inheritance during this time, and had to pay a chunk of it to the US government, over and above the chunk I also had to pay to the British government. Although there are reciprocal tax agreements, that doesn't mean you don't have to pay - your tax has to be worked out by both sets of rules (which are completely different, and even operate on different time-scales - the US tax year is Jan - Dec) and then you can set most of your British tax payment against your US one.

For example, if you have investments in the UK like unit trusts - in the UK you don't have to pay tax until you cash an investment in (and see how much it has made or not in profit) - however in the US you have to pay tax every year on the 'notional' profit - how much you would make if you were to cash it in, even though you haven't. The admin can be nightmarish.

It is something to think carefully about, IMO. If you do it, make sure that when your children become adults, they familiarise themselves carefully with all the rules, and the process for giving up the passport (which is not straightforward). If they do well in life, they may find it expensive and difficult to give up the passport later on.

Knowsabitabouteducation Mon 18-Feb-13 11:09:12

I think missingmom might be referring to Selective Service

marfisa Mon 18-Feb-13 11:12:12

Well, that is very illuminating, bedhopper. It sounds like the US tax system was a nightmare for you, and that I have found it easy only because I have never had to deal with inheritance, investments, etc.

But I HAVE had to deal (via my DH) with the nightmare of wanting to come and go from the US freely, and not being able to. That was dreadful as well.

It sounds like you're damned if you do, damned if you don't. The OP's DC can either opt for potential future tax hassle, or potential future immigration hassle.

The main point I would reiterate, though, is that the OP can't just wait and let her own DC decide to take up citizenship later in life - if they visit the US while they're young on a UK passport, then the path of US citizenship is effectively closed to them.

I also think that your decision to renounce citizenship, bedhopper, is quite unusual. I live in a city where there are loads of people with multiple nationalities and have never met anyone thus far who thought dual citizenship wasn't worth having.

marfisa Mon 18-Feb-13 11:13:02

Knowsabit: Oh, OK, maybe so. But selective service isn't the same as conscription.

megandraper Mon 18-Feb-13 11:35:46

I know some people who have dual nationality and don't fill in US tax returns - they don't have social security numbers though because they weren't issued when I was born (I worked in the US for a while, and therefore flagged myself up to their attention and got a number). But I believe babies born now get given a number at birth (or when passport is issued) so you couldn't depend on not being flagged up.

You can only make the best decision you can - and make sure your kids pay attention to the ramifications when they are old enough to think about it for themselves.

megandraper Mon 18-Feb-13 11:37:18

Oh - and I would say that it is a different situation if one of the child's parents has US nationality - then it's a part of their heritage, and is perhaps more compelling to go for the passport. In my case, it was a bit of an accident really, and I had no ties to the US.

GreenLeafTea Mon 18-Feb-13 13:40:49

There was a discussion recently among my American friends who have dual-national kids and they said that the non-American partner should go through American immigration as they want families to go through together. If you travel a lot to the states it may be worth considering. They all file US tax returns every year.

Ah good point Tasmania!

I agree with a lot of what marfisa wrote as well. Yes your kids may end up with complicated tax problems far down the line, but A) they will then presumably be able to afford accountants to sort it out, and B) how likely is this? Only a very small percentage of people make that much money.

And the tax inconvenience might be far outweighed by skipping all the inconveniences of immigration hassles (which I've been dealing with the past eight years, it's no joke either). I would far rather deal with the IRS than UKBA again!

Do you really think that having an American dad, your kids will never want to visit America? Maybe go live there for a while, work there on their summer holidays?

And no, there isn't any conscription. Men have to register with the Selective Service, which theoretically means someday they could be drafted, but no one's been drafted for 40 years and honestly it's not going to happen. They're always talking about getting rid of the SS but they sort of have to keep it for symbolic reasons.

Teapot13 Mon 18-Feb-13 16:18:29

I'm an American living in London; DD has multiple nationalities.

You really need to take appropriate advice yourself -- there is a lot of good advice on this thread, and a lot of bullshit, and apart from the obvious posts you'll probably have a hard time telling which is which. (It depends so much on your individual situation, timing of events, etc.)

