# Dual citizen question



## lat19n (Aug 19, 2017)

We are currently retired (since July last year) and reside full time outside the US. We have submitted our paperwork to obtain citizenship in Mexico and awaiting final word. 

The only income we obtain outside the US is bank/investment interest. We have to pay a tax of 0.6% on any interest we get here. In fact that is taken at the time that interest is obtained (we never see it). We were told when we first arrived here that as long as we had no 'earned income' here we need not file a tax return - simply report everything to the US and file a US tax return - which is what we have done.

But - does any of that change if/when we obtain dual citizenship ? 

Since we have never filed a tax return in Mexico - in fact we do not even have an RFC (like a social security number) - I never felt it fair of us to file for FEIC with the IRS. But now I see the other side of the argument. If we are Mexican citizens perhaps THEY are more entitled to our taxes - even for the interest we earn on our US savings...

Any thoughts appreciated.


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## Bevdeforges (Nov 16, 2007)

Normally speaking, you file your "main" income taxes with the country in which you are currently resident. It's only the US where you are required to file full resident income tax returns no matter where in the world you live. 

So, taking Mexican nationality doesn't change anything at all about your need to file a US return. (And on that return you are supposed to declare your worldwide income.)

I'm not familiar with the Mexican tax system, but I suspect you need to at least file a return of some sort based on your residence there. And you'll have to consult the US- Mexican tax treaty for the details on which sources of income are taxed by which jurisdiction.
Cheers,
Bev


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## lat19n (Aug 19, 2017)

Thanks for the reply and excuse this personal question.

Are you a dual citizen ? Do you give any monies you may earn on your US holdings to France ? How about if you are not a French citizen ? Do they know of your US holdings ?

I am not trying to cheat anyone - just trying to do what feels right ...


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## Bevdeforges (Nov 16, 2007)

Yes, I am a dual national. The French tax laws require reporting of worldwide income, too - though the exact figures differ between what I report to the US and what I report to France, due to various factors and allowances in the two sets of tax laws.

Under the terms of the US-France tax treaty, certain items are taxed by one side or the other, and there are specific procedures to invoke the provisions to eliminate a double taxation. These, however, vary by the tax treaty.
Cheers,
Bev


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## lat19n (Aug 19, 2017)

Well it would appear that the US<->Mexico tax relationship if very similar to the US<->France relationship.

Doing a quick read - our filing requirements *might* have changed when we purchased our house in Mexico. Just like the US (and apparently France), Mexico taxes on worldwide income. Sure there is the provision for no double taxation.

When we first arrived here and asked all our tax related questions we were renters with very little 'interest' income. 

I've got a feeling that we have been over paying the US a lot and under paying Mexico for quite some time.


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## lat19n (Aug 19, 2017)

Bevdeforges said:


> Yes, I am a dual national. The French tax laws require reporting of worldwide income, too - though the exact figures differ between what I report to the US and what I report to France, due to various factors and allowances in the two sets of tax laws.
> 
> Under the terms of the US-France tax treaty, certain items are taxed by one side or the other, and there are specific procedures to invoke the provisions to eliminate a double taxation. These, however, vary by the tax treaty.
> Cheers,
> Bev


When it comes to US Social Security disbursements - in France - do you need to pay taxes in France / the US / both ?


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## Bevdeforges (Nov 16, 2007)

lat19n said:


> When it comes to US Social Security disbursements - in France - do you need to pay taxes in France / the US / both ?


Under the US-France tax treaty, government pensions (i.e. US Social Security and deferred tax programs like IRA, 401K etc.) are taxable only in the US. There is a mechanism whereby you declare such government pensions on the French declaration forms, and then indicate that they are entitled to a tax credit at French tax rates, which brings the tax paid on the pensions to 0.

There are countries (like the UK or Germany) where US Social Security is only taxable in the taxpayer's country of residence, though I think they expect you to use the Foreign Tax Credit to avoid double taxation. (Honestly, most folks just don't bother reporting their US SS if they are receiving it in the UK or Germany.)
Cheers,
Bev


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