# Is renouncing the easiest way?



## PrairieDawn

Hello everyone.

I signed up on this forum a long time ago, and decided flying under the radar was the best course of action. I was intimidated and stressed by every other option and decided to stick my head in the sand and pretend the problem didn't exist. 

Years later, I'm still feeling the stress, and I hate that my partner also worries about the consequences of my situation. The potential penalties and taxes scare us a lot. 

So, I ended up back here,and have been Googling a ton.

Have things changed? I'm reading that many people have renounced their US citizenship at a consulate office, and had a CLN mailed to them months later, essentially ending their relationship with the US government and IRS. And they *did not need to file any taxes?!* Can it really be that easy after all my stress and worries over the years?

For all this time, I assumed that no matter what, I would have to catch up on my back taxes in order to fully sever ties to the US. Can anyone confirm for me that this is true? If so, why are people continuing to go through the process of applying for a SSN, then filing their back taxes? Why not just choose this route? What are the pros and cons? 

Background:
- Canadian, born and raised
- Applied for US citizenship as an adult (American father)
- Hold a valid US passport
- Have never lived or worked in the US (No SSN)
- Have never filed taxes in the US

I'd love to hear from anyone on this topic. I feel like it's time to be rid of this dark cloud and move forward.


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## Bevdeforges

A friend of mine is pretty much through the process of renouncing and is just waiting for the CLN to be issued and sent to her. In her case, it's pretty much a no-brainer - in part because of where she lives (and has lived for the last 40 or 50 years). She has minimal financial ties to the US and, while she does receive a US SS benefit, the US-German tax treaty works in her favor (i.e. only Germany can tax pension benefits from the US so her renunciation makes no difference in her taxes on that score).

Frankly, in your situation, if you don't have a US birthplace and have never gotten a US SSN, I'd just continue on without the expense and bother of renouncing. You didn't get US citizenship when you applied as an adult, you just recognized that you were a US citizen (from birth) due to your having an American citizen parent. These days that's called being an "accidental American" and quite frankly the US doesn't really keep track of those folks closely enough for you to worry about any "consequences." 

Those who need to "think about it" are those with financial assets in the US (bank accounts, investments, etc.) or who are entitled to US SS benefits (usually due to having worked in the US). Some countries' tax treaties with the US have some awkward provisions, where you could wind up paying more tax on certain types of US sourced income as a "non-resident alien." 

It's also worth "thinking about" if you have a US birthplace that appears on your home country passport and you have reason to visit the US frequently. It doesn't always happen, but if some sharp-eyed (or ambitious) Immigration official spots the US birthplace on a "foreign" passport, you could be in for some considerable delay on entry to the US.

But it doesn't sound like you really "need" to spend the $2350 in order to renounce. Your exposure is minimal (as are the chances you actually owe any taxes to the IRS).
Cheers,
Bev


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## Nononymous

Agreed. You have absolutely no reason to worry, and no reason to do anything. Go back to sleep! You are under zero threat at all.

If you have a Canadian birthplace and your only official contact with the US was to apply for a passport, you can safely ignore your US citizenship. I would even argue that simply letting your US passport expire is better than renouncing, which in addition to costing $2350 is more likely to make the US government aware of your existence. With no SSN, you are fully out of the US tax system, and should keep it that way.

A couple of quick points to address things in your original post.

Flying under the radar is the best option for you and many others. Making an informed decision to do so is not sticking your head in the sand, it's being smart! You may think you were refusing to deal with the situation, but you were trusting your instincts and making the right choice. 

Under the terms of the US-Canada tax treaty, the Canadian government will not assist in the collection of US penalties or taxes owed. So those fines are a threat on paper only. First off, the IRS doesn't know about you and won't find you, and even if by some miracle they decided you owed them money, there's nothing they could do about it if you didn't have US assets or income. Most anyone who's suffered financial loss due to US tax compliance has inflicted it upon themselves, due to fear, unethical advice from tax professionals, or even a tragic misguided sense of "honesty".

