# Considering US citizenship ...



## aitch74 (Jul 22, 2015)

So, I have been living in the US since 1999, have been a permanent resident since 2005 and married a US citizen in 2007. We have two children. My parents both still live in the UK and have no intentions of moving anywhere. We intend to stay in the US.

I am seriously considering becoming a US Citizen ... that is what I feel like I am. I am still very attached to my heritage and it will be tough to denounce my British citizenship, but I understand that that is not officially recognized by Great Britain unless I do it in front of a British official.

My main concern is the inheritance or estate tax implications on whatever my parents might decide to leave to me. Does it make a difference whether I am a US citizen or not? How would I be taxed in the UK and/or the US as either a permanent US resident or as a citizen?

What other considerations should I be thinking about?

Thanks, Helen


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## Crawford (Jan 23, 2011)

You do not give up your British citizenship when taking out US citizenship.

Thousands of Brits have US citizenship.

The US taxes on world wide assets. Makes no difference if you are just a permanent resident or citizen.

You need to consult a lawyer about the tax implications of any UK inheritance. You'll either be taxed in the UK or the US.


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## Davis1 (Feb 20, 2009)

you become a dual citizen ....only extra cost is buying two passport every ten years 
Citizenship & Naturalization - Volume 12 | Policy Manual | USCIS


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## Bevdeforges (Nov 16, 2007)

You may want to take a look at the Expat Tax section here on the forums: Expat Tax - Expat Forum For People Moving Overseas And Living Abroad Ignore all the hype and posturing about FATCA and such, but from some of the questions asked over there you can get a feeling for some of the tax issues.

Basically, taking US citizenship, you are signing up for "eternal taxation" - given that the US taxes its citizens, no matter where in the world they live. There are, however, tax treaties and processes to allow you to avoid double taxation.

As far as the inheritance from your parents is concerned, it shouldn't pose a problem as long as all the relevant taxes are paid in the UK before you transfer over any funds or assets you inherit from them. There is one paperwork maze related to "foreign gifts" (which includes bequests from an inheritance) but should be a one-time thing: Gifts from Foreign Person
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Bevdeforges said:


> Basically, taking US citizenship, you are signing up for "eternal taxation"....


OK, now let's add some details to those quotation marks because those quotation marks are critically important.

Here's a critically important fact that you posted at the very beginning that (I think) Bev missed: you are now and have been a U.S. permanent resident since 2005.

Long-term U.S. permanent residents (you) and U.S. citizens (your possible future you) are both already subject to _exactly the same tax and financial reporting rules_ no matter where you live. In the event you move outside the United States and wish not to be subject to _possible_ income tax on non-U.S. source income -- as about 6% of overseas U.S. citizens/permanent residents owe (like me) -- and also wish not to be subject to U.S. financial reporting, you must affirmatively terminate your U.S. status with the State Department and with the IRS.

It now doesn't matter, for these purposes, whether your U.S. status is U.S. citizenship or U.S. permanent residence. You have already crossed that particular tax/financial bridge, well and fully. So *the tax and financial reporting consequences of U.S. citizenship are moot for you*. You already have them, and they are just as sticky now as they would be with U.S. citizenship.(*) Said another way, you already have full U.S. tax citizenship -- you don't gain that through U.S. naturalization.

In my view, in your case, you would decide to take U.S. citizenship if you value the privileges associated with that citizenship. You're already subject to the tax and financial reporting obligations, and simply moving overseas (by itself) wouldn't change that. If you're subject to the Expatriation Tax you're subject to the Expatriation Tax -- no escaping that now.

(*) With one exception. Terminating a U.S. citizenship through consular renunciation requires payment of a US$2350 fee. Terminating long-term U.S. permanent residency does not.


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## twostep (Apr 3, 2008)

Are your children dual citizens?


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## mamasue (Oct 7, 2008)

I became a USC 3 years ago. The main reason I did so was in case I ever needed to leave the US for an extended length of time, eg. poorly relatives in the UK.

