# Dual citizen implications



## diesis (Mar 20, 2016)

Hello, 

I know that this is an issue that has come up before, and I have been doing a bit of reading about it. I just wanted to make sure that I understand it properly, as it is all a bit new and intimidating. 

I was born in the USA, and moved to Australia the year of or year after my birth. I also lived there for about 18months during high school. The remainder of the time has been in Australia, except for the occasional holiday. 

Recently I bought my first property, and the mortgage application talked about this "FATCA" thing, which prompted me to look into what that was. In the process I discovered that I should be filing US Tax returns in addition to the Australian ones! 

I have found the Streamline process website and I think this is the correct place to start. It looks like I have to go back 3 years, but 6 years for the FBARs. 

My questions are:
1. Should I get an accountant to do this? I don't know anything about the US tax system, and want to make sure I don't make any mistakes... but on the other hand it seems that accountants charge at least $300 per return!

2. I don't think I will have records going back 6 years that show how much was in my bank accounts, and I may not even have records going back 3 years to complete the US returns, depending on what is needed. What do people usually do in this situation?

3. I have read that there are options to claim exclusions or credits for foreign income - is this something I should be doing, and if so, how? 

4. I don't currently earn over the threshold I've seen for excluded foreign income, but I probably will in the future. Can anyone comment on how likely it is that I would have to pay US tax as well as Australian tax? 

5. Finally, what are the implications of my US citizenship and tax obligations should I get married to an Australian, or have children in Australia? Would my partner or children then have to file taxes too??

I really appreciate any help with the above, I know I have a lot of questions! I wasn't really sure where else to go to get the information.

Thank you!


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## Bevdeforges (Nov 16, 2007)

First of all, don't feel like the Lone Ranger. There are many, many folks in similar situations who are struggling with the implications of this "accidental" American citizenship stuff. It's also the case that no one is going to swoop down on you any time soon for failure to file (in fact at this point they probably don't even have an inkling that you exist) so take your time and do things calmly and rationally. 



diesis said:


> My questions are:
> 1. Should I get an accountant to do this? I don't know anything about the US tax system, and want to make sure I don't make any mistakes... but on the other hand it seems that accountants charge at least $300 per return!


Unless your financial situation is rather complicated (with lots of investments and such), there is no real need to find an accountant. In fact, there is a "free file" program where you may be able to use an online tax preparation software to prepare (and perhaps also file) your returns. It's not completely intuitive, but it's a whole bunch easier than figuring out the forms for yourself. For the back filing, it's possible to download software for $15 to $50 (American) a year.

And, just to lay all your options on the table, there is the option of simply laying low and trying to stay off the IRS radar (as you have been doing all these years - the laws haven't changed, at least regarding the need to file). It's up to you.

Should you decide to file and back file, the first thing you need is your US Social Security number. If you received one at birth, you need to dig it out, cause you can't file taxes or FBARs without one. If you don't have an SSN, then you need to check with the local consulate to ask about the procedure to get one.



> 2. I don't think I will have records going back 6 years that show how much was in my bank accounts, and I may not even have records going back 3 years to complete the US returns, depending on what is needed. What do people usually do in this situation?


Not really a problem. For the bank accounts, the big thing is the identity information on the accounts (which will be the same each year unless you've added or closed out accounts during this time). They aren't really interested in pinpoint accuracy on the "high balance" figure - just a good faith estimate. Probably safest to guesstimate high rather than low. But if that's all you've got, that's all you've got. 



> 3. I have read that there are options to claim exclusions or credits for foreign income - is this something I should be doing, and if so, how?


All part of the process of doing the forms. The tax preparation software should handle it for you, but if you want to at least attempt to do it yourself (or just want an overview to have some idea what the software is doing) download Publications 54 and 17 from the IRS website. 
https://www.irs.gov/uac/About-Publication-17
https://www.irs.gov/uac/About-Publication-54
In Pub 17, you only want to bother with the sections related to the types of income you have: salary, bank interest and then you only mess with the other stuff if it relates to you personally. Chances are, you won't have to get into the deductions, especially if you simply exclude all your salary income using form 2555. 



> 4. I don't currently earn over the threshold I've seen for excluded foreign income, but I probably will in the future. Can anyone comment on how likely it is that I would have to pay US tax as well as Australian tax?


Don't worry about that just yet as tax law can and does change from time to time. Overall, the chances are that you'll pay very little, if any US tax. The overall idea is that overseas residents pay taxes to their home country - and in very general terms, any US taxes they pay usually relate to US source income (like US social security benefits, pensions coming from the US, interest or investment income on accounts based in the US). Since you haven't lived in the US long enough to be eligible for US source income, in the long run, you shouldn't wind up paying US taxes. But you still have to file every year that your worldwide income exceeds the threshold for your filing category.



> 5. Finally, what are the implications of my US citizenship and tax obligations should I get married to an Australian, or have children in Australia? Would my partner or children then have to file taxes too??


