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.

Nigglenaggle Sat 16-Feb-13 20:47:54

Probably I am totally wrong about this, but I thought that your children chose one or the other once they came of age at 18yrs, and only have dual nationality until then, so shouldnt be an issue?

MrsFionaCharming Sat 16-Feb-13 20:48:14

Would they be able to apply for them as adults if they decided they wanted them? If so, I'd leave it up to them, when they're older.

SoleSource Sat 16-Feb-13 20:57:41

I agree with Gribbet123.

HollyBerryBush Sat 16-Feb-13 20:59:55

Something that perhaps needs to be checked with the IRS rather than word of mouth?

There are reciprocahal agreements in place between countries for tax collection purposes.

FWIW my friends children have quadrupal nationality (now that is hedging your bets!) British/American?canazdian/German and they are only taxed in the UK - but they have all 4 passports

BobbiFleckmann Sat 16-Feb-13 21:01:06

nope - I'm a UK / US dual and the OP is quite correct. IF you renounce your US citizenship there's an exit tax based on the value of your assets. The obligation is to file a return annually and an obligation to pay additional tax on top of your UK tax (if you're resident in the UK not US; not sure about the reciprocal tax treaties if you're resident elsewhere) once your annual income exceeds about £80k
Are they entitled to take up the US citizenship once they're older if they want to live there? My brother took his up and lives there, I've only spent a brief period living / working there and so it's a bit of a millstone

DeepRedBetty Sat 16-Feb-13 21:02:09

I only know about dual Dutch and UK nationality. I really think you need to find a better source of info than us Vipers on this one. Not often I say that...

eachtigertires Sat 16-Feb-13 21:08:08

The expat forum usually has some good advice about this sort of issue.

Tee2072 Sat 16-Feb-13 21:10:57

They may not ever claim their citizenship if they travel to the US without US passports.

The threshold for paying US tax this year is apx $80,000 or about £60,000 per year.

There are many many benefits to US citizenship.

They do not have to choose one or the other at 18. They may have both.

Daffodilly Sat 16-Feb-13 21:14:48

Thanks for the replies. We have had some advice from the accountants that DH uses to do his US tax returns. They say children are citizens and liable whether or not we take up the passport - though I say how will the greedy American tax system know they even exist if we don't get them passports and they never choose to live there.

I think there is a time limit on how long they can apply, or at least in a straightforward way (hence not waiting until adults). Used to be you could t be dual US and something nationality, but that has changed in the time DH has been in UK.

Gah it is all horribly complicated. I never should have married "foreign" ;-)

BobbiFleckmann Sat 16-Feb-13 21:21:29

it's a shag. An expensive one. ANd don't think it'll speed your way through the lines at JFK - they won't let you through the US passport line with the rest of them. I'm not convinced that the accountant is right about automatic citizenship for offspring of a citizen born out of the country - I thought dual nationality had to be applied for. The other thing to remember is that taking a minor US citizen out of the states is basically impossible following divorce unless the citizen parent agrees (assuming you did ever plan to (a) move there and then (b) get divorced)

i think it's a bad idea to get US passports unless you really have to, for the tax reasons. and at any time they can change the law.

most worrying is that uk courts will uphold US law so if the US courts decide you owe 5 billion $ in tax, the uk courts will enforce it.

wonderingsoul Sat 16-Feb-13 21:37:10

my children are half American. born in the UK. we had time register them as American and to get the social surcurty number..like you register births in the UK. which ex Dh never did so they are unofficially duel nationality if this helps.

BlatantLies Sat 16-Feb-13 21:38:22

Mmmm. Interesting...

DS2 was born in the US and has a US passport and a UK passport. I will have to do some more research on this as it looks like there, could potentially, have problems with tax implications in the the future.

This FT Article is a few years old but gives some useful info.

FairPhyllis Sat 16-Feb-13 21:47:54

If the children are US citizens I think they will be legally obliged, if they travel to the US, to enter and leave on US passports.

OP is correct about the tax situation and the kids will need to think quite carefully about the benefits of retaining citizenship when they are older. It might be worth it on the basis that it is fecking hard to get permission to work in the US. Otherwise I do not see many benefits of it for an EU citizen.

Gryffindor Sat 16-Feb-13 21:53:13

Yanbu. There are also implications in respect of the extra-territorial reach of some US legislation that may impact them. For example I am not able to hire a US person into my team because of US sanctions implications. the US is tightening this even further with the launch of FATCA next year.

However, if they ever wish to live in the US then the dual passports will of course be a massive advantage.

Knowsabitabouteducation Sat 16-Feb-13 21:58:39

They have to file US tax returns every year, but unless are very high earners, eg over £100k, they are unlikely to pay US taxes. Even beyond the $80k that you take off the top of your income, there is also credit against foreign taxes paid.

US citizen is very sought after!

littlemrssleepy Sat 16-Feb-13 22:21:03

That's a bit pants isn't it. I was reading about the changes to French tax law which seemed to suggest that if the French Government considers you resident for tax purposes (e.g if you own a holiday home there) then you will pay tax in France on all your income as well - even that not earned in France. So, by that definition, if your children were American Citizens who continue to live in UK and have some kind of dealings in France they will pay tax to 3 different governments. Presuming they are loaded to live such a lifestyle they will pay 75% tax in France, 40% in UK and ?? in USA. How on earth does that work???

Knowsabitabouteducation Sat 16-Feb-13 22:23:32

These countries have tax treaties to prevent double taxation.

YABU

The potential benefits of US citizenship in terms of jobs and schooling far outweigh the potential negatives.

You don't even have to file a tax return until you make over $8000. You don't pay extra taxes unless you make major bucks.

On the other hand, being able to travel and work and live in the US with no problem is a pretty huge potential bonus.