I hold both UK and US passports, so I can come and go without any problems, for any length of time.
Also.....I don't have to renew GC every 10 years, which isn't cheap. Naturalisation is a one-off payment....done!!

There's no need to renounce UK citizenship. Being a citizen of both definitely has advantages.


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## MarylandNed (May 11, 2010)

As others have said, you don't lose UK citizenship if you become a USC. I became a USC almost 10 years ago and am still a UKC. In fact, I also hold citizenship of Ireland and Canada. Some countries restrict the ability to have multiple citizenships but the UK and US do not.

During the USC ceremony, you have to swear _"to renounce and abjure absolutely and entirely all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which the applicant was before a subject or citizen"_ but this oath means absolutely nothing to the UK. The UK decides who is and who isn't a UKC - not the US. If you want to renounce your UKC, you have to go through a separate process with the UK government.

As a USC, you must leave/enter the US with a US passport per US law. You can still have a UK passport and use this to enter the UK if you so wish. I usually just use my US passport to enter the UK (UKCs don't have to use UK passports when entering/leaving the UK). 

As a USC, you will be liable to file US tax returns on worldwide income regardless of where you live in the world. But really this isn't any different from you being a PR who lives in the US.


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## BBCWatcher (Dec 28, 2012)

MarylandNed said:


> But really this isn't any different from you being a PR who lives in the US.


Or a long-term U.S. PR who _doesn't_ live in the United States. It's completely un-different, in other words. The original poster already has U.S. "tax citizenship."

The U.S. doesn't actually have Citizenship-Based Taxation (CBT), to be very precise. It has Status-Based Taxation (SBT), where status is any one of:

(a) Residence (or even sufficient physical presence, even illegally) in the U.S.;
(b) U.S. citizenship;
(c) Long-term U.S. permanent residency that has not been explicitly terminated by filing IRS Form 8854.

The original poster has both (a) and (c) already. Moving outside the United States would change (a) but would not change (c). U.S. citizenship would not alter the original poster's preexisting tax status because he already fits (c).


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## BBCWatcher (Dec 28, 2012)

Said another way, the original poster, a long-term U.S. permanent resident, is already fully subject to the tax obligations associated with U.S. personhood no matter where he lives in the world, but he does not currently enjoy the rights and privileges uniquely associated with possession of U.S. citizenship.

The only potential negative to U.S. citizenship for him that I can see is that the hypothetical cost of exiting the U.S. tax system in the future, after leaving the United States, would increase to $2350. That's the current fee to renounce U.S. citizenship, and as far as I can figure out that would be the _only_ difference if he were to exit the U.S. tax system in the future. But, as another poster pointed out, there are fees to keep renewing U.S. permanent residency. You have to do it about every 9.7 years, and the current fee appears to be $450. There's also the fact that you can lose PR status if you're deemed to have abandoned it, as another poster pointed out, but crucially the original poster cannot simply abandon his U.S. tax personhood -- he would have to file IRS Form 8854 to terminate that. Yes, that's correct, you can lose your PR status but still be subject to the U.S. tax system.

I think this is pretty much a "no brainer" and that U.S. citizenship would be great to have. There are some nice privileges and rights that come with it, and I can't think of any material downsides in these circumstances.


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## MarylandNed (May 11, 2010)

BBCWatcher said:


> Or a long-term U.S. PR who _doesn't_ live in the United States. It's completely un-different, in other words. The original poster already has U.S. "tax citizenship."
> 
> The U.S. doesn't actually have Citizenship-Based Taxation (CBT), to be very precise. It has Status-Based Taxation (SBT), where status is any one of:
> 
> ...





BBCWatcher said:


> (*) With one exception. Terminating a U.S. citizenship through consular renunciation requires payment of a US$2350 fee. Terminating long-term U.S. permanent residency does not.



It's not "completely un-different" which is why I qualified it with "living in the US" (which is the OP's stated intention). Getting rid of US tax obligations while living outside the US is a different process for PRs and USCs. For example, just living outside the US for a long enough period can cause you to lose PR status. Relinquishing US citizenship is a different process as you can't lose US citizenship simply by living outside the US. So different steps on the way to ridding oneself of US tax obligations (although both would still have to file 8854 with the IRS). Easier for PRs - costlier for USCs.


