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Ask Slashdot: Should I Let My Kids Become American Citizens?
An anonymous reader writes "Can you help me decide whether to allow my small daughter and son to become American citizens? I am American and my partner is Swedish. We have both lived in Belgium for many years and have no plans to leave. I became a Belgian citizen some years ago and kept my American citizenship. My partner has both her original Swedish and now Belgian citizenship. We are not married. Instead we have a registered partnership, which is common in northern Europe, confers most of the benefits of marriage, and raises no eyebrows. However, the American government does not recognize such partnerships, so in their eyes I am still single. Generally, children of American citizens abroad automatically become American citizens themselves at birth. But our kids fall under an exception. Male American citizens who live abroad and have children out of wedlock with a non-citizen mother do not automatically transmit citizenship to their children unless they sign an "affidavit of support" promising to support their children until the age of 18. If you don't sign before the child reaches 18, the child is not considered an American citizen. This has been upheld by two Supreme Court rulings (Nguyen v. INS and Flores-Villar v. United States). For legal beagles, the relevant statutes are 8 U.S.C. 1401 and 1409. (Read on below for the rest.)
The kids have Swedish and Belgian citizenship. We could go down to the American consulate and get American citizenship for them any time, but I keep putting off the decision and I am not sure I want to do it at all. Sentimentally I would like the kids to have American citizenship, but there is really only one practical pro to it: American citizenship would allow them to live, work, or study in America more easily, if they choose, when they get older. The cons:
- They would be immediately enmeshed in the U.S. tax bureaucracy, which would require them to file U.S. tax returns for life even if they never set foot in the U.S. This, as I know from experience, is a huge bother, even when you don't owe anything.
- Sometimes they would owe U.S. tax, though, for example for capital gains, unearned income, and in some countries self-employment income.
- My son would have to register for the draft.
- The decision, once made, is difficult to back out of: renouncing one's U.S. citizenship costs $2300 and a lot of paperwork.
- They can easily travel to the US for family visits as Belgian/Swedish citizens.
- There are lots of good universities in Europe. And if they really wanted to study in the U.S., it's not too hard to do as a European.
What do you think I should do? The clock is ticking, and I find it hard to choose between the evil of not being able to be American if they choose, and the evil of unjust, lifelong pursuit by the IRS. Here are two good relevant links.
I am Canadian.
It is a common occurrence for Canadian children with one American parent to be automatically given US citizenship. This is not a good thing. The IRS will expect you to file tax returns. They'll try to charge you money, and if you don't bother, it actually makes you LESS mobile, not more.
It's expensive to renounce too. This is a real problem up here, and bites a lot of people. As a Canadian, you can visit the USA mostly without issue (working there is another matter). If you have dual citizenship, there is MORE scrutiny and more complication and more cost.
It is never worth it, ever.
Virtually everyone I know who has dual citizenship has officially (and expensively) renounced it, and none have any regrets, and all are still free to visit the USA.
No US tax is not something simple. Here in Switzerland, a U.S. citizenship can be a real burden. I know personally at least 2 ex US citizen who gave up the citizenship just because they were tired of the complex situation they were facing.
While working in Canada I had a boss who was a US citizen, but he had been born in Canada to US married parents. He had the tax id for his parents to claim him as a dependent till 18. But he did not have a SSN number. He refused to work in the states because he didn't want to get a SSN number and thus have to pay taxes for the rest of his life, but he was still a US citizen.
I have no clue if that was legal or not. And I have no idea if this matches your circumstances, but it may be something you want to look into. See if they will be forced to pay taxes even if they don't have an SSN number just the tax id (which is different for children, or so I've been told).
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Yes. They don't lose anything by becoming citizens (there are tax issues but they are pretty minor), and being a US citizen has a lot of advantages, like the support of US consulate services.
I'm a dual citizen (born American, obtained British citizenship while I lived there), and while my default position would be "you should grant them US citizenship as that opens up more options to them if they ever want to live in the US" (and despite the many issues, there are still good reasons to want to live here for many people), it should be said that the tax bullshit really is onerous, and renunciation would be expensive. It is like the US congress has built a financial Berlin wall around the country ... sure, you're free to leave, if you can pay up (and pay for expensive tax preparers who specialize in filing US taxes for expats, as the forms are by no means easy), but good luck ever getting out from under our thumb.
It's not an easy question to answer, and as someone else suggested, I would involve your 16 or 17-year old child in the decision beforehand, with good financial and legal advice on the implications pro and con. Weighing the option of living here vs. the never-ending IRS headaches of living abroad--that's a tough one.
The Future of Human Evolution: Autonomy
If the kids can also keep their EU citizenship, it is worth it. I don't think there are any tax implications, maybe there are implications if you are a US citizen earning money overseas.
I am a US citizen by birth. A couple years ago I applied for and was granted irish citizenship cuz they have this program where if your grandparents are from Ireland then you can get citizenship. This way I got an EU passport, and if shit hits the fan in US I can go anywhere in Europe and get a job.