Especially as your DH really wants them to have it, I think it's pretty churlish of you to deny it because maybe they might have a tax bill in thirty or forty years.

My DS has a US and an EU passport, I actually think it's one of the best gifts I'm giving him. He will have so much more opportunity than I've had. I don't know anyone with dual passports who regrets it.

We are a family of duals, the older boys are living in UK and debating renouncing US citizenship due to tax laws, I really don't blame them one is very likely to exceed the amounts where he will pay tax to both counties in the next few years. You are supposed to file federal taxes each year and FBAR for all accounts over $10,000 whether you will owe the US or not.
Are you sure your children are eligible before you get upset about it all. Your Dh must have lived in the US for a set number of years and 4 (I think) of those have to be after the age of 14 or 15. I know once we move back my Dd will not be eligible to pass on her US citizenship unless she moves back to US as an adult as we have no plans to live here again and she is only 8.
I no longer believe the benefits of having both citizenship's for the children exceed the negatives, if it were the 80's or 90's I'd say yes but not any more.

mrsbunnylove Sat 16-Feb-13 23:26:19

the uk is hated around the world but america is even more hated. stick to uk passports. if possible, move and get irish ones.

KRITIQ Sat 16-Feb-13 23:35:27

I think it would be best to get accurate information from the US Consulate. From what I understand, What dreaming said is closest to correct.

If you are born in the US or have a parent who is a US Citizen, you don't have to apply. You are a US citizen unless you renounce your citizenship. Following a Supreme Court ruling, you don't have to renounce your US citizenship if Naturalized as a citizen of another country.

last filed a tax return in the US in 2988. I have worked and paid taxes in the UK since then. I've renewed my UD passport twice since moving and no one has chased me for taxes. I always travel to the US on the US passport.

Perhaps I've been lucky, but I doubt it!

KRITIQ Sat 16-Feb-13 23:40:34

Sorry, I'm not a time traveller. I last submitted a 1040 (US Tax return) in 1988. My dad was a tax accountant then and my brother is now. I grilled them on this. The $80 k threshold seems to be where it changes.

kickassangel Sat 16-Feb-13 23:43:05

Getting a passport is not the same as being a citizen, it sounds like you may be getting the two mixed up. They can be citizens without a passport. Being a citizen will make them liable for a tax return, but if they were born in the UK and never end up lving there than that isn't a problem.

They have the right to citizenship whether you get passports or not, but they can let it lapse.

They don't need to get a passport in order to claim their citizenship.

The US doesn't recognize dual nationality, but it does recognize that some people have it, and therefore do not prosecute if people continue with both.

Ooh I didn't know you were American Kritiq smile

I would say many many American expats do not bother with US taxes, with no repercussions

When you add in all the tax deductions and legal tax avoidance you can do -- really, you need to be making a LOT of money before you would have to pay extra taxes.

I just think the more globalised the world gets, the better off you are having more passports. It just gives you more options.

SavoirFaire Sat 16-Feb-13 23:56:42

You also need to be aware of the new FATCA regulations. The DCs US (dual) citizenship will impact their UK bank accounts very soon. Certainly worth seeking additional advice. here for info.

So now you have to declare bank accounts with more than $50,000 in them.

I seriously cannot get worked up about rich people having to do more paperwork (sorry).

Your average dual citizen is not really going to be screwed

You have to declare bank account with over $10,000 in. Over $50,000 is a whole new ballgame.
$10,000 isn't that much in pounds.
http://taxes.about.com/od/taxglossary/g/FBAR.htm

lisianthus Sun 17-Feb-13 02:02:38

Get advice, but my understanding(from working with a lot of Americans in the UK) is that it is a very bad idea unless your children intend to return to work and live in the US. It is not so much the requirement to pay taxes, as all of the paperwork it entails. I also know a few people who have been in the position of your children and they grew to adulthood in the UK and then found out that they should have been filing a tax return in the US as well, but hadn't because they weren't aware that they had to. Cue lots of negotiations with an unimpressed IRS- a body you donot want to be on the wrong side of - to sort it all out.

Give your kids the choice when they are of an age to make an informed decision. Sure, having the chance to work or go to Uni in the US would be great, but if they don't actually want to do those things, why saddle them with the drawbacks of US citizenship?

kickassangel Sun 17-Feb-13 02:23:32

But if their dad is an American then they are citizens as well unless they actively avoid it. It's something they have to opt out of, not join up if they want.

anonymosity Sun 17-Feb-13 02:36:51

I don't see what the "drawbacks" of US citizenship are. I know that when we are eligible for it, we'll apply (we have greencards which allow residence and work). We live in the USA and it will mean at the very least with citizenship a) we can vote and b) if when we are very, very old we need medicaid, we can have it.

Tasmania Sun 17-Feb-13 02:42:59

I would not denounce their citizenships just yet, for two reasons:

(1) you currently only get taxed above a certain amount,

(2) you don't know what will happen to the UK; the US is a much bigger country (cheaper houses, etc.), so I wouldn't want to take that away from my dc, if I had the choice.

RichManPoorManBeggarmanThief Sun 17-Feb-13 03:06:55

The tax thing becomes an issue if you are a US passport holder living in a country with lower income taxes than the US. This is because Us citizens, resident outside the US are taxed on their worldwide income. Most other country's non- residents are only taxed on the income they make in the country it arises in.

Eg I am a uk citizen resident in Hong Kong. I don't have to pay uk taxes on my salary from my job in Hong Kong but if I was American then my Hong Kong salary would be taxable in the US. They do take account of taxes already paid in HK but as the tax rate in HK is 15%, most Americans still have to pay more to the US. Even worse if you live somewhere that's tax free as your salary and cost of living basically reflects that but you're still having to pay US taxes on it

A lot of Americans in HK with dual nationality are renouncing their us citizenship at the moment for exactly this reason.