Renunciation and tax compliance are separate processes. You do not need to be compliant to renounce, or to receive your CLN. When you renounce, all future tax obligations cease. Filing form 8854 and certifying five years' past compliance is necessary for a full exit of the US tax system, and closing off obligations for years prior to renunciation. Sometimes this costs money - Boris Johnson having to settle for capital gains taxes on real estate, for example - but mostly it doesn't. If you just renounce and ignore the tax paperwork, there's really nothing much the IRS can do about it (see the point about collection, above). The only disadvantage is that you become something called a "covered expatriate", which is not bad in and of itself, but if you were were to give or leave money to (compliant) US taxpayers, they would pay a punitive tax rate on those funds. So being a covered expatriate is not smart if you have a sizeable estate and children in the US. Otherwise, whatever. Folks are waking up to the fact that they can renounce and still ignore the tax situation.

I'll spare myself some typing and suggest you read the recent "Dual UK/US national working abroad..." thread for more about my background. My views have evolved a little since I learned about this in 2011. I now think that, first, under no circumstances should dual citizen abroad without US financial ties even consider coming into tax compliance and, second, renunciation is only necessary if a CLN is required to gain access to banking services in countries with serious FATCA enforcement, where you cannot easily avoid revealing place of birth and citizenship to financial institutions.

In Canada, the banks easy to deal with: you lie and they don't care. In your case even easier, as you have a Canadian birthplace. It's quite simple: never, ever say anything to anyone about your US citizenship, period. If asked, say no. Keep the passport in the bottom of a drawer and let it expire, forgot you ever had it. You will be fine. You can invest however you want to invest, use TFSAs or RESPs, or incorporate a business without fear of the "repatriation" tax. Keep quiet and nobody will ever know.


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## PrairieDawn

Bevdeforges said:


> A friend of mine is pretty much through the process of renouncing and is just waiting for the CLN to be issued and sent to her. In her case, it's pretty much a no-brainer - in part because of where she lives (and has lived for the last 40 or 50 years). She has minimal financial ties to the US and, while she does receive a US SS benefit, the US-German tax treaty works in her favor (i.e. only Germany can tax pension benefits from the US so her renunciation makes no difference in her taxes on that score).
> 
> Frankly, in your situation, if you don't have a US birthplace and have never gotten a US SSN, I'd just continue on without the expense and bother of renouncing. You didn't get US citizenship when you applied as an adult, you just recognized that you were a US citizen (from birth) due to your having an American citizen parent. These days that's called being an "accidental American" and quite frankly the US doesn't really keep track of those folks closely enough for you to worry about any "consequences."
> 
> Those who need to "think about it" are those with financial assets in the US (bank accounts, investments, etc.) or who are entitled to US SS benefits (usually due to having worked in the US). Some countries' tax treaties with the US have some awkward provisions, where you could wind up paying more tax on certain types of US sourced income as a "non-resident alien."
> 
> It's also worth "thinking about" if you have a US birthplace that appears on your home country passport and you have reason to visit the US frequently. It doesn't always happen, but if some sharp-eyed (or ambitious) Immigration official spots the US birthplace on a "foreign" passport, you could be in for some considerable delay on entry to the US.
> 
> But it doesn't sound like you really "need" to spend the $2350 in order to renounce. Your exposure is minimal (as are the chances you actually owe any taxes to the IRS).
> Cheers,
> Bev


Thanks so much for your reply Bev. It's comforting to hear that I am most likely not on their radar. I've been told that multiple times, yet the worry just won't go away. Mainly, it's the bank forms and the passport that worry me. I honestly can't remember if I ever ended up filling out the proper W9 form declaring to my bank I was a US citizen. If I did, then they may find me through that route. 

I was also listening to a talk radio show a couple days ago about new tax implications for expats due to Trump's new tax law. It just seems to be getting worse. And if it gets worse and worse, and my net worth increases by the year, I feel like I may just be setting myself up for a big penalty down the road.

If I wanted to satisfy my paranoia and just be done with it, do you think I could try to renounce without my taxes completed, and see if I get a CLN? Would I be in the clear at that point? How does one know they are in fact in the clear? If I show up on the IRS's radar after my renunciation, could I just follow through with my tax filings at that point? Is that risky? Or do you think it's doable to renounce and then just go through the tax filings on my own after?


