# US Citizenship Q



## billthomson (Aug 20, 2014)

I'm a dual US/Canadian cit, originally from US, & lived in the US long enough that my kids can be US citizens. The kids are in early teens. My oldest was born in the US, so has US citizenship by default. My youngest though was born in Canada. I've never filed any paperwork to get his US citizenship, does anyone know if he is considered a US citizen by default regardless of whether I do this?

Reason I'm asking is that if nothing changes in the next few years, when my kids turn 18 I'll advise them to renounce US citizenship rather than face a lifetime of dealing with the IRS. I want to know if the youngest would even need to - ie do I need to file to get him citizenship so he can renounce, or can I just let it expire by default. I always assumed that he wouldn't have US citizenship unless I actively filled out paperwork, but looking at some stories online recently seems to suggest otherwise.

Thanks!!!


----------



## Nononymous (Jul 12, 2011)

I have a daughter in a similar situation as your youngest. I'm Canadian, dual citizen due to birth in US, met the criteria for passing on citizenship - it always feels a bit like passing on a genetic illness, doesn't it? - by virtue of having lived in the US more than five years, with two of those years past the age of 14.

Your oldest can't escape the mark of Cain, the US birthplace, so will need to deal with this one way or another. I would not recommend he travel to the US with a Canadian passport, eventually that will be a problem.

As far as I know, your youngest is automatically considered a US citizen, though of course the US will have no record of his existence. With a non-US birthplace he could enter the US on a Canadian passport and otherwise "pass" as Canadian, though this is technically illegal.

Where you might encounter difficulty is family travel. If a customs agent sees a mix of passports within one family, they could ask questions. It is of course technically possible for you to be US/Canada and have one child with US/Canada and another with Canada only (if the former was born in the US, but you didn't meet the criteria for passing US citizenship on to the latter, born in Canada) but this is bit of an outlier.

My daughter's birth was, alas, registered with a US consulate in Europe, in the country where she was born. (Seemed like a good idea at the time.) She travels to the US on a Canadian passport with no difficulty. When we've crossed together in the past I've used a Canadian passport. This is technically not kosher but it was widely ignored until recently; after getting a lecture about it last year I renewed my US passport. We have no plans to travel to the US together in the foreseeable future; if we do I'm not sure what my best approach is - probably send her with her Canadian mother and take a separate flight!

When she turns 18, in a few years' time, she can decide what to do: renounce, ignore, or comply. It will likely depend on whether she has any interest in going to the US, or if there's any monetary disadvantage to becoming tax compliant (beyond the paperwork nuisance and having put herself on the radar) given that she'll have a very substantial RESP to her name - thank you, grandparents.


----------



## billthomson (Aug 20, 2014)

Thanks for the reply. We've traveled to the US a LOT of times, I always use my US passport & Canadian passports for the rest of the family (including my daughter's passport that lists a US birthplace). Nobody has ever complained about the mixed passports, only once did a border agent note my daughter's birthplace and mention that she's a US citizen too (we always do carry a copy of her birth certificate too). In fact, I don't even have a Canadian passport, I just use my US passport & citizen card when I enter Canada & have had zero problems on flights or by car. I do keep meaning to get a Canadian passport someday....

I kind of think the best thing to do is get the citizenship officially for my youngest, & let him renounce at 18 if the laws haven't been fixed by then, although the idea of just never having to do anything is pretty appealing.


----------



## Nononymous (Jul 12, 2011)

They may not give a hoot about the kids' passports. Who knows?


----------



## DavidMcKeegan (Aug 27, 2012)

From the sounds of it your youngest would be automatically considered a US citizen (you can confirm via this table Citizenship Through Parents | USCIS). A such, your best bet will be to eventually get a US passport for them (make travel to the US easier), and then come age 18, they can make the decision to renounce their US citizenship if they so choose.


----------



## Bevdeforges (Nov 16, 2007)

Nononymous said:


> They may not give a hoot about the kids' passports. Who knows?


Used to be they only occasionally noticed the US birthplace - however lately we're getting more reports of folks being "reminded" that as US citizens they are required to enter the US on their US passport. There actually IS a big fine for trying to enter on another passport if you are a citizen, though I haven't heard too much about them invoking this - other than as a "warning." It does, however, suggest that things could be a changing.
Cheers,
Bev


----------



## truncat (Aug 4, 2014)

Isn't there a limit on when you have to start paying taxes as a US citizen overseas? I thought it was around $80K - if so, why renounce right at 18? Unless they are very well off, I know I wasn't making $80K a year when I turned 18... Having dual citizenship could be a very handy thing to have. If there's not a need to right away, I'd let them wait to make the decision until it becomes an issue.