Mimishimi Sun 17-Feb-13 03:25:53

You are right to be worried. Our daughter is a dual US/Australian citizen and we have been informed by DH's tax advisor this year that she is expected to file a U.S tax return yearly once she reaches a certain age. She might also have to pay tax on any earnings even if she has not earned it in the US. Even if her income is quite ordinary. Very scary. The place is run by criminals which actually why we left despite living there for years. We are also thinking of getting her to renounce her citizenship.

anonymosity Sun 17-Feb-13 04:09:04

I don't see how or why filling in a tax return is scary? especially when there are accountants who can advise you and do it for you...confused

mathanxiety Sun 17-Feb-13 05:28:13

Requirements for claiming citizenship.

Tax. If your DH files a US tax return he will not be able to claim your child as a dependent unless the child has a SSN.

Tax exclusions

Credit or deduction?

DD1 has both an American passport and an Irish one. She uses the American passport leaving and entering the US but the Irish one within Europe and elsewhere. She works in the US and has paid taxes there (I did her tax returns until last year) since age 16 when she was legally able to work. (Children don't have to file tax returns on the contents of their piggy banks.) Normally the US tax liability is the difference between the foreign tax requirement and the US tax requirement and only if the foreign taxes are lower than the US taxes.

Doing taxes isn't scary. Even paying taxes isn't necessarily scary. The IRS 'help' site is incredibly wordy and there are a gazillion forms, but with enough time and all your documentation and a calculator it is possible to roll up your sleeves and get it done. ANd there are accountants if it turns out to be too complicated.

Reporting a foreign bank account is not the same as paying taxes on what's in it. You are taxed on the interest in a bank account, and not the money in the account, because taxing you on your savings in the bank is double taxation (assuming you paid taxes on it when it was income). Taxing income from those savings is reasonable. Any foreign taxes paid on your interest income may qualify for US tax credits.

I would keep the citizenship as educational opportunities in the US are great and financial aid for citizens is good. Summer and term-time work for American citizen students is unrestricted. It can work out cheaper to go to a really good American university than a British one. Plus you can go and work (and be taxed) there. It is very handy to have an option besides staying in Britain and hoping things don't go belly up; unless you are fluent in a European language (which is the alternative option) I think it's shortsighted to have all your eggs in one basket when it comes to career opportunities.

NumericalMum Sun 17-Feb-13 05:46:40

Our DC has dual nationality (not US) and the main reason we got it was because my grandmother didn't get British citizenship for my dad meaning when he was older he had no right to claim it due to a change in laws. He eventually got a passport but we had to get visas to work here and it was such a pain. My DC can give up her passport if she wants one day but for now it provides extra security and I would hate her to ask us why we didn't bother one day.

If your DH files a US tax return he will not be able to claim your child as a dependent unless the child has a SSN.

Not true when we moved here, DS had an ITIN before he had a SSN and was claimed as a dependant. It may have changed since DS' citizenship was sorted out.

I am a DN and never paid tax to the U.S. until we moved here. My sister is also dual and the IRS never bugged her until she decided to move here and then they cared and wanted 7 years of records.

If you ever go to the U.S. they will need U.S. passports, it is a big no-no to not have them and enter on a foreign passport.

I'm really glad I'm a dual national. It was important to me to live here as an adult so I could experience my other culture.

But if their dad is an American then they are citizens as well unless they actively avoid it. It's something they have to opt out of, not join up if they want.

Agreed. They are already citizens unless you denounce it and I think the kid should get to choose that when they are an adult.

well so long as dad has met the resident requirements that is.

Cyclebump Sun 17-Feb-13 07:29:09

I was born in the US and was not allowed to leave the country at two weeks old without a US passport hmm

If you are a US citizen you cannot travel to or within the US without a US passport.

I have never been chased fir taxes despite having a social security number (I've never lived in the US or earned a big wage).

And despite what someone else has posted, I have always used the US citizens queue when travelling to the US (JFK included) and once took three hours less to get through than my non-US citizen siblings.

It's a faff renewing my US passport (I go to the embassy), but it's once every 10 years so it's git more pros than cons.

GingerPCatt Sun 17-Feb-13 07:39:56

We got DS's American passport in August. If the ever travel to the US they have to do it on an American passport. As I recall, the social security card was a different form so see if you really have to do that as well. We did both since I want DS to have choices about where he goes to university or where he lives when he's older. I'm not worried about the tax thing at the mo. When he's an adult and working he can decide what's best for himself and besides, who know what taxes will be like in 18 years time.

OlyRoller Sun 17-Feb-13 08:04:20

Americans most certainly do NOT need a US passport to travel within the US. Travel between states is unrestricted.

Acinonyx Sun 17-Feb-13 08:35:55

Dd has UK and US passports. DD and dh must travel to the US on their US passports but I go through customs with them as I am dd's mother - I don't have to go separately (I did before I had dd).

Dh earns over the limit and has done for a long time. He files a return every year but he has never had to pay anything. He does claim for dd as a dependent.

theoriginalandbestrookie Sun 17-Feb-13 08:58:26

I'm an adult with dual nationality. Never filled in a US tax return in my life as I haven't worked there.

Personally I'm pleased I have the option of both countries as you don't know whats going to happen in the future in the UK or the US.

As far as I am aware my only obligation to keep my US passport is to return atleast once every 10 years using it. So at Easter we are going to Disney ( what a hardship !)

Knowsabitabouteducation Sun 17-Feb-13 10:11:41

To those who say they haven't filed a US tax return, you do realise you are breaking the law if you earn over £8000?

Just because you haven't been caught doesn't make it right.

The IRS won't chase you because very few British residents pay a penny. There isn't anything in it for the as penalties are based on taxes owed.

