# Birth tourism and U.S. taxes **URL:** \ **Category:** Factual Questions\ **Created:** [June 28, 2022, 1:34am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009 "2022-06-28T01:34:51Z")\ **Posts on this page:** 18\ **Page:** 1
**Author:** ![CookingWithGas](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cookingwithgas/32/485_2.png) [@CookingWithGas](https://boards.straightdope.com/u/CookingWithGas)\ **Post date:** [June 28, 2022, 1:34am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/1 "2022-06-28T01:34:51Z")
Suppose a pregnant woman from Elbonia scores a plane ticket to the U.S., just so she can give birth to an American citizen. After the birth and getting her baby a birth certificate and U.S. passport, she goes back to Elbonia. (Let’s not split hairs about the aforementioned details, the real question is coming next.) Elbonia considers the baby to be an Elbonian citizen due to the mother’s citizenship. The baby grows up, gets a job in Elbonia. Does this U.S. citizen have to now pay U.S. taxes, **[just as U.S. expats living abroad do](https://www.hrblock.com/expat-tax-preparation/resource-center/filing/status/expat-tax-rules/)**? ---
**Author:** ![DPRK](https://avatars.discourse-cdn.com/v4/letter/d/4491bb/32.png) [@DPRK](https://boards.straightdope.com/u/DPRK)\ **Post date:** [June 28, 2022, 1:42am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/2 "2022-06-28T01:42:43Z")
Someone explained in a different thread that being born in the United States makes one a citizen. Therefore, they will tax your foreign income as explained in your link, however the tax treaties/tax credit applies. To avoid this the kid can renounce his or her U.S. citizenship. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [June 28, 2022, 5:23am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/3 "2022-06-28T05:23:37Z")
This was exactly the situation with a large number of Canadians. There has been a frequent cross-border migration both ways. i worked with a woman who was concerned because her brother was born in the USA although he had not lived there since being an infant. Now Canadian banks were getting antsy about having him as a customer, and the FACTA requirement meant that if he did not declare his RRSP (like a 401K) he and the bank holding it could be liable since typically a retirement account would be over $100,000. Also, houses were worth over $100,000 - another “foreign asset”. But if he did report it, now he was alerting the IRS that he was a US citizen who had never yet filed a tax return. Since the USA was a common tourism destination and layover for other trips, would he find himself arrested next visit if he did not declare? Meanwhile, since FACTA was fresh at the time, tax accountants in Canada familiar with US taxes also were backed up with several years’ work. Basically, odds are the taxes in one’s home country would be greater than American taxes, so deducting local taxes paid from US taxes calculated means nothing was due. However, that does not relieve anyone from the duty to file a return saying nothing was owed or declaring larger foreign assets. It just means no extra financial penalty would be assessed. (Canada is one of a few countries with a special cooperative tax treaty with the USA, as I understand, thus clarifying this. For example, my father was receiving a Canadian pension. Canada has an extra deduction against income for senior citizens. Due to the treaty, this is recognized as a legitimate deduction when he did his US taxes.) ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [June 28, 2022, 7:24am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/4 "2022-06-28T07:24:03Z")
That’s a frequent problem among people who hold American citizenship for being born there without having much of a connection to the country (which is not so rare, I know a number of such cases in Europe). The basic rule is that, yes, these people are subject to U.S. tax laws. It does not necessarily mean they actually pay taxes to the U.S.; things such as the [foreign earned income exclusion](https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion) can exclude much, or even all, of such people’s income from taxability in the U.S. But they still get to do the paperwork of having to file American tax returns. ---
**Author:** ![nicky](https://avatars.discourse-cdn.com/v4/letter/n/f0a364/32.png) [@nicky](https://boards.straightdope.com/u/nicky)\ **Post date:** [June 28, 2022, 7:46am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/5 "2022-06-28T07:46:47Z")
The US is almost unique in its wicked insistence on citizenship based taxation. (Newsflash: if the USA does things one way and nobody else does, the USA is wrong) Its not just income tax - which at least has exclusions - but capital gains as well. Top it all off - if you want to renounce citizenship you have to pay ! ---
**Author:** ![nicky](https://avatars.discourse-cdn.com/v4/letter/n/f0a364/32.png) [@nicky](https://boards.straightdope.com/u/nicky)\ **Post date:** [June 28, 2022, 7:55am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/6 "2022-06-28T07:55:15Z")
Another thing: the US also bullies foreign banks into compliance ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [June 28, 2022, 12:35pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/7 "2022-06-28T12:35:27Z")
> [@Schnitte](#): > > That’s a frequent problem among people who hold American citizenship for being born there without having much of a connection to the country (which is not so rare, I know a number of such cases in Europe). Boris Johnson… > [@nicky](#): > > The US is almost unique in its wicked insistence on citizenship based taxation. > > (Newsflash: if the USA does things one way and nobody else does, the USA is wrong) From what I’ve read, the only other country that does this is Eritrea, the other shining city on the hill. However, unlike Eritrea, at least the USA does not also threaten the rest of your extended family if you don’t pay up. ---