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## BBCWatcher (Dec 28, 2012)

That's simply not correct. Long-term PRs cannot lose U.S. tax status through abandonment of PR. Congress changed that a few years ago -- you may be recalling out of date information. They, just like citizens, must explicitly and affirmatively terminate their status with the IRS. Terminating tax status with the IRS also requires terminating U.S. PR (if not already lost) or U.S. citizenship.

It amounts to the same thing for both cohorts, including Expatriation Tax if applicable. The only real difference is the US$2350 fee to terminate U.S. citizenship, as mentioned.


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## MarylandNed (May 11, 2010)

BBCWatcher said:


> I think this is pretty much a "no brainer" and that U.S. citizenship would be great to have.


I agree - which is why I became a USC. A couple of other reasons to do so. Under certain circumstances:

(1) Unlike USCs, PRs can be deported (e.g. for certain criminal convictions)
(2) Unlike USCs, PRs can be deemed 'inadmissable' and refused entry to the US (e.g. for having a communicable disease such as TB)

http://www.nolo.com/legal-encyclopedia/us-deny-entry-inadmissibility-reasons-29715.html



BBCWatcher said:


> There are some nice privileges and rights that come with it, and I can't think of any material downsides in these circumstances.


A few possible downsides of US citizenship that I can think of:

(1) The already-mentioned cost of ridding oneself of US citizenship and its US tax obligations
(2) The cost of keeping a US passport. USCs are required to leave/enter on US passports. Not such a big deal if you live in the US but might be a hassle if you live outside the US, hold a different passport and wish to visit the US.
(3) Being caught in possession of a US passport by anti-US extremists (although this might be no worse than being caught with a UK passport!)

Overall, I think the pros to becoming a USC far outweigh any cons.


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## Bevdeforges (Nov 16, 2007)

OK, let's just hope we haven't scared this poor OP away altogether.

The main point is that, there are a few "inconveniences" to taking US citizenship - probably fewer for a UKC than for many other nationalities. (Thinking here of those nationalities that will not recognize dual-nationality and so will expect/require you to give up your birth nationality.) 

How the OP wants to proceed is entirely up to him. On balance, there doesn't appear to be any compelling reason not to go ahead with US citizenship. It may actually make certain aspects of life a bit easier, especially if he intends to remain resident in the US for the long term. But the final decision is up to the OP.

Let's not get caught up in the "nits and lice" of all the possible "what if" situations.
Cheers,
Bev


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## MarylandNed (May 11, 2010)

BBCWatcher said:


> That's simply not correct. Long-term PRs cannot lose U.S. tax status through abandonment of PR. Congress changed that a few years ago -- you may be recalling out of date information. They, just like citizens, must explicitly and affirmatively terminate their status with the IRS. Terminating tax status with the IRS also requires terminating U.S. PR (if not already lost) or U.S. citizenship.
> 
> It amounts to the same thing for both cohorts, including Expatriation Tax if applicable. The only real difference is the US$2350 fee to terminate U.S. citizenship, as mentioned.


That's not what I said. Maybe you didn't read what I actually said (*especially the bit in bold*):

_"For example, just living outside the US for a long enough period can cause you to lose PR status. Relinquishing US citizenship is a different process as you can't lose US citizenship simply by living outside the US. So different steps on the way to ridding oneself of US tax obligations (*although both would still have to file 8854 with the IRS*). Easier for PRs - costlier for USCs."_


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## aitch74 (Jul 22, 2015)

twostep said:


> Are your children dual citizens?


Yes they are ...


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## aitch74 (Jul 22, 2015)

Wow ... thanks for all the responses ... not much specific to inheritance tax, but that's ok ... I think I'm going to do it ... it feels like the right thing to do and I'll deal with the inheritance tax when it comes up! Being a USC will also afford me the option to hold a concealed carry permit ...


