Filing taxes is relatively easy - even when overseas. I used a CPA who specialized in overseas taxes my first year abroad because I feared how complicated it would be. Then I was smacking myself at the fact that he did anything I could have done with a little more legwork and I paid him $400 to do it.
I think the big deal is knowing that the US government is tracking you even when you think you’re well out of the reach of its power. People appreciate having a US passport and having access to US consular services. But there’s something fundamentally wrong with knowing that the US is still interested in taking money you earn outside of its jurisdiction when you don’t use or benefit from US infrastructure and services. Even worse when you consider the recklessness of US foreign policy, which you inevitably become acutely more aware of living outside the US than you are at home.
US tax policy is also a huge PITA for banking for non-Americans. While living in the Cayman Islands I knew many Brits, Jamaicans, Honduranians, and others who received letters threatening to close their bank accounts if they did not produce evidence of their citizenship to their bank. It was all to establish that the banks did not need to report on their banking activities to the IRS.
And the US law is so far reaching that it can require reporting of personal banking details for a non-American who has signatory authority over an American’s account.
Example: Sue is a Brit living and working in the Cayman Islands. She has no US accounts or assets. Sue has Power of Attorney and signatory authority over her elderly father-in-law Bob’s accounts in a Cayman Islands bank. Bob is a US citizen. US tax law now requires the bank to report to the IRS on not only Bob’s accounts but also all of Sue’s accounts. And Sue’s Cayman based retirement account has to report to the IRS. And maybe a bank or investment company decides they don’t want to deal with such reporting requirements and drop Bob and Sue as customers.
I know several Americans who had the same experience. One job, simple wages, no retirement investments.
But doing part of my parents taxes reduced me to tears. And the IRS makes mistakes which require more hours/days to fix. And our family stopped using a CPA because the selection was limited, the cost enormous and the advice incorrect.
As citizens, my parents didn’t object to the American Government tracking them. They thought that filling out American tax returns was a normal part of being American. Due to tax treaties, they didn’t have to pay American tax. But as they got older, the burden fell on their kids to look after it for them.
According to the U.S. Department of State, U.S. nationals, including dual nationals, must use a U.S. passport to enter and leave the United States. So they wouldn’t be able to legally enter or leave the country using any other passport.
ISTM if you live and work in Switzerland and have Swiss citizenship, then renouncing U.S. citizenship is not necessarily a problem, and may even work to your advantage. If you have not acquired Swiss citizenship yet, though, then it would be a big deal if you jumped the gun and left yourself without any citizenship.
AFAIK if you work for a US company outside the U.S. and you are not a U.S. citizen then that’s OK, you don’t pay U.S. taxes and the company does not report your wages to the IRS. So being paid by a US-based corporation is no reason to maintain American citizenship. OTOH, if you work for them in the U.S. then you need a Green Card and are taxed.
I’m not trying to limit their options, but also don’t want them to have to pay US taxes on property they may buy/sell in another country in the future. As I mentioned before, we got a US tax bill for 80K for a house my husband bought in Australia 10 years before he met me, long before we married, over 15 years before he became a US citizen and I was never on the deed. That is what initially got me thinking about their citizenship. My daughter lived in the US until she was 12 and has visited over 15 countries - I consider her very open- minded. She’s a junior in high school and her feelings about USA are her own based on personal experience, travelling, news, etc. She is mature, smart, and perceptive. For example: her best friend was at the Sandy Hook school during the massacre and suffers PTSD. When she was 10, she was cornered at a State Fair by a religious zealot telling her she would go to hell because she doesn’t go to church and hasn’t accepted Jesus. She was 10! She’s been told by teachers in the US that being gay is wrong, that Christianity is the only true religion, she sees confederate flags every summer when we go to the US to visit family (they live in SC and GA.) She’s been verbally attacked and berated by some Americans (even some friends) for supporting LBGTQ rights, for speaking out about Trump, for having a rainbow patch on a back pack. She supports the BLM movement with passion. Our family does not own guns and we support gun control. Our close friends are Mexican-Americans. She sees the world from perspectives of an American, an Australian, a European and goes to an international school. She sees violence in the USA. It is understandable that she considers the US to be close-minded. Of course, there are good and bad people in all countries and we do try to raise our children to be open-minded and encourage them to form their own opinions.
It does get messy and complicated! There are many banks in Europe that will not open an account for US citizens. There’s only one available to us where we live.
I did not realize that even if one is no longer carrying US citizenship, they are still considered a “US national” because they were born in the US. One of our kids was born in the US, one was not. Very complicated!
I wouldn’t give up my US citizenship and my husband would keep both his US citizenship and that of his home country. It’s just the kids who we are talking about and probably just one of them who already has dual citizenship.