However, If you ever want "immigration benefits" (ie to sponsor family members to live there), you have to provide three years of tax returns. Do you really want to scramble around trying to file back taxes?

If you finances are fairly simple - job, mortgage, bank interest - it is a half-hour job once a year. Anything more complex, and you can use Turbotax.

lljkk Sun 17-Feb-13 10:14:00

Apologies I don't feel like reading whole thread closely. I am ex-pat USA having lived in UK 21 yrs.

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. They have to formally renounce their US citizenship to be completely sure of avoiding that risk.

The rules about entitlement to citizenship for children of Americans born abroad are somewhat complicated. You need to review closely.

It is a faff going to register births at American consulate. Be sure to get the documents correctly notarised.

Under American system you only have to file tax return if you owe (whereas in Britain you have to declare in Inland Revenue all earned income even if far below the tax threshold, how many people knew that?). Anyway, I haven't filed with IRS for a decade because I didn't owe anything, not likely to in near future. Helpful in case of sudden tax-liable inheritance, though, to document that I didn't owe tax in many previous years.

lljkk Sun 17-Feb-13 10:19:39

Is the tax threshold as low as £8000, so about $12,000, Knowsabit? I thought even the personal allowance was around $14k, now. And the foreign earned income exclusion was nearer to $70k. I realise investments are taxed differently, but "fortunately" I'm not blessed with lots of income from those either, lol.

Does that Turbotax programme work well for people living outside USA, and can it cover individual state tax returns (even better)? Whenever I looked into this previously there was NO good home software package for non-resident US tax payers. I gave up & did it all by hand, reckoned that any fines I might ever be levied with would be less than the expensive software package costs that needed updating annually and wasn't a guarantee of getting it right, anyway. It was a pure statistical risk-tradeoff decision. Hopefully this year my earned income will exceed £8k (but not $70k, for sure). I'll have to get my head around it all again.

lljkk Sun 17-Feb-13 10:22:24
TheCatAndTheFiddle Sun 17-Feb-13 10:28:06

Message withdrawn at poster's request.

Amphitrite Sun 17-Feb-13 10:28:24

One of my parents is American but my siblings and I were born and brought up in the UK and my parents didn't bother to register us with the US embassy here before we were 18. When one of my siblings decided to move to the US after university it posed huge difficulties. They are now a naturalised US citizen, but that took over a decade to achieve. My advice would be not to close off options for your children if it all possible as you don't know what they may wish to do in the future.

Knowsabitabouteducation Sun 17-Feb-13 10:37:39

The filing threshold is $9750 for 2012.

You don't have to file if your earned and unearned income is lower than this.

When you file, you start off with all your income and then deduct $80000 from your earned income (foreign earned income exclusion). For the majority of people, this will bring their "adjusted gross income" down to zero, or almost zero. Next, you take your personal exemption (same as personal allowance in the UK) and exemptions for your dependents who have SSNs or ITINs, then your standard deduction.

If you still have a positive number at this point, you work out the taxes. Then you deduct foreign taxes paid.

You have to earn well in excess of £100k to owe anything.

Knowsabitabouteducation Sun 17-Feb-13 10:46:29

Lljkk,

We have been using Turbotax for the last 10 years in the UK, although using an accountant this year as our finances have dramatically changed.

It's a simple program to use and it carries all your info forward from year to year. It will help you to decide whether to take the standard deduction or itemise, for example.

It does deal with state taxes but we have never used this part of Turbotax as our state allowed us to sever ties when we left.

cleanandclothed Sun 17-Feb-13 10:46:48

As others have said, the issue is not the tax owed but the duty to file. But whatever you do, make a fully informed decision and get some advice first. I work for a bank and FATCA is going to make a big difference. You may find some uk banks will not want American citizens as account holders. And very silly for people to say 'this is only for rich people and not for ordinary ones' about tax returns. They might be right for them personally as adults ( not an attitude I would take personally though) but you have no idea how much your children will earn or where they might want to work, or how the US will change the rules in the future.

lljkk Sun 17-Feb-13 13:36:54

How much does your accountant cost, btw? I asked a London accountant to do my US accounts one year and they quoted £800-£1200; I did them myself after all.

I'm finding prices of about £89 for Turbotax 2012, does that seem right? I assume Free version can't handle foreign-based residents, either.

Knowsabitabouteducation Sun 17-Feb-13 13:53:28

We used the third one up in Turbotax - $79 is what I remember.

No idea how much the accountant is, but I know he has already saved us $$$ by finding an adjustment that we had absolutely no knowledge of. Turbotax wouldn't have picked it up.

mathanxiety Sun 17-Feb-13 16:51:57

There is software available that can handle forrin addresses which may or may not be possible for Turbotax to accommodate.

Knowsabitabouteducation Sun 17-Feb-13 17:32:25

Turbotax can handle foreign addresses

SavoirFaire Sun 17-Feb-13 20:06:38

Seriously, those of you who aren't worried about filing a US tax return, please look up the FATCA regulations. You will have to tell your UK bank that you are a US citizen and they will be obliged to inform the US authorities. The US are tightening up significantly, to find those people who aren't filing returns (even if return would have you owing no tax), and if you are not, it could impact your ability to bank in the UK.

cleanandclothed Sun 17-Feb-13 20:12:56

And those blithely saying 'there are double tax treaties to ensure you don't get taxed twice' well yes but it isn't quite that simple. And any uk resident married to a us citizen should get proper joined up us uk tax advice on us and uk inheritance tax when writing wills otherwise there may be all sorts of problems on death of the first spouse.

Knowsabitabouteducation Sun 17-Feb-13 21:07:51

Nothing blithe about it

I just think it's funny that it seems to be the people with accountants and tax advisors who are the most freaked about having to file US taxes. I mean, why? You're paying someone to do it for you!

