Filing US Taxes as a Dual Citizen

February 16, 2023 | , | 4 minute read
Expat Tax Blog. Tax Tips for US Americans abroad.

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Expat Tax Filing for Dual Citizenship

For many Americans, holding multiple passports is a dream come true. Unfortunately, many Expats and Accidental Americans know that this privilege comes with responsibility. At MyExpatTaxes, we make Filing US Taxes as a Dual Citizen easier than ever. Here’s what you need to know as a holder of a dual citizenship.

US law states that every US citizen or green card holder must file and pay US taxes every year. This even goes for any US citizen abroad who lives around the world. Plus, the US and Eritrea are the only two countries that uphold citizen-based taxation. Therefore, ignoring following the law can result in unnecessary penalties. 

US tax filing and obligation also apply to people born in the US, and children who have American parents with a US citizenship through them. However, some people may not know this – especially if they are dual citizens.

Accidental Americans and Expats Filing US Taxes with Dual Citizenship

Whether you’ve never obtained a US passport or social security number, the fact still remains that you are most likely a US citizen if:

If you realize you fall within one of those situations, you are probably an Accidental American. To be absolutely certain though, you’ll need proof, like a birth certificate. You can also check in with your parents to see if they registered your birth at a US Embassy or Consulate.

Accidental Americans are people who innocently did not know they are a US citizen. Meaning they are bound to the same laws and regulations as regular citizen. Accidental Americans who live abroad have a requirement to report their income to the IRS as long as they meet the filing threshold.  

All US citizens, no matter where they live around the world, must report and pay worldwide income and taxes to the IRS once a year. Therefore, if you possess US citizenship, even if you have a passport and citizenship in another country, you will need to file US taxes every year.

Additionally, out of the 12 months in the year, June is the month for expats to file their US taxes (and April to pay taxes).

Plus, the Foreign Account Tax Compliance Act (FATCA) is becoming more known in foreign banks and may refuse American citizens an opportunity for a bank account. Therefore, Accidental Americans are in more need than ever to become aware of their US citizenship before joining a bank.

Foreign banks now need additional information for every American abroad who signs up with them. The IRS likes to be aware of where your money is being kept to prevent illegal money laundering.

US Tax Agreements for Dual Citizens

Luckily, dual citizens/Accidental Americans most are unlikely to face double taxation, due to certain agreements the US made with foreign countries. For example, the Totalization Agreements contain countries worldwide that will not double tax Americans abroad.

Country-Specific tax treaties like Form 8833 can help define which kinds of income you can exclude from your host country’s taxation system or the US’. US tax treaties can help Americans abroad save a lot of money and time.

Additionally, there are plenty of tax benefits available to you as an American citizen abroad. Two are the Foreign Earned Income Exclusion and Foreign Tax Credit.

Solutions for Dual Citizens filing US Taxes

If you realized you have US citizenship and need to file US taxes, you’ll need a US passport and Social Security number to start. Once you have them both, you can start the process of becoming tax compliant.

One suggested way to file back taxes is by using a US amnesty program called the Streamlined Procedure. This helps Dual Citizens and Accidental Americans file up to 3 years or more on back taxes for the IRS. As an innocent unaware American, no additional tax penalties or fees are applicable.

Otherwise, if you’ve been deliberately avoiding filing taxes, you may be subject to thousands of dollars in fines to pay.

Renouncing US Citizenship

An option for dual citizens who realize they have US citizenship and don’t want to have it anymore is to renounce their citizenship. In order to do this, however, one must be up-to-date on all tax payments and filings for US taxes.

And in order to be up-to-date on US taxes, one must require a US passport and Social Security number. Additionally, there is an exit fee, of more than $2,000. Almost 20 times the average from other nations.

Need Assistance?

As you can see, becoming tax compliant with Dual Citizenship to the US comes with its own responsibilities. If you need assistance becoming tax compliant, do reach out to us via our app or chat box (found at the bottom right of your screen).

Otherwise, feel free to explore our US expat tax filing software for Americans abroad. MyExpatTaxes is for an affordable price of 149€ and we are confident you can file in as little as 30 minutes. Our expat tax software is smooth, simple and user-friendly. Plus, it definitely fits in with today’s times since everything is being done online (why waste time and frustration filing US taxes manually?).

Additionally, if you need help distinguishing what kind of filing status you are in (like filing single or married filing separately), contact us. Plus, we offer a passport renewal service. Renewing your passport every 10 years is another obligation to fulfill, so let us know if you need help.

Written by Michelle H.

February 16, 2023 | , | 4 minute read

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