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## PrairieDawn

Nononymous said:


> Agreed. You have absolutely no reason to worry, and no reason to do anything. Go back to sleep! You are under zero threat at all.
> 
> If you have a Canadian birthplace and your only official contact with the US was to apply for a passport, you can safely ignore your US citizenship. I would even argue that simply letting your US passport expire is better than renouncing, which in addition to costing $2350 is more likely to make the US government aware of your existence. With no SSN, you are fully out of the US tax system, and should keep it that way.
> 
> A couple of quick points to address things in your original post.
> 
> Flying under the radar is the best option for you and many others. Making an informed decision to do so is not sticking your head in the sand, it's being smart! You may think you were refusing to deal with the situation, but you were trusting your instincts and making the right choice.
> 
> Under the terms of the US-Canada tax treaty, the Canadian government will not assist in the collection of US penalties or taxes owed. So those fines are a threat on paper only. First off, the IRS doesn't know about you and won't find you, and even if by some miracle they decided you owed them money, there's nothing they could do about it if you didn't have US assets or income. Most anyone who's suffered financial loss due to US tax compliance has inflicted it upon themselves, due to fear, unethical advice from tax professionals, or even a tragic misguided sense of "honesty".
> 
> Renunciation and tax compliance are separate processes. You do not need to be compliant to renounce, or to receive your CLN. When you renounce, all future tax obligations cease. Filing form 8854 and certifying five years' past compliance is necessary for a full exit of the US tax system, and closing off obligations for years prior to renunciation. Sometimes this costs money - Boris Johnson having to settle for capital gains taxes on real estate, for example - but mostly it doesn't. If you just renounce and ignore the tax paperwork, there's really nothing much the IRS can do about it (see the point about collection, above). The only disadvantage is that you become something called a "covered expatriate", which is not bad in and of itself, but if you were were to give or leave money to (compliant) US taxpayers, they would pay a punitive tax rate on those funds. So being a covered expatriate is not smart if you have a sizeable estate and children in the US. Otherwise, whatever. Folks are waking up to the fact that they can renounce and still ignore the tax situation.
> 
> I'll spare myself some typing and suggest you read the recent "Dual UK/US national working abroad..." thread for more about my background. My views have evolved a little since I learned about this in 2011. I now think that, first, under no circumstances should dual citizen abroad without US financial ties even consider coming into tax compliance and, second, renunciation is only necessary if a CLN is required to gain access to banking services in countries with serious FATCA enforcement, where you cannot easily avoid revealing place of birth and citizenship to financial institutions.
> 
> In Canada, the banks easy to deal with: you lie and they don't care. In your case even easier, as you have a Canadian birthplace. It's quite simple: never, ever say anything to anyone about your US citizenship, period. If asked, say no. Keep the passport in the bottom of a drawer and let it expire, forgot you ever had it. You will be fine. You can invest however you want to invest, use TFSAs or RESPs, or incorporate a business without fear of the "repatriation" tax. Keep quiet and nobody will ever know.


Thank you so much for this. My stomach is turning just reading all this. I mean, it's great news to read this info, but I am just so worried things will change in the future and the two departments (passport and IRS) will speak to each other. Every time I get an email from the local US embassy (about foreign travel warnings), I cringe, because it's a reminder that *someone* out there knows!

What about TFSAs? I have been avoiding investing in this amazing financial tool because of this situation. I read that RRSPs and RESPs are protected, but not TFSAs. Do you invest freely without worrying about this stuff? 

I have entered the US on my American passport in the past but I switched back to my Canadian one once this all became an issue. If they swipe my Canadian passport, does the info from my American passport come up as well? 

As I said in my reply to Bev, I may not have even done the W9 form (I can't remember 100%), and may have already lied to the bank about my status. Do you think I could call the bank to ask which form they have on file for me, or would that be really stupid?


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## Nononymous

The only thing I can say is that given the circumstances you should simply forget about this stuff. But it may not be in your psychological makeup to do so - some people are worriers by nature.

I have a valid US passport that I keep in my bag when entering the US, in case they ask for it, which has only happened once. Otherwise I use the Canadian on principle, so far with no ill effect. I have a small TFSA that I opened, on principle, so I could defy another US law. I have an SSN and filed US taxes for a few years when I lived and worked there; I stopped when I returned to Canada. I have a US birthplace. In other words, I have far more exposure than you, but I am completely non-compliant, have no intention of becoming compliant or renouncing, and couldn't care less about what the US government thinks. I sleep quite well at night. The only reason I keep coming back to sites like this is because I think it's important to convince others in a similar situation that they should not panic.