I have to file (not pay) taxes in three countries. It's not rocket science and I do it myself, although in this one case it helps to be quite poor smile

I'm blithe about FATCA because I do file my US return.

Seriously, just be honest, follow instructions and get help if you need it. The IRS even has a help desk at the US embassy you can go to.

As far as I can tell FATCA will help crack down on tax dodging and money laundering and that's fine by me.

riverboat Sun 17-Feb-13 23:40:02

Tax issues aside, I can understand that your DH wants his children to share in his own national identity.

I'm living abroad in DP's country, and it would be important to me that any children we had understood and were able to identify with their British heritage.

I guess nationality on a passport could be viewed as just a legal thing and nothing more, but I think I would struggle to see it exactly like that.

Well I'm glad to hear there are people succesfully filing US taxes from UK using Turbotax. Once Dh and I move back, we will have to file federal taxes annually, we'd like to collect our Social security and private pensions one day. Filing from UK was starting to really worry me. Here we have an accountant who does it all this year it only cost about £70 so worth it to us. under 100 for Turbotax will be well worth it. grin

mathanxiety Mon 18-Feb-13 00:55:13

YY the aim of FATCA is uncovering the sort of sums that would make you rub your eyes trying to count the zeros. They have to cast a wide net -- that is the side effect of laws.

Riverboat, I agree about trying to share nationality, trying to have the children acknowledge that aspect of their heritage. It really is more than just a matter of convenience in Immigration lines. I was thrilled when DD1 decided to get her Irish passport and I am working on DS. Hopefully the rest of them will also claim their Irish passports (and therefore their children can also claim under Irish law). DD1's BF started looking into his Italian roots and investigating Italian passports when she was getting her paperwork together.

Tasmania Mon 18-Feb-13 01:24:06

dreamingbohemian - It's because often, accountants and tax advisors have to justify being paid. By making something look a lot more complicated than they are, they do exactly that. If it was so easy, why would anyone employ them to do things for them?

Their clients - understandably - then tend to panic. wink

missingmumxox Mon 18-Feb-13 01:44:04

it wasn't until I lived in the US, that I understood why 3 of my cousins who could claim US as could their Dads, didn't, Dads both did in their 30's, because they earned well under the balance and where you aware about the national guard thing? I think? as in you are conscripted from 18 whatever, don't need to report these days but it is what they used in vietnam.
I when I lived in the US used to call it a communist state..because really it is, my boys had to do the pledge of allegiance every morning, you have to be sooo careful what you say, no discussions on anything. I once got het up on the abortion issue as in I am for it, my GOD! so different to the UK where we could just discus it, do a few off color jokes and move on

mathanxiety Mon 18-Feb-13 02:11:16

I agree with a lot of that Missingmumxox

lljkk Mon 18-Feb-13 09:20:36

Ooh, hadn't heard of FATCA before. not that it impacts me (interest rates = 0.5%, anyone?).

I don't think USA can compare to over-regulated UK nanny state.

marfisa Mon 18-Feb-13 10:32:32

Get the passports, definitely! As people have said, your DC will only be taxed in the future if they earn over $80,000 (and that figure is adjusted upwards every year to reflect inflation). If your DC decide that they don't want to be US citizens later on, for tax reasons or political reasons or whatever, they can always abandon their US citizenship themselves.

If you are a US citizen and have a child born abroad, you are supposed to register the birth with a Consular Report of Birth Abroad. You can apply for a passport and social security number at the same time. We did this last year and it is a bit of a hassle (you have to go to the US embassy in person), but once you've done it, it's sorted. If your child plans to become a US citizen, s/he MUST enter on a US passport the first time they visit the US. If they visit the US for the first time on a different passport, it may be impossible for them to claim US citizenship in the future. This is a silly rule IMO, but it's law, and I know from firsthand experience that US immigration can be incredibly ruthless and obstructive. sad Much better just to get the passport straight off and know that if they ever want to visit the US in the future, they will have no entry/exit problems.

We are a family with several different nationalities among us and we see dual citizenship as a good thing in an increasingly global world. It's a way of maximizing your DC's choices. Even if they never want to live or work in the US, they may one day be curious about exploring the place their dad comes from, and if they have passports, they can visit freely. Not getting them a passport at this point would be limiting their future choices (especially if you take them to visit their dad's family in the US at some point, and they go on a British passport).

Imagine how you would feel if the situation were reversed and you were all living in the US and your partner argued that your DC didn't need British passports?

Dual citizenship is a gift; give it to your children if you can and then let THEM abandon it later if they don't want it.

marfisa Mon 18-Feb-13 10:36:44

And missingmum, there is no mandatory conscription to the National Guard; that's rubbish.

i believe that you still have to file tax returns even if you're under the limit.

i would be very wary before doing anything. make sure you have all the facts.

american liberties are being eroded all the time. <inflamatory>

marfisa Mon 18-Feb-13 10:49:38

Yes, you still have to file tax returns, but as dreamingbohemian said, it's not hard to do.

I usually forget to file my tax returns for years and then file about five years' worth at one go. blush I never owe anything and have never been penalized for filing late (if I did owe anything, I'm sure there would be penalties, but my income falls well below the foreign earned income exclusion threshold).

I totally agree about the US and civil liberties. Due to their own stupid bureaucratic error, they ordered my DH deported (it's a long, LONG story) and it took us years of effort and thousands of dollars to fix it. It's one of the reasons I'm happy to live in the UK now instead of in the US. However, it's also one of the reasons I am so keen on getting dual nationality for my DC. Just because I don't want to live in the US any more doesn't mean that they might not want to, and the way the US treats non-nationals is not pretty.

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.