This is completely false. There's a massive deduction for income earned overseas, so that you don't have to pay US taxes at all unless you make over a certain very large amount. I live overseas and make six figures (USD), and my taxes every year amount to entering the amount I earned, skipping to the overseas deduction, and entering the amount I earned again. I don't pay a dime of taxes in the USA. If you are doing that, you are doing it wrong. If your accountant is telling you that it's a lot of work, fire them and get an honest accountant.
It's more than just tax paperwork. There are asset declaration forms to send to Treasury Dept. Failure to file these can result in prison sentences.
The situation is MUCH more complex than just having to do a 1040 like everyone else in the US. Furthermore, there are regulations the US gov. is enacting which affect how international wire transfers are handled by banks, which is forced upon any bank that has a branch in the US. These regs. can cause you to automatically loose "witholding" taxes on transfered amounts, and then have to go through an ordeal to get the money back if it isn't justified by your overall tax picture.
Finally, the US .gov will happily pass new laws that create new reporting obligations that they will do very little to warn people about. Ie., don't expect a highway billboard to warn you of new reporting obligations. So unless you are proactive about determining whether the legal landscape has changed, you may find yourself out of compliance with some new rules that almost no one knows about, where failure to comply entails possible prison sentences.
They are not nice people creating these rules. Conduct yourself under the US global empire accordingly, if you wish to stay out of trouble!
Note that some of these rules get sold to the public by capitalizing on the resentment toward the "1%." But then what actually happens is that it's the normal people who are most at risk of getting penalized since we don't have tax attorneys constantly monitoring the legal landscape, unlike rich people. So once again, if you cheer on the .gov when it claims it's going to "help" you by giving the shaft to "the rich," unless you are an IDIOT you should know damn well that if you go along with it you are being played for a fool, just as it's always been.
it's about possible future chances for their kid to riches, fame and education. Chinese really love to plan ahead. A foreign passport will make education abroad much easier and help with job prospects, even back in China. Not to mention you avoid the hassle that traveling on a Chinese passport gives you - like having to apply for a Visa for pretty much anywhere - i.e. forget ad-hoc trips.
Also the entry barriers for this 1st class Western citizenship are rather low. Just give birth. In other countries you have to have lived there for X years and hold on to legal work - now that is much more difficult for the average "I only speak Chinese and I don't want to work as cook" Chinese upper middle class person.
It's not even just taxes. The US is so weird about all sorts of things that can bite you. When I got engaged in Iceland, Iceland wanted a certificate from the US proving that I'm not already married - it's a standard requirement here, and most countries have such a certificate. But not the US! In the US you can get a certificate proving that you are married from the state you got married in, but not a certificate proving that you're not married. The only way around it is to find the one sherrif's office in the country who considers a signed affadavit to be sufficient to wed (all of the others disagree).
I would never dream of cursing my kids with US citizenship. How mean could you be to them? I can't bloody wait to get my Icelandic citizenship so that I can formally renounce my US citizenship.
You know when it's okay to shout fire in a crowded theatre? When it's on fire.
All right Mr. Pedant, yes, if you qualified to not have to file in the US, then you're probably OK not to file as a non-resident. However, if you're an adult non-resident with any significant source of income, you do have to file, even if that income is below the non-resident exemption (approx $90,000 USD) where you won't owe any income tax. But do note that the US is virtually alone in taxing non-resident citizens.
If you don't make substantially more than $90,000 and only have an income from a job (i.e., not self-employed, own a business, or have substantial investment income), it's not a huge deal beyond having to file a second tax return. Otherwise, it can mean major tax headaches. A friend of mine up here who's also a non-resident US citizen folded his one-man business and took a regular job because the tax benefits to owning an incorporated business in Canada were nullified after the IRS claimed their share (and then some).
The point being, yes, there can be serious tax consequences to having US citizenship if you don't earn your living in the US. I don't foresee renouncing my US citizenship anytime soon, but for a foreign national considering whether to pursue US citizenship, I would advise them to think twice about doing so without a compelling reason.
Momentarily, the need for the construction of new light will no longer exist.
move to sweden. Have fun with that 75% tax.
This. Exactly This.
Stay in Europe, and you won't be paying US taxes effectively, due to the foreign tax credits. Yes, you'll have to file a tax return every year, but that's not extremely difficult, especially if you don't have to pay any taxes. Taxes are significantly higher in most of Europe.
I faced a more or less similar choice a few years ago. Me and the misses were in the U.S. on a non-immigrant visa, and my wife was about to deliver. We could have chosen to deliver outside of the U.S. and avoid U.S. citizenship for my daughter. We chose to give birth in the U.S. so out little peanut would have dual (actually triple) citizenship. She will always be free to work in both the E.U. as well as the U.S. without any immigrant processing. She can choose to attend U.S. college, or European.
We reckoned that the simple fact that she would have to file a tax return every year would be an acceptable cost of all the benefits.
I'm not a complete idiot... Some parts are missing.