One small bit of good news - because you've not actually lived in the US, you could not pass on citizenship to any future children. So that's one less worry.

I would say nothing to your bank. If you did sign a W9 you would probably remember, because they would have asked for an SSN and you would have either said that you didn't have one or would have tried to get one. Let that sleeping dog lie, and if you are ever asked in future, you now know how to answer!


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## Nononymous

One more note. If you tend towards the paranoid end of the spectrum - I'm not saying that in a judgemental way, just making an observation - then for the sake of your mental health I would not renounce without also coming into tax compliance. Because renunciation might make the IRS aware of your existence. Nothing would ever happen as a consequence of it, but you'd be thinking and worrying about it until the end of your days. In which case it's probably better to go through the whole process so you can feel assured that you're fully and formally out of the system. You would owe nothing, it's just the paperwork hassles (and costs if you pay someone to do it for you).


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## Nononymous

And yet one more note. If you want to find out what your bank knows about citizenship, without explicitly asking them - which would be an obvious flag that you are hiding something - what I would do is this. Go in and open a new account or sign up for a TFSA or some other investment product. Mention that you need to change your e-mail address or cell number or something like that. Then pay careful attention - they might do a basic review of your customer information, and they may ask you a citizenship question. Possibly not, because Canadian banks are very lax about FATCA, but they are checking citizenships and tax residency in general because of CRS (the global Common Reporting Standard). So you might figure out what they already know, or at very least you can confirm Canadian-only so that it's never a problem in future, assuming that you're comfortable telling an untruth.

But I think you'd remember if you signed a W9 because the lack of an SSN would have been an issue. And even if you had, frankly it's not a huge deal, it doesn't mean that you're somehow identified to the IRS as a foreign tax evader, it just means that some of your account data - not matched to an SSN - might potentially be added to the vast dump of useless FATCA data that is probably sitting untouched on someone's desk somewhere in the US.


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## Nononymous

PrairieDawn said:


> I have entered the US on my American passport in the past but I switched back to my Canadian one once this all became an issue. If they swipe my Canadian passport, does the info from my American passport come up as well?


Apparently not. If it did, they would tell you to use your US passport, because technically it is illegal for a US citizen to enter the US on a foreign passport. Needless to say, this law is not enforced.

Currently US border folks have no access to any tax information. Unless there was a warrant for your arrest on tax evasion charges - which you'd likely know about - there can be no questions about your tax status.


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## PrairieDawn

Thanks so much for the replies Nononymous . I really appreciate you sharing your views and what you're doing. Has the IRS not contacted you because you haven't filed your taxes? How are so many people getting contacted about FATCA? I've read so many stories about dual citizens paying fines, etc. to the US government, but are you saying most are voluntarily doing so? They were not tracked down? 

I have a feeling I looked at the W9 form, which asked for tons of info I didn't have (TIN etc), and just did the W8BEN. But a small part of me worries I did the W9 and just wrote (do not have these numbers) or something like that. I can't be sure. I will try opening a TFSA and see what happens there. 

If the IRS can't actually get at my money or assets, is the worst case scenario being banned from the US? 

What do people do who have renounced citizenship if they did fill out the W9 form properly? Do they go into their banks and cancel them and then fill out a W8BEN? 


Thanks again for all the advice.


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## Nononymous

PrairieDawn said:


> Thanks so much for the replies Nononymous . I really appreciate you sharing your views and what you're doing. Has the IRS not contacted you because you haven't filed your taxes? How are so many people getting contacted about FATCA? I've read so many stories about dual citizens paying fines, etc. to the US government, but are you saying most are voluntarily doing so? They were not tracked down?


I filed my last US return from a Canadian address in the mid-90s. Renewed my passport twice (though the last time from a temporary address in Europe). Never heard a word from the IRS, expect I never will. 

Nobody is being contacted by the IRS due to FATCA reporting, as far as we know. (By "we" I mean here, Isaac Brock Society and the American Expats Facebook group - the main centers of resistance.) People are being contacted by their banks because of FATCA, and are then being scared into compliance. 