This list might be a good place to start

http://london.usembassy.gov/us_attorneys_in_uk.html

marfisa Mon 18-Feb-13 19:05:12

There is also some useful info on this page:
london.usembassy.gov/cons_new/faqs/faq_children.html

freetoanyhome Mon 18-Feb-13 19:08:22

thanks. Its a ridiculous situation. She has a US passport and a SS number. They just wont renew her passport now she is an adult <bangs head against Embassy door>

lljkk Mon 18-Feb-13 19:10:44

FREETO: How did she get a US passport without US Embassy taking copies of all of her dad's info?

Knowsabitabouteducation Mon 18-Feb-13 19:40:49

Freetoanyhome,

You should not need photo age progression if her last passport was issued over the age of 5. If hers expired when she was 14, it was issued when she was 9. Even then, the photos do not need to be passport photos - they can be family snaps or school photos.

She can use her British long-form birth certificate as proof of citizenship if it has her father's name and place of birth as the USA. Together with the expired passport, this should be fairly compelling to even the most fastidious consular officer. In order to get her first passport and/or Consular Report of Birth Abroad, she would needed to have had his name and place of birth in her British birth certificate.

How did she come to get her first US passport? Was this based on her Consular Report of Birth Abroad? If she had this document and it is now missing, it is possible to get a copy, as you would any birth certificate.

I am surprised you have had such a run around at the consulate. I have always found them to be extremely friendly, and eager to provide the necessary documents. Did they tell you where to go for additional help? Surely they didn't just leave you hanging?

Perhaps if your DD takes herself to the consulate, she may get a better officer.

I would be surprised if she were issued a non-immigrant visa given her claims to US citizenship. Clearly she has claimed US citizenship given that she has an expired passport and failed passport application, and they take very seriously anyone claims to citizenship and failure to get a passport. It is a big crime to falsely claim citizenship, so they would not just hand out visas instead.

freetoanyhome Mon 18-Feb-13 19:53:52

thanks for the info. Its all a bit complicated involving her being born to ex, splitting up, getting back together, moving there, getting her a passport, splitting up and us moving back etc. I didnt register her birth when we lived in the UK (she was born here). I've spent hours on the phone to the Embassy and they have been rude and unhelpful. She has finally got an interview to renew her passport so fingers crossed.

Knowsabitabouteducation Mon 18-Feb-13 20:05:33

Let us know how she gets on.

It would be a good idea for her to take as much documentation as possible when she goes for her interview, although her expired passport and long-form birth certificate should be enough looking at the forms.

For example, how did you come to be in the US - were you married and he sponsored you for a green card? If so, any documentation surrounding that would be a strong support that he was a US citizen sponsoring his wife on an immediate relative visa. Do you have any copies of tax returns? Do you have any evidence of having a life together which reasonably resulting in his fathering your DD? (Don't answer - just questions to think about).

Daffodilly Mon 18-Feb-13 20:18:56

Thanks for all the replies. Lots to think about and clearly we need some expert advice.

Children are aged 6, 3 and 5 months. None of them registered as birth abroad. Never remotely occurred to me that we'd need to as both parents have British passports, we live in UK and have no plans to move to USA. Of course that could change, I just mean it isn't like we are temporarily here and happens to be where children were born. We consider UK home.

I am very happy for children to know their heritage - both sides. I just don't want to saddle them with a lifetime of additional paperwork and admin for a "benefit" they may never realise. I have to say though I see US citizenship is highly converted by many, as a British citizen I'm not convinced pros outweigh hassles if they never want to live there.

We've been back to USA every year since we had first child to visit DH's family. Always travelled on UK passports as I didn't have a clue this would be a problem. I know ignorance isn't an excuse, just hope we haven't unknowingly caused a major problem.

Saski Mon 18-Feb-13 20:23:27

My husband is in the process of giving up his US citizenship and his attorney has told him to not use his US passport when entering the US - so I gather that even if it is required for US citizens to use their US passport when entering, it's not enforced.

My son's US passport was expired at Xmas when we travelled back and we used his UK passport - I filled out the form online and paid the 14GBP fee or something in that neighborhood.

Daffodilly Mon 18-Feb-13 20:29:39

Thanks Saski that makes me feels bit better.

We've certainly not tried to deceive US immigration nazis we enter together as a family with DH on US passport and rest on UK. Explain we are visiting family. They always piss me off by asking questions that seem to imply we might be trying to stay on illegally in the country. As if! No thanks 2 weeks with inlaws is enough and then I'll be going home to UK thanks!

Mimishimi Tue 19-Feb-13 02:12:34

This is interesting reading if you want to know exactly what is being done to the USA. Not just with tax laws but other legislation. This became pretty evident to our little circle of Aussie expats living near New York after 9/11. Most of us, bar one, are back in Australia now. It's exactly what happened to Germany too...

http://www.thecommonsenseshow.com/2013/02/14/is-it-time-to-pack-your-bags-america/

Okay, so the language used is fairly sensationalist and emotive, but nothing they are saying about the practical effects, and intended use, of these laws is actually inaccurate. We always got grilled when entering the US too, and that was before 9/11. They then wonder why birthrates throughout the Western world have dropped off a cliff too ... confused

But Dafo, if DH is able to pass on citizenship then they are US citizens and may already be 'burdened' as it were.

Plus you may see the UK as home, but hopefully they are going to have long long lives and their time at home as children will be just a small part of that. What if they are like me and really wanted to live in the U.S. as a U.S. citizen? I have Brit citizenship and was born and brought up there but still very much value my U.S. citizenship, just as much as my Brit one.

Mimi, I read the link and it is really sensationalist. Plus as a dual national you have more choices, not less.

Saski Tue 19-Feb-13 08:54:15

It's true that citizenship is quite separate from passports, but if you want your children to be able to rescind their citizenship more easily - not having a passport and/or not entering the US under a US passport makes your case stronger.