**Author:** ![DPRK](https://avatars.discourse-cdn.com/v4/letter/d/4491bb/32.png) [@DPRK](https://boards.straightdope.com/u/DPRK)\ **Post date:** [June 28, 2022, 12:59pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/8 "2022-06-28T12:59:39Z")
> [@md-2000](#): > > But if he did report it, now he was alerting the IRS that he was a US citizen who had never yet filed a tax return. Since the USA was a common tourism destination and layover for other trips, would he find himself arrested next visit if he did not declare? No one will arrest him, however there will be paperwork if and when he does file a US tax return. Best consult a tax professional about this. > [@nicky](#): > > Another thing: the US also bullies foreign banks into compliance This could be an enforcement mechanism, as, otherwise, what are they going to do to a non-US resident who does not pay US taxes they think he owes? However, it is mixed up with other regulatory issues, e.g. Credit Suisse has been found guilty of “failing to prevent money laundering”, and fined. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [June 28, 2022, 1:41pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/9 "2022-06-28T13:41:52Z")
> [@DPRK](#): > > otherwise, what are they going to do to a non-US resident who does not pay US taxes they think he owes? Another option would be to put out an arrest warrant on that non-resident for tax evasion. Even if that warrant is never executed, it can still be a major PITA while travelling. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [June 28, 2022, 1:44pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/10 "2022-06-28T13:44:46Z")
If the hypothetical child in the OP has no Social Security number, how would the IRS ever become aware of their existence or of any income they earn in other countries? ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [June 28, 2022, 1:47pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/11 "2022-06-28T13:47:03Z")
Most likely they wouldn’t, but that doesn’t eliminate the citizen’s legal obligation to file tax returns and to pay taxes on taxable foreign income. ---
**Author:** ![CookingWithGas](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cookingwithgas/32/485_2.png) [@CookingWithGas](https://boards.straightdope.com/u/CookingWithGas)\ **Post date:** [June 28, 2022, 1:49pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/12 "2022-06-28T13:49:25Z")
> [@Dewey\_Finn](#): > > If the hypothetical child in the OP has no Social Security number, how would the IRS ever become aware of their existence or of any income they earn in other countries? Fair question. I think they would not know, unless someone reported them as a tax cheat. But in reality I believe babies are now routinely issued SSNs at birth. This was true for my children born in the 1990s. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [June 28, 2022, 1:54pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/13 "2022-06-28T13:54:55Z")
I doubt even a social security number would ensure that. A non-American employer in a country outside the U.S. employing a dual citizen who, in addition to local citizenship, holds U.S. citizenship will report that employee’s earnings to the local tax authorities, but hardly to the American IRS. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [June 28, 2022, 2:03pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/14 "2022-06-28T14:03:45Z")
It’s not automatic. The parents are asked if they want to apply for a SS number at the hospital (probably when they are completing the birth certificate paperwork) and it’s a lot easier to do it at that point , but the parents can decline applying for the number at that time. ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [June 28, 2022, 7:07pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/15 "2022-06-28T19:07:09Z")
> [@md-2000](#): > > (Canada is one of a few countries with a special cooperative tax treaty with the USA, as I understand, thus clarifying this. Nitpick: It’s more than a few. Here’s a list of all the countries the US has a tax treaty with, and as you see it’s a lot. > **[United States Income Tax Treaties - A to Z | Internal Revenue Service](https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z)** > > The United States has tax treaties with a number of foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U.S. taxes on certain items of income they receive... ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [June 28, 2022, 8:05pm UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/16 "2022-06-28T20:05:29Z")
The question of whether Customs was told by the IRS who had failed to file tax returns was discussed IIRC a few years ago in a thread. Also, whether the State Dept. would refuse to renew passports for such exp-pats. The answer seemed to be “no” to both. But - that does not guarantee that it could not happen in the future. > [@DPRK](#): > > > [@nicky](#): > > > > Another thing: the US also bullies foreign banks into compliance > > This could be an enforcement mechanism, as, otherwise, what are they going to do to a non-US resident who does not pay US taxes they think he owes? The issue would of course be that by simply having a customer that may trigger US action, a bank by inadvertently not filing correct paperwork or not being ware of the American customer’s citizenship could find itself mixed up in years of litigation, meanwhile being liable for hefty fines. Simpler not to have to file any paperwork. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [June 29, 2022, 12:59am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/17 "2022-06-29T00:59:33Z")
The US would have no way of knowing about such a citizen, assuming they avoided getting a US passport, SSN, etc. But their home country passport would show their place of birth and if they ever traveled to the US, it would be noted and questioned since US citizens are not allowed to enter the US on a foreign passport, as discussed before. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [June 29, 2022, 4:28am UTC](https://boards.straightdope.com/t/birth-tourism-and-u-s-taxes/967009/18 "2022-06-29T04:28:03Z")
It’s not “how would they find out?” the question would be “what happens if they find out?”. Who knows, someone reports it, some company they are involved in has to file a report with the US government as a contractor - who are employees, names and birth date/location, etc. They apply for a loan and the bank discovers their country of birth and lack of renunciation. Some enterprising fellow at the NSA starts doing a computer cross-reference of names… Dozens of scenarios. As I understand, formally renouncing your citizenship after the fact does not erase the violations done before that. If anything, it can call attention to them. The point being, if it is ever discovered, then bank may be on the hook for big penalties when the 800-lb gorilla decides that until they can prove they did not make a mistake, the owe a hefty fine held in escrow or privileges suspended. Safer to not have that customer.