The dual citizens who paid fines are the ones who either had complex cross-border affairs or who entered the (extortionate and awful) OVDI/P "amnesty" program six or so years ago, which had mandatory penalties. Since then ordinary non-compliant duals like you and I have not been penalized, certainly not with FBAR fines of $10k per account for example. But some would have owed taxes due to investments (e.g. the US not recognizing TFSAs) or capital gains on the sale of a primary residence. Sadly, payment is often "voluntary" with the IRS having no ability to collect if there are no US assets or income in play. But lots of people have been coerced into cooperation by lawyers and accountants - the compliance industry if you will.



> I have a feeling I looked at the W9 form, which asked for tons of info I didn't have (TIN etc), and just did the W8BEN. But a small part of me worries I did the W9 and just wrote (do not have these numbers) or something like that. I can't be sure. I will try opening a TFSA and see what happens there.


Most likely this is nothing to worry about. And if a bank ever asks, you are a Canadian, born in Canada. Period. 



> If the IRS can't actually get at my money or assets, is the worst case scenario being banned from the US?


Pretty much, and even that is highly unlikely.



> What do people do who have renounced citizenship if they did fill out the W9 form properly? Do they go into their banks and cancel them and then fill out a W8BEN?


Yep, they'd bring in their CLN and say "stop reporting me to the US, tear up the W9" and that's that. Bank might want them to fill out a W8-BEN, or the new CRS form, or just take their word for it. I once refused to sign a W8 because I said that as a Canadian I objected to signing a US government form to prove something I wasn't; the bank backed down. (I was lying about not having US citizenship, of course, but the principle was at stake.) 



> Thanks again for all the advice.


You're more than welcome. Now forget about your US passport and never speak of this again!


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## Moulard

Nononymous said:


> Apparently not.


If you ever fly into the US your US and Foreign Passport (Australian, in my case) they ARE linked. This is a result of the pre-clearance requirements imposed by the US to board the aircraft.

This is because the passport you are travelling is not (or may not) be the one you are entering the US one (for example, leave Oz on the Australian one and enter the US on the US one to comply with both sets of immigration rules). So when I last boarded a flight to the US, with 2 new shiney passports (I had previously let both expire) , during checkin they had to ring the Australian Department of Foreign Affairs and quote both my Australian and US passport details and then wait for them to link the two before they would finalise checkin.

What I cannot comment on, is whether behind the scenes DFAT passed the info to the US.


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## Bevdeforges

Let me add one further note. Even if your bank(s) have a W9 on file for you, all they report is the year-end balance in your various accounts. They don't report any account activity, nor even account income (i.e. interest or other payments into the account). There is nothing to indicate that you have any tax filing obligation. (Tax filing thresholds start at around $10,000 of income - unless you're filing as married, filing separately, where it is closer to $4000.) But other than your financial accounts where you might have given them a W9, the IRS has no idea of any income you have unless it is US source income. 

Plus, even if you've given them a W9, you say you have no US SSN. So they can't actually match up anything reported to your tax records (or lack thereof). Unless they have some reason to know that you are evading taxes, they won't bother with running anything down about you. (Don't forget, the IRS budgets have been cut way, way back in recent years. They really do have to show a potential for "recovery" of big sums in back taxes to open an investigation into someone's tax situation.)
Cheers,
Bev


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## PrairieDawn

Moulard said:


> If you ever fly into the US your US and Foreign Passport (Australian, in my case) they ARE linked. This is a result of the pre-clearance requirements imposed by the US to board the aircraft.
> 
> This is because the passport you are travelling is not (or may not) be the one you are entering the US one (for example, leave Oz on the Australian one and enter the US on the US one to comply with both sets of immigration rules). So when I last boarded a flight to the US, with 2 new shiney passports (I had previously let both expire) , during checkin they had to ring the Australian Department of Foreign Affairs and quote both my Australian and US passport details and then wait for them to link the two before they would finalise checkin.
> 
> What I cannot comment on, is whether behind the scenes DFAT passed the info to the US.


Interesting.


So would you all advise renewing my American passport when it expires in a few years, to always have on hand when I cross, just in case? I was planning to let it expire and burn it.