Basically, no. For your children to get US citizenship, you would have had to have lived in the US for at least a couple of years after your 14th birthday. (18 months is definitely NOT enough). Your partner takes on no filing obligation of her own. You would be expected to report any bank accounts held jointly with your partner, but where they ask for a SSN, you can just indicate "NRA" for non-resident alien.
Cheers,
Bev


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## ersterhernd (May 5, 2015)

Do you have a US Social Security Number?

If not, that'll be your first hurdle if you want to go forward with this. If you already do, consider yourself fortunate because it can be a troublesome process done from abroad.

Good Luck.


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## Nononymous (Jul 12, 2011)

Given the number of enquiries lately, it sounds like Australia is catching up to where Canada was a few years ago. Consequently I can quote verbatim the reply I gave another Australian last week:



> You also have the option of ignoring this. You're in the same boat as half a million non-compliant Canadians with dual citizenship. I would look into the legal situation in Australia, but in Canada the US government basically cannot collect a dime from Canadian citizens. If you aren't planning on moving to the US or spending large amounts of time there, and you don't have US assets, then you can cheerfully stop worrying about this. Ideally Australian banks won't try very hard to comply with FATCA - if they ask about citizenship, lie, provided they don't want to see your place of birth. Right now you're off the radar - think long and hard before you get back on.
> 
> One piece of good news: based on the timelines you've given, your children will not automatically inherit US citizenship.


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## diesis (Mar 20, 2016)

Thanks for the responses!
I do have a social security number, it's a very old business card I've always just kept in my passport. I must have gotten it when I was a kid. 
I've already filled out the paperwork with the bank and said that I had US citizenship.. lying on a bank form didn't really seem like a good option. I also didn't know what it was for, so I didn't think too much about it. I guess that means I am "on the system" now. 

I've seen a few horror stories when searching this topic online, especially when people sell houses etc later on. I guess I will get myself up to date with the returns and then have a think about whether or not to keep the citizenship. I don't really want to be taxed twice when I start to have a high income or assets.

Thanks again everyone!


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## maz57 (Apr 17, 2012)

diesis said:


> I've seen a few horror stories when searching this topic online, especially when people sell houses etc later on. I guess I will get myself up to date with the returns and then have a think about whether or not to keep the citizenship. I don't really want to be taxed twice when I start to have a high income or assets.
> 
> Thanks again everyone!


Those horror stories are generally innocent people who discovered the insane US CBT tax system and consulted a so-called "professional" who pushed them into one of the abusive early voluntary disclosure programs. Their fleecing by the IRS was mostly penalties rather actual tax owed. (For example, being assessed huge FBAR penalties for not filing a form they didn't even know they were supposed to file.)

Remember, as an expat the IRS really only knows what you choose to tell them. If you think you need to go through the motions to be US tax compliant why would you tell them about a house sale or the intricate details of your home country tax deferred savings accounts? With FATCA they will now get a bit of info about bank accounts and interest paid, but still know relatively nothing about you.

The citizenship question is fairly straight forward. Keep it if you think you might want to live there someday. Otherwise, get rid of it. The current trend is not making things easier for US expats and its not likely to improve in the foreseeable future.


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## Nononymous (Jul 12, 2011)

Out of curiosity, you had to put citizenship information on a mortgage application? Strange. 

If you took your business elsewhere and didn't say anything about US citizenship to a new bank, I doubt that anything would be reported.


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## Bevdeforges (Nov 16, 2007)

Citizenship information is often considered part of your personal identification information - particularly in those countries where there isn't a single number (like the US SSN) that labels each person. However, it's usually the case that you can just indicate your "primary" nationality if you want to. If you weren't born in the US, there is no reason to give more information than you were asked for. (Unfortunately, place of birth is another piece of "identity" info.)
Cheers,
Bev


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## diesis (Mar 20, 2016)

A few pages in to the application there was actually a question that asked "are you a US citizen" and yes or no checkboxes. I thought it was odd too, but I didn't want to blatantly lie. A few weeks after the paperwork was in they followed it up with a FATCA form.


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## Nononymous (Jul 12, 2011)

diesis said:


> A few pages in to the application there was actually a question that asked "are you a US citizen" and yes or no checkboxes. I thought it was odd too, but I didn't want to blatantly lie. A few weeks after the paperwork was in they followed it up with a FATCA form.


That would have been a good time to lie.


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## maz57 (Apr 17, 2012)

Nononymous said:


> That would have been a good time to lie.


Its difficult these days to find a really good time to lie but this would have definitely been a great opportunity. Oh well......


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## BBCWatcher (Dec 28, 2012)

May I remind everyone (again) that lying to your bank is most likely, in most countries, a criminal offense under the _domestic_ laws of that country.

I do not recommend lying. Dumb idea, in my view.(*) I would really rather not hear about some of my fellow forum members getting hauled to jail or fined for lying. Instead, decline to answer the question if you don't want to answer it. Revert to a paper form if you must, if the electronic application won't accept a refusal to answer.

(*) I also don't recommend that you recommend anybody lie. That too can be a criminal offense under the domestic laws of your country.


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