Not sure what you mean exactly, but being born in the U.S. does entitle you to U.S. citizenship (and nationality). People who have “acquired the nationality of the United States by virtue of birth in the U.S.A.” can still give it up. Example:
You need to run things by your tax adviser anyway, not just random people on the Internet. But if your kid is having actual problems like not being able to open a bank account and if the professional advice is that the solution is to renounce U.S. nationality, then, yes, it can be done. The only potential disadvantage of this would be if the kid plans to work in the U.S.— foreigners need a certain type of visa and Work Permit/Green Card, and there are all kinds of horror stories about how those are not always straightforward to get compared to Europe.
I’m a little confused - you said earlier both kids were US citizens and citizens of your husband’s home country. I hope you don’t think only the one born in the US is a US citizen , cause I’m pretty sure they both are
Originally, we thought both kids would automatically have Australian citizenship through my husband and were in the process of getting all the paperwork finalised for our son (our daughter already had her Aussie passport and her US one) when I first posted. We later found out that Aus. didn’t recognize our son as a citizen because he was adopted. He will only be able to apply for Aus. citzenship after residing there for a period of time as opposed to our daughter who simply has Aussie Citizenship because her dad is Australian.
I don’t really see the urgency in your situation. You talk about getting hit with a surprise tax bill for 80K but all situations like that can be anticipated far in advance and planned for. There’s also some ancillary benefits to a US passport, even if you plan to never step foot in the US. It probably isn’t a big deal if you already hold a Swiss passport but there’s some countries where US passports get visa free entry/longer non-visa stays compared to your other passport. You can avail yourself to a US embassy in a country if something goes wrong. And if your children were adults, they would have gotten $1200 each in their bank accounts despite never having set foot in the US.
I think right now, the smartest thing to do is to just more educate yourselves on the pros and cons of renouncing and when, if ever, the right time is, it almost certainly won’t be the moment they turn 18. It will be relatively easy to plan for the renouncing given the combination of anticipated earnings, tax obligations, paperwork burdens, bank account limitations and the like and it’s just one more adulting task you should prepare your kids for.
Yes, of course, we would contact immigration, tax and other legal experts before making any decisions. I was just speculating and figured some of the dope members might have experience. The kids are not having any issues and they were able to open bank accounts through the only bank here that will work with Americans. They are both in high school and we have plenty of time to mull over this. When they begin to apply for unis (probably in the UK or Aus.), their citizenships will likely come into play and pose more questions. Generally, I would think the more passports one carries, the better.
As for my comment about being a US national, I was responding to Acerbic’s post:
“According to the U.S. Department of State, U.S. nationals, including dual nationals, must use a U.S. passport to enter and leave the United States. So they wouldn’t be able to legally enter or leave the country using any other passport.” Hypothetically, would that limit my daughter’s ability to visit the USA on her Aussie passport if she gives up US citizenship? Another can of worms.
Again, no urgency and no decisions being made for possibly years, just wondering, listening, and weighing pros and cons.
Australians can visit the U.S. (e.g. for tourism) for up to 90 days under the “Visa Waiver Program” by filling out a form and paying $6 or whatever it is.
I don’t think you become a non-citizen national when you give up US citizenship.I’m fairly certain that to be a non-citizen national you must either be born in certain US territories or born to a US non-citizen national parent under certain circumstances.
Also, Australian nationals must use an Australian passport to leave Australia.
Also, travelers must use the same passport at both ends of flights.
We’ve had this discussion before: actual dual passport holders do actually travel between countries, and do disregard at least one of those three incompatible requirements. Some people insist that since they disregard one of those rules, the rule must not exist.
The third rule, the last rule that was put in place, doesn’t make it ‘illegal to enter the USA’ on an American passport if you’ve left another country on another passport. It’s just against the rules to travel that way, because the USA tries to do data matching for travelers. Our consulate was very clear that entering on a different passport than you exited with was a very bad idea, but obviously, nobody is obeying all three rules.
“They” are already tracking you, and the computer is not going to get confused if someone leaves Australia with an Australian passport and someone with the same name gets off the same flight and enters the U.S. on an American passport.
My advice is obviously to enter the USA on an American passport. (I know a dual citizen who tried otherwise, and had to endure an aggressive tirade from the border policeman.) However, in the situation under consideration, the kid has renounced U.S. nationality and is unlikely to have an American-issued passport or other travel document, nor does she need one.
There are frequently multiple people with the same name on a flight, and the danger isn’t that the computer can’t track you, but that you have to endure detention and an aggressive tirade from a border policeman.
Members of my family have been detained for much stranger things than disregarding travel instructions, so I don’t claim that following the rules will protect you, even if that was possible. Fortunately, most people are not interrogated at the border, and clearly looking White and having an American passport helps in America.
The kids are not having any issues and they were able to open bank accounts through the only bank here that will work with Americans. They are both in high school and we have plenty of time to mull over this. When they begin to apply for unis (probably in the UK or Aus.), their citizenships will likely come into play and pose more questions. Generally, I would think the more passports one carries, the better.