HitWithTheYankStick Mon 18-Feb-13 16:45:14

To those people who think that the tax issues are a problem for the mega rich only who can afford accountants, who cares about them, yada yada yada.

I am at the £100k threshold at this point in my career and it's not fun paying tax out of your net income to a country you haven't lived in for 20 years.

I didn't expect to be in this situation, at the start of my career I wouldn't have predicted it.

It's not hard to get here, though, when you live in London and work in a city geared job, and by the way - that exchange rate malarky doesn't help. You can easily be on a salary which looks huge in USD terms with an exchange rate that favours Britain but isn't mega bucks when you're bringing up a family in London. The starting point for the discussion about US expats abroad who resent IRS obligations is that they're mega bucks hedges in Mayfair stashing it all in Swiss accounts. Or worse that you're running like an online gambling site out of Costa Rica into the US. The reality for many people couldn't be further from the truth.

Alternative Minimum Tax hits a lot of people. It means that even if you've paid your tax at the highest tax rate in the jurisdicition where you live they only allow you UP TO a certain percentage of your allowable deductions. It's a high percentage but the amount you can end up paying could - trust me - end up being a month's net wages.

But that's okay, cause I'm 'rich' right? I can get along fine with one month's less pay. It's a good use of my family's resources, for sure, filling the coffers of a country where none of us live instead of for example paying into a retirement fund or saving for my children's education.

The one time I needed something when I was abroad (my passport was stolen) they made the situation more difficult than it needed to be.

So the upshot OP is that I would think very very seriously before going down the route of getting your children US passports. Don't feel bad deciding NOT to do it. I wish we had reconsidered it for our children. I wish I'd at least researched whether they could just wait and do it as adults when it was clearer what they were going to do with their lives.

I hadn't really grasped that if they never live in the US or only live there for a short period of time as adults they won't be able to pass the citizenship on to their children. So, I feel like I've ended up saddling them with obligations for a lifetime which may result in them having to go through a complex renunciation process later but NOT with all of the benefits that would accrue, if you see what I mean.

HitWithTheYankStick Mon 18-Feb-13 17:02:00

How old are you children?

Did you not go to the embassy when they were born and get a Consular Certificate for an American citizen Born Abroad? It's called something like that. They advise you to do that as soon as possible. The rules have been changing though. When my friends children were born ( one 2 yrs before mine) you didn't have to get a social security number. I think it was still optional with my first but with my last you had to.

I mean to be frank - if you haven't been to the embassy yet for that certificate and and they're a few years old now...I'm not sure it makes that much difference if you leave it a few more years til they're older.

But I would call them and see. Get the rundown around what it means to wait. A good friend of mine is a US citizen and her children don't have passports. They've been to and from the US as well. They are still 'allowed' to get them.

The foreign income exclusion this year is $95,000, or about £60,000.

That's the top 5% of wage earners. So yes, I think it's fair to say that your children would be lucky to get into that bracket.

I'm not saying 'soak the rich', I'm just saying the odds that you will end up having to pay anything -- especially anything onerous -- are not enormous. I know loads of Americans abroad, I don't know anyone who has to pay taxes.

freetoanyhome Mon 18-Feb-13 17:09:25

'If your DC don't travel into USA on US passports when they are entitled to US citizenship, then they could end up being forced to forfeit US citizenship later. You may be depriving them of an option. What's more, they could be held guilty of a criminal charge (go to jail penalties) for travelling into the USA without US passport. '

Really? My daughter has dual nationaily through her US father. She has a US passport that expired when she was 14 but is finding it impossible to renew as she has a UK birth certificate and no access to her biological dads birth certificate or US passport. After being given the run around by the Embassy (who are extremely unhelpful) she gave up trying to renew her US passport and intends to start university there in September and enter the US on her UK passport. She does have a social security number and the expired passport but at the interview to renew they wouldnt do it without age succession photos, her dads birth certificate and current US passport (not possible). WTF can we do?

theoriginalandbestrookie Mon 18-Feb-13 17:20:30

Phew really worried after reading this thread, but I'm nowhere near the £60k bracket.