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## PrairieDawn

Bevdeforges said:


> Let me add one further note. Even if your bank(s) have a W9 on file for you, all they report is the year-end balance in your various accounts. They don't report any account activity, nor even account income (i.e. interest or other payments into the account). There is nothing to indicate that you have any tax filing obligation. (Tax filing thresholds start at around $10,000 of income - unless you're filing as married, filing separately, where it is closer to $4000.) But other than your financial accounts where you might have given them a W9, the IRS has no idea of any income you have unless it is US source income.
> 
> Plus, even if you've given them a W9, you say you have no US SSN. So they can't actually match up anything reported to your tax records (or lack thereof). Unless they have some reason to know that you are evading taxes, they won't bother with running anything down about you. (Don't forget, the IRS budgets have been cut way, way back in recent years. They really do have to show a potential for "recovery" of big sums in back taxes to open an investigation into someone's tax situation.)
> Cheers,
> Bev


Thanks, Bev. That's an excellent point and I hadn't considered that they can't really determine what taxes I might potentially owe without the whole picture. Didn't realize that about the funding either. Great info. Thank you. 

What if I become a bazillionaire by some twist of fate though?


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## Nononymous

Moulard said:


> If you ever fly into the US your US and Foreign Passport (Australian, in my case) they ARE linked. This is a result of the pre-clearance requirements imposed by the US to board the aircraft.


For a Canadian, I'm not sure they are. Possibly because we have US customs pre-clearance on Canadian soil, so the airlines are less fussy about checking passports because it's already been done for them. I just stroll up to US customs and show them my Canadian passport and that's that.

I once got into a dispute about the nature of a business trip. Only then did they notice a US birthplace and ask about citizenship. I gave them my expired US passport to look at and they let me in with a lecture to renew it, and took lots of notes.

I continued using my Canadian passport on all subsequent trips, nobody seems to care. I didn't renew the US passport until I knew I was going to be in Europe for half a year with a "disposable" address, but I've never had to show the new one either.


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## Nononymous

PrairieDawn said:


> What if I become a bazillionaire by some twist of fate though?


Doesn't matter as long as the bank doesn't know you're a US citizen, because it won't be sending any FATCA reports so the IRS won't know you exist.


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## Nononymous

PrairieDawn said:


> So would you all advise renewing my American passport when it expires in a few years, to always have on hand when I cross, just in case? I was planning to let it expire and burn it.


NO!!!! Do not renew it.

You have a Canadian birthplace, they will have no reason to suspect US citizenship. Just continue using your Canadian passport. 

The fact that you used a US passport in the past, while not ideal, is likely not going to be an issue because they really don't seem to have that sort of data readily at hand, to somehow link two people with the same name and birthdate but different citizenships and passports.


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## Moulard

PrairieDawn said:


> Interesting.
> So would you all advise renewing my American passport when it expires in a few years, to always have on hand when I cross, just in case? I was planning to let it expire and burn it.


Well technically US law requires you to enter the US on a US passport if you are a US citizen. If you present yourself with a foreign passport, and the UCIS border official believe you to be a US citizen I don't believe they can refuse you admittance, because to do so would be, in effect, them an abrogation of your US citizenship. 

They can, however, they can fine you.


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## Bevdeforges

Moulard said:


> Well technically US law requires you to enter the US on a US passport if you are a US citizen. If you present yourself with a foreign passport, and the UCIS border official believe you to be a US citizen I don't believe they can refuse you admittance, because to do so would be, in effect, them an abrogation of your US citizenship.
> 
> They can, however, they can fine you.


Basically, though, the only way they will realize you are a US citizen is if you have a US birthplace. (And even then, they don't always notice.) 

Admittedly, the fine is steep - but I don't believe they have the authority to fine you on the spot. Usually what they do is haul you off the a side office and "interrogate" you for an hour or so. That's what happened to the born-in-the-US daughter of a friend of mine. Her sister (also born in the US) had visited the US several months prior with her (all French) family and nobody said anything when she entered with her French passport.

You plays the game and you takes your chances.
Cheers,
Bev


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## Nononymous

The other week I sailed through US customs using a Canadian passport with US birthplace. On one occasional about five years ago I was told to use a US passport but have continued using the Canadian - I'm funny that way - and have never had any further trouble.

With a Canadian birthplace there is zero problem for a dual citizen using a Canadian passport.


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