# What are Accidental Americans?



## MyExpatTaxes (10 mo ago)

An Accidental American is someone who is born abroad from at least one US parent, and will usually acquire American citizenship at birth. This is only, however, if the parent takes the necessary steps to make it so, usually by registering their child at the US Embassy in the foreign country that they gave birth in.

Additionally, Accidental Americans are citizens who were born in the US to foreign parents OR were born outside the country to American parents and are unaware of their status as US citizens. 

By law, all US citizens are supposed to report and pay their (worldwide) taxes to the IRS every year. This means that even if you live abroad in Mexico as a US citizen, you still have to file every year. So, if you want to renounce your citizenship, you have to make sure you’re all up to date on paying and filing your US taxes.

With the rise of FATCA since 2010, foreign banks and institutions need to determine their customers are US Americans abroad. If yes, they will need to report certain information about the customer’s account to the IRS every year. It’s to prevent money laundering in “offshore” bank accounts. So that’s why if you are opening a foreign bank account as a US expat and show your US passport, the teller may inform you of the large amount of paperwork involved in the process.


----------



## Harry Moles (11 mo ago)

MyExpatTaxes said:


> So, if you want to renounce your citizenship, you have to make sure you’re all up to date on paying and filing your US taxes.


This is completely untrue, which I'm sure you know.

Renunciation is purely a matter of citizenship law, between an individual and the State Department. There is no requirement to be filing or otherwise demonstrate compliance, or to have paid any US tax debts. The IRS does not approve renunciations; consular officials do not enquire as to current tax status, or require that you supply a Social Security Number. (At my own recent renunciation, I was informed that loss of US citizenship would not wipe out past tax debts, but otherwise the subject was not mentioned. I did not provide an SSN. I received my CLN in the mail after a short period of time.)

There is a separate process with the IRS after renunciation to formally exit the US tax system. This involves filing a partial-year return for the year in which nationality is lost, plus Form 8854 (to determine if covered expatriate status applies, and determines a possible exit tax) on which one certifies whether or not one has been fully compliant with tax and FBAR filing obligations for the past 5 years. This process is optional. For a person who was been compliant, or who has US assets, or who intended to maintain close family or business ties with the US, then it probably makes sense to go through the process and properly expatriate from the US tax system. For an Accidental American who has never filed, doing so is a complete waste of time and money. Why enter the US tax system only to leave it again?

Every year the IRS is given a list of names from the State Department, US citizens who have renounced. The IRS doesn't appear to do anything with this list. By their own admission, over 40 percent of those who renounce do not file Form 8854, and the IRS makes no attempt to follow up.


----------



## Harry Moles (11 mo ago)

Furthermore, the discussion of citizenship for children born abroad to a US parent isn't entirely complete or accurate. See this thread for more clarity: 









General expat tax question


Hi, I was hoping someone might be able to answer a question about my situation so I can decide whether to hire a professional or not. Money is tight for me these days unfortunately. I’m a US citizen/Canadian PR that has been living in Canada for 10 years. I work and live in Canada and my only...




www.expatforum.com


----------



## MyExpatTaxes (10 mo ago)

You make a good point. The IRS may not usually follow up, but it doesn't mean they never will. That's why each specific case should always be looked into individually. We're happy to help anyone who prefers to get their US taxes in order while attempting to renounce.


Harry Moles said:


> This is completely untrue, which I'm sure you know.
> 
> Renunciation is purely a matter of citizenship law, between an individual and the State Department. There is no requirement to be filing or otherwise demonstrate compliance, or to have paid any US tax debts. The IRS does not approve renunciations; consular officials do not enquire as to current tax status, or require that you supply a Social Security Number. (At my own recent renunciation, I was informed that loss of US citizenship would not wipe out past tax debts, but otherwise the subject was not mentioned. I did not provide an SSN. I received my CLN in the mail after a short period of time.)
> 
> ...


----------



## Harry Moles (11 mo ago)

MyExpatTaxes said:


> You make a good point. The IRS may not usually follow up, but it doesn't mean they never will. That's why each specific case should always be looked into individually. We're happy to help anyone who prefers to get their US taxes in order while attempting to renounce.


The last people the IRS will ever follow up with are those who renounced without ever having an SSN or filed a US tax return. There would be literally nothing to follow up on, except possibly a few FATCA numbers. Definitely not worth their time and money.

As long as you help those who make an informed decision about their circumstances, all good. Certain US expat tax practitioners make it their business to scare people into filing before renunciation when in most cases it's completely unnecessary; worse, intentionally or otherwise they deceive them into believing that tax compliance is necessary to renounce US citizenship, which is not true. Accidental Americans who've never been in the US tax system can simply renounce and be done with it, saving themselves a lot of time and money and trouble.


----------