----------



## BBCWatcher (Dec 28, 2012)

In tax year 2014 earned income up to $99,200 is completely free of U.S. income tax for everyone residing overseas indefinitely/permanently. There are additional exemptions and deductions as well.

Substantially more than $80K, in other words.

I agree with your point. An 18 year old -- indeed, anybody, at any age -- can evaluate his/her situation and decide at any time. You're also correct that the vast, vast majority of U.S. citizen 18 years olds don't earn more than $110K, $80K, or anything remotely similar -- and among the remaining 18 year olds that are earning gobs of money, most are doing it in the world's #1 economy. ("It's the lifetime after-tax income and total lifestyle experiences, stupid," to borrow a phrase from James Carville.) Though unfortunately you'll find a lot of hyperbole relating to this whole subject. Mostly because a lot of people renounce their citizenships for non-individual financial reasons.


----------



## Bevdeforges (Nov 16, 2007)

truncat said:


> Isn't there a limit on when you have to start paying taxes as a US citizen overseas? I thought it was around $80K - if so, why renounce right at 18? Unless they are very well off, I know I wasn't making $80K a year when I turned 18... Having dual citizenship could be a very handy thing to have. If there's not a need to right away, I'd let them wait to make the decision until it becomes an issue.


Be careful of that interpretation of the tax rules. You may not actually have to PAY tax until your earned income exceeds the FEIE (the exclusion allowance for overseas earned income - i.e. salary and salary-like income), but you still have the obligation to file. In addition to that, if you have income from "unearned" sources (IRS terminology) like interest or investments, that is all subject to US taxation at much lower levels (offset by any foreign income taxes you pay on that income).

The decision to renounce or not to is a highly personal one. And, given that the fees for renouncing go up to something over $2000 at the end of this week (from $450) there is the financial side of the decision now as well - at least for some folks. Though the hike in fees does tend to make "flying under the radar" a much more attractive option.
Cheers,
Bev


----------



## DavidMcKeegan (Aug 27, 2012)

Bev is right, even though you will likely not have to pay taxes until you are over the 99K income level (and even when you are over that threshold, depending on where you live you could still not have to pay US taxes), you will still have to file a return if you are over the minimum income threshold.

That means for a single person the minute you make over 9K (approximately), you better file a US return. If you are self employed the threshold is even lower at only $400. 

Definitely something to think about. Fortunately it sounds like your child will have years before they even have to worry about it.


----------



## BBCWatcher (Dec 28, 2012)

Your are _obliged_ to file a tax return if you meet or exceed the filing threshold, but there is no _penalty_ for non-filing if you genuinely owe zero U.S. income tax. Nonetheless, it is _prudent_ to file on-time even if you owe zero U.S. income tax for at least these reasons:

1. If you erred and you genuinely owe some U.S. income tax, even an inadvertently incorrect filing is better than non-filing from a penalties and interest point of view;

2. In order to sponsor someone for immigration into the United States (such as a spouse) you'll need to submit copies of your tax records to USCIS;

3. Other benefits are connected to having tax records to submit, e.g. student financial aid (both government and private);

4. You may be eligible to collect refundable U.S. tax credits, i.e. you may be able to receive free money from the IRS if you file and if you qualify -- a tax rate less than zero;

5. If you live in a comparatively high income tax jurisdiction, you may be able to "bank" Foreign Tax Credits that can be used to offset future U.S. income tax liabilities -- up to 10 years into the future;

6. If you decide to renounce U.S. citizenship and obtain a Certificate of Loss of Nationality (CLN) you'll likely need past years' tax filings to do it;

7. It's reasonably likely that employers, financial institutions, governments, and others will increasingly require their clients and associates to be tax compliant in order to avoid their incurring certain risks.

FBARs (FinCEN Form 114) are different. There is a penalty for non-filing (or for late filing) if you are required to file a FBAR. Whether the penalty is charged or not is a separate question, but the U.S. Treasury certainly has the legal right to collect penalties if you're late, don't file, or file a false report.


----------



## billthomson (Aug 20, 2014)

I wanted to clarify, the reason I suggested I'd have the kids renounce at 18 is that my understanding is that between 18 and 18.5 you can renounce without having to document 5 years of tax compliance, I seem to recall it's easier to renounce in this time frame (albeit you still need to pay the ridiculous new fee).

And yes, even though it is very unlikely that they'd owe anything, my personal experience is that the actual filing/forms can't be filed properly on a TFSA/RESP/Mutual fund based on the info provided for the accounts at year end. I'd like to think the US will deal with this before it impacts my kids, but I'm not hopeful. I didn't make my first mutual fund or retirement contribution until I was in my 30s, but I'd encourage my kids to put away a small amount earlier.


----------