The tax situation for US citizens living abroad is growing bleaker by the moment. Because of the overreach of the IRS, certain banks will not even open non-US accounts for US citizens - they have separate shell banks for US citizens that the IRS can easily access without the bank divulging the details of it's non-US customers.

Now, there's talk of the IRS having access to even non-US citizens, living abroad, if they are married to US citizens. My husband and I have had a few discussions about getting a divorce in the course of his renouncing his citizenship to make a complete break from his income and assets to the US.

BiddyPop Tue 19-Feb-13 09:55:20

I am a dual national (US and Irish). I got my passport just after I got married. I only got a social security number a couple of years ago (gap of a few years) as we were thinking of moving there so I needed to consider filing back taxes paperwork to be able to sponsor DH for a visa. They were completely seperate processes.

I have never actually filed for taxes yet, as it became irrelevant again - and there has never been any paperwork sent to me since (and I have renewed my passport and we have travelled there on hols twice).

HitWithTheYankStick Tue 19-Feb-13 10:32:11

I think people who are worried about their children already being 'burdened' with US citizenship if they have never gone to the embassy and got that Consular Report thingy, got passports, got SS numbers, are probably overthinking things.

I mean not even they can't FORCE you to take up a citizenship against your will.

Saski Tue 19-Feb-13 10:52:06

If the US government can find a US citizen's bank account opened with a non-US passport, they can find their children.

The non-earning children of taxpayers coming under scrutiny since the US has gone bonkers are not old enough for us to know how the IRS will treat them.

It all could turn out to be paranoia. Then again, it might not.

Oh my god, they can find your children! And...and... make them fill out paperwork! And if they're very rich, they might have to pay a little money under completely legal and transparent regulations!

I mean, come on now. I get it, taxes suck, nobody wants to pay taxes. But that's life. If you want to be all Gerard Depardieu about it, go ahead, but realistically your children will be minimally affected.

Saski Tue 19-Feb-13 11:19:43

Actually, the US government is becoming very unreasonable. There's no other country that taxes world-wide income. Why should US citizens living outside of the US pay US taxes, when they already pay taxes in their country of residence?

Why should Brits pay income tax when people in Dubai pay no income tax at all?

yes it sucks but, again, that's life

It's not the US government's fault that you have chosen not to make use of the benefits of US citizenship.

Btw no one has mentioned yet one of the biggest benefits -- you can vote in US elections. Given some of the utter lunatics who run for office in the US, that's no small thing.

Saski Tue 19-Feb-13 11:56:14

I'm not sure I agree with your logic. My logic is that you should pay taxes in your country of residence.

Yes, but if you were an Emirati, your logic would be that individuals shouldn't have to pay income taxes at all. My point is just that all tax laws and all attitudes toward taxes are relative, there is no one 'right' way to do it.

juneau Tue 19-Feb-13 12:11:11

AFAIK it is illegal for a US citizen (and having a US parent is enough to confer US citizenship), to enter the US on a foreign passport. I'm assuming that your US DH has family there and will therefore wish to visit them with the DC at some point? If so, you should check very rigorously before you book your travel that you will not be breaking the law/risk being turned back at the border for having the wrong travel documents.

I know this because my DH is American and we faced a similar, though not identical, situation.

lljkk Tue 19-Feb-13 12:57:22

having a US parent is enough to confer US citizenship

not always, the rules are complicated.
I haven't heard of anyone actually being turned back for travelling on their non-US passport, but I have heard of a great many wink-wink-nudge-nudge heavy hints dropped liked bombs about "That child should have a US passport" from the Border Agency people. They are still human beings and appreciate children can't fix the situation there and then, so they can't say something overt. At least one friend had no idea what they were on about, though until I explained.

Some of this talk about filing taxes is scare-mongering. Uk is moving hard towards universal self-assessment too, anyway.

My dad always files his own taxes, he got audited by the IRS and WON. smile.

Oh no, I can feel my life imploding having (skim) read this thread... I am from the USA and haven't filed a return since we moved here 18 years ago. Last year due to being a director of OH's company I earned over the threshold, first time ever. Can anyone help me and tell me who I need to 'fess up to? The Embassy scares the life out of me. BTW I gained British citizenship a few years ago but haven't got a UK passport yet. I am cursing my laziness but hoping I can use 'I was just a housewife' and 'no one told me I had to' to excuse all those years of non communication.

BTW I had no idea re: the citizenship, I have one child born in the US and one in UK, I'd assumed that the UK born one's entitlement to US had expired as she's 17 and we are not really bothered about it, no desire to live/work there... and DS aged 19 needs to know that he should be filing! he won't thank me for that I suppose. I need to sort this out but don't want to spend £££ doing it... is the UK Citizen's Advice a good place to start or will they just send me to the embassy? [[http://www.irs.gov/pub/irs-utl/non-resident_questionnaire.pdf] this] was the form I found via the embassy website and I cannot make heads or tails of it... professional advice will be needed I suppose. Just furious that it will cost me money for no point whatsoever.

Can we all claim political asylum grin if they demand unreasonable amounts of money?

Sorry OP haven't carefully read the whole thread (as I've been to busy having a minor heart attack imagining what sort of prison they'll put me in) what have you decided to do?

aaarg. should have been this

Knowsabitabouteducation Tue 19-Feb-13 13:06:36

Unless you want to move to the US within 3 years, don't worry about back taxes. Just start to get your affairs in order.

You basically need to keep calendar year records of your income, and then do a 1040 before June 15th next year. It's pretty easy if your finances are simple.

As for your 17 year old, you have a short time to get her Consular Report of Birth Abroad, which will establish her US citizenship.