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## MarylandNed (May 11, 2010)

aitch74 said:


> Wow ... thanks for all the responses ... not much specific to inheritance tax, but that's ok ... I think I'm going to do it ... it feels like the right thing to do and I'll deal with the inheritance tax when it comes up!


I think it's a good decision - especially since your kids are USCs. It means fewer potential hassles in later life because you will have guaranteed your right to leave/enter the US whenever you so wish and you don't have to keep renewing your green card. Imagine if your kids lived in the US and you were somehow unable to be with them because you had lost PR status for whatever reason and weren't a USC?



aitch74 said:


> Being a USC will also afford me the option to hold a concealed carry permit ...


No comment!


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## BBCWatcher (Dec 28, 2012)

MarylandNed said:


> (2) The cost of keeping a US passport. USCs are required to leave/enter on US passports. Not such a big deal if you live in the US but might be a hassle if you live outside the US, hold a different passport and wish to visit the US.


The original poster is a U.K. citizen. U.K. citizens are (fairly unusually) not legally required to enter/exit the United Kingdom specifically with a U.K. passport. Thus, in many/most cases, he can avoid renewing his U.K. passport if he chooses (though he will still maintain U.K. citizenship). It costs US$110 to renew a U.S. passport, and it costs (at current exchange rates) about US$133 to renew a U.K. passport (assuming a normal page count passport, not a mini passport), excluding postage. Possession of a U.S. passport also means avoidance of green card renewal fees.

To net it out, the original poster _probably_ saves money even on this score, or at least that's a realistic option in the circumstances.

To comment on inheritance tax, once again: *there is no difference in taxation* between U.S. permanent residents and U.S. citizens. The U.S. does not have an inheritance tax(*) though it does have an estate tax. The U.S. federal estate tax is zero unless the estate has a value greater than US$5.43 million or unless some of that lifetime exemption was used in the form of large lifetime gifts. The U.S. federal estate tax is sometimes zero even if those conditions are violated.

(*) With one exception: if a U.S. person receives an inheritance from a "covered expatriate," a person who was subject to the Expatriation Tax. Then there's an inheritance tax.


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## BBCWatcher (Dec 28, 2012)

OK, there is one rare exception to the "no difference in taxation" statement. Very, very rarely a tax treaty will have different provisions depending on citizenship status. The one example I can think of is the U.S.-Italy tax treaty. If you're a U.S. citizen (only) residing in Italy and receiving U.S. Social Security benefits, the tax treaty says that only the U.S. has the option to tax those benefits. If/when that same individual acquires Italian citizenship then Italy assumes the sole option to tax those U.S. Social Security benefits. That's a downgrade, actually -- the U.S. tax treatment of those benefits is generally more favorable.

I'm not aware of any such provisions in the U.S.-U.K. tax treaty.

Other potential or actual disadvantages:

1. There's a fee to naturalize (currently US$680).

2. The usual, currently hypothetical discrepancies between two countries and their potentially varying obligations. Theoretically Country X could legally require you to do something and Country Y could legally require you not to do that same thing (or to do the opposite). Fortunately in this case we're talking about U.S. and U.K. citizenships, and those two countries have been agreeable with each other for a couple centuries, starting a few years after British forces so rudely torched the White House in 1814.

But you're already "subject to U.S. jurisdiction" according to the U.S. For example, U.S. travel restrictions to Cuba (such as they are -- they're starting to fall) still legally apply to U.S. permanent residents. You've already acquired the legal responsibilities associated with U.S. personhood. So I don't think you're acquiring anything new in this respect with U.S. naturalization.

The one possible exception I can think of is military draft eligibility, though even there the U.S. has, at points in history, drafted non-citizen residents, and the U.S. requires all young male residents of the United States (whether legal or illegal, citizen or not) to register for Selective Service.

On the potential advantages side, yes, U.S. citizens have greater privileges concerning firearms licensing and legal possession. The disadvantage, of course, is having any firearms in the home or on your person. They are certainly dangerous to their possessors -- there's just no question about that. (I'm not making a political statement here. I'm just making a statement of fact.) Greater firearms privileges also means that additional occupations open up to U.S. citizens, in law enforcement and security.


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