Hitwiththeyankstick I don't disagree with a lot of what you say, but I googled to see what percentage of the population earns over £100k and according to the result I got it was less than one percent. The average salary for London was apparently £34k. Therefore whilst you may feel that you are not a high earner or it is inflated because of the high costs of living in London the reality is that you are in the top 1% of wage earners.

Wether that makes it ethical for you to have to pay tax to a country you haven't lived in for 20 years is a whole other matter, but it absolutely does make you the logical target for the attentions of the IRS.

Knowsabitabouteducation Mon 18-Feb-13 17:22:29

Yank,

It's the Consular Report of Birth Abroad (CRBA). We did this when our kids were newborns, but ISTR that you have until they are 18 years old.

lljkk Mon 18-Feb-13 17:23:59

The rules change all the time, FREETO, the penalties may not be severe, I hope for her sake some of my info is dated. Your situation sounds terrible. I wonder if you could get hold of her dad's birth certificate thru the district where he was born (it's a public record document). And if you could document that he had spent 5 years after his 14th birthday resident in the USA (SS records, employment or voting records...?).

Knowsabitabouteducation Mon 18-Feb-13 17:24:31

Freetoanyhome,

You can order a copy of her father's birth certificate from the Live Statistics office of his birth state.

lljkk Mon 18-Feb-13 17:26:34

FREETO is her dad completely in-communicado? Could you find out his current passport number? They should be all they need.

HitWithTheYankStick Mon 18-Feb-13 17:28:45

I know. They've got to pay for all that free health care and generous maternity leave coverage one way or another! wink

I seriously don't resent a penny of the tax I've paid in the UK - 50% rate, bring it on. I am grateful for living here and delighted my chidlren are growing up here. I think if I were emotionally more invested in the US (and I think I'm in a minority of expats who feels the way I do, probably 1%!!) I would be less upset about it all.

Knowsabitabouteducation Mon 18-Feb-13 17:29:45

Another option is to see a US immigration attorney. There are lots in London and beyond (the embassy has a list). They will be able to sort this out for you.

The American authorities want your daughter to take up her rightful residence in the US and save her from the rest of the big bad world.

freetoanyhome Mon 18-Feb-13 17:32:22

I dont even know where he was born. Her plan was to enter as a UK student then just renew her passport at a local office which is apiece of cake. Its ironic that the Embassy refuses to recognise her as a citizen but the border police will pounce on her for being one as soon as she lands.

digerd Mon 18-Feb-13 17:34:59

Kissassangel
That is interesting, I read that Germany was the only country that did not allow duel citizenship. Perhaps it was meant in the EU .I was a british citizen while living in germany with my german DH, but I would have had to renounce it if I wanted german citizenship. My DH would have got duel UK if he had lived here, but the german laws would not recognise the british part.

Knowsabitabouteducation Mon 18-Feb-13 17:38:06

Germany is quite extreme.

The US and the UK both allow you to have other citizenships, but they only really care about their own. The exception to this is that neither country will provide consular services when you are in the country of your other citizenship.

Communist state?!?

I have had discussions about abortion with my American friends and my kids don't say the pledge at school everyday. My kids will have to register when they are 18 but there isn't conscription.

Sounds like a lot of generalisations based on one experience.

I love living here. I love having two cultures. I am very grateful that my parents made it possible for me to have my cake and eat it. OP's kid may well appreciate it too in the future. I am trying to bring my kids up to value both their heritages and see the good in both and there is much good in both.

Really as expensive as it is having two sets of passports it is small change compared to the benefits of having another citizenship and one that millions of people around the world would love to have.

Freeto, when I was trying to find out about expeditious naturalisation the embassy was less than useless and it took some effort to even find someone who knew what it was. I ended up calling someone in Washington who was extremely helpful. I suggest you skip the embassy and get your info elsewhere.

If you can afford it it might be worth enlisting the help of an attorney who specialises in such issues. We found it really helpful when getting green cards sorted out for my family. If you find a good one they can really be worth their salt.

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