If she decides at a later date that she wants to study or settle in the US, she will have her paperwork cut out (and expenses), whereas it is very easy to do it now while she is still under 18.

Many thanks Knowsabit, I guess they have an obligation to be reasonable! I suppose it cannot hurt to contact them as it's not like we've deliberately misled them and it seems like there are plenty of others in this situation. It's just the way the forms are written that makes me so nervous! I never minded doing returns when I was living there but that's because I usually got a refund.

megandraper Tue 19-Feb-13 13:16:22

Don't forget that any tax-free savings you have in the UK (ISA's / Premium Bonds etc.) or tax-free benefits (child benefit etc.) are not tax-free from a US perspective, and need to be declared.

lljkk Tue 19-Feb-13 13:16:40

notMrsR
CAB can't help you.
There are some helpful ex-pat forums.

This is what i think is true (am not expert):

Don't panic. ExPats fail-to-file tax returns a lot, It's very common.

I wouldn't bother with that form.

Get hold of the right forms for the right tax year (I guess you owe for 2012?) and file them soon. Your return isn't due until June 2013 and you can even request a deadline extension until September, I think. If your income in 2011 was over threshold you'll just have to file late taxes for that year too and any previous when you made lots of money; there will be some late penalties paying tax owed but not outrageous.

If you never owed taxes in previous years you don't have to worry about failing to pay tax installments last year; but you will have to worry about paying tax instalments for 2013 if you'll continue to have income over the threshold (because you were liable for tax last year, iyswim). That part I find tricky!

I would probably try the stupid Turbotax thing just because of the convenience of e-filing. I've had hmm experiences of bad advice from accountants so I would shy away from hiring one of them unless you think your situation is enormously complicated; I reckon I will pay less in penalties than I would to an accountant, and the accountant is never liable for any mistakes on your return, anyway. Technically you could sue accountant, but probably not worth it.

Your DS19 almost certainly does not have to file because he wouldn't owe anything, either (read upthread for details).

By the time you work thru allowances & deductions you may not owe for 2012, either. BUT if you can establish that now, then you will be in a good position whenever a year crops up that you do owe taxes, because you'll have paperwork to show you've been open & honest about previous income.

Knowsabitabouteducation Tue 19-Feb-13 13:18:48

You can't efile from overseas, ll.

You have to print out your return, sign it, and take it to the post office.

Thanks all. What a wealth of knowledge on MN! I'm going to speak to one of DH's partners who is also from the USA and ask him what he does, it seems that he's been diligently filing ever since he moved here many many years ago-- but that's because he intends to return one day, whereas I don't. However I don't want to burn any bridges. In the meantime I'm off to investigate how to get my hands on the tax forms, and talk to our company accountant about what I need to declare.

And Knowsabit I've just downloaded the application for DD, seems straightforward. We'll have a (hopefully) nice mother-and-daughter session going down to the Embassy for an appointment. And just in time as she's 18 in a few months, she can decide what she does after that!

dabdab Tue 19-Feb-13 13:30:59

But why is it illegal for US citizens to enter on an alternative passport if they are dual? My dc are dual, and we are travelling to US this summer - I was wondering about not renewing and just having them travel on UK passports because I would like to avoid the expense and the pain in the bum hours of waiting at Embassy for all 3 dc to get renewed
What will happen if we did travel on UK passports?

they threatened to arrest my dh. he basically got out of it by saying that he's travelled there hundreds of times before, and does he (the immigration guy) really want to be the first to cause a stink? but he won't go there again.

also, born in the us, no us passport, no social security number.

i would not go there on a different passport if you have a us passport.

dabdab, good question.

extra revenue from having to have a us passport, and then you get embroiled in the tax situation. win-win for them.

i would not go there on a different passport if you have a us passport.

sorry, i meant, do not go there on a different passport if they've decided you are a US citizen.

note: you may not have any say in this.

Acinonyx Tue 19-Feb-13 14:40:12

You MUST use your US passport to enter the US. Both dh dd do this. Dh once tried to use hi UK passport because he forgot his US one. At immigration, they saw he was born in the US. To make it worse, it was clear dh was trying to hide the fact that he was in fact a US citizen hmm not dh's finest hour. He was taken for questioning and strictly speaking, could have been deported on the next plane back. he got a stiff warning, and I had to hang around with dd for hours not knowing what on earth was going on.

So definitely you must enter on your US passport. We won't try that again anytime soon.

lljkk Tue 19-Feb-13 14:54:08

Are you sure, Knowsit? Because FreeFile looks okay, I think that counts as e-filing; 2012/3 forms including 2555 here.

Thanks for the tip about CG counting as annual income, btw, I could never decipher whether that was the case or not (I've filed returns both ways in past).

Knowsabitabouteducation Tue 19-Feb-13 16:20:55

You can't e-file with TurboTax. I think the sting is taking FEIE.

That's unless things have changed this year.

I don't think not being able to e-file is a show-stopper though.

"Taxpayers with an AGI (Adjusted Gross Income) of $57,000 or less can electronically file their tax return for free using freefile. Taxpayers with an AGI greater than $57,000 can either use the Free File Fillable Forms or efile by purchasing commercial software. A limited number of companies provide software that can accommodate foreign addresses. To determine which will work best for you, get help choosing a software provider."

(http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad)

Also
"U.S. Embassy
24/31 Grosvenor Square
London W1A 1 AE
England

Walk-In Assistance:
Tu-Th: 9 a.m. to 1 p.m. & 2 p.m. to 4 p.m.
Phone Service:
M-F: 9 a.m. to 12 p.m.
Tel: +44-207-894-0476
Fax: +44-207-495-4224"

from same page

Also you may be able to exclude $95K of your foreign earned income if you meet certain conditions -- e.g. you live the vast bulk of your time in a foreign country.

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now