Do US Dual Citizens Have to File US Tax Returns?

Do US Dual Citizens Have to File US Tax Returns?

Many Americans have a second nationality, perhaps because one (or both) of their parents is foreign, or because they were born abroad, or because they became a citizen in another country after having lived there for a while. Americans with both US and another nationality are known as dual citizens.

Some people are unknowingly US dual citizens, if they have an American parent perhaps but always lived abroad, or if they were born in the US because their foreign parents were there temporarily. These dual citizens are known as Accidental Americans.

All American citizens, including US Dual Citizens, are required to file a US tax return, reporting their worldwide income, wherever in the world they live.

Furthermore, the IRS can access Dual Citizens’ foreign bank and tax information due to information exchange laws, agreements, and treaties, so they know who should be filing.

When US Dual Citizens do file, they can claim one or more provisions such as the IRS Foreign Tax Credit, or the Foreign Earned Income Exclusion, that reduce their US tax bill, in most cases to zero. So although US Dual Citizens have to file US taxes, most don’t end up paying anything.

The only way for US Dual Citizens to avoid filing a US tax return at all is to renounce their US citizenship.

Renouncing US citizenship isn’t particularly easy or affordable though, as it requires expats to firstly ensure that their US tax filing is up to date and then pay a $2350 (as of 2018) renunciation fee.

Dual Citizens who are behind with their US tax filing and wish to catch up without facing penalties, including those who wish to renounce their US citizenship, can do so under an IRS amnesty program called the Streamlined Procedure, so long as they do so before the IRS contacts them about it.

US Dual Citizens who have any doubts or questions about their US tax filing situation should contact a US expat tax specialist firm at their earliest convenience.