Children born in the US – citizenship
Have you served in the USA with your family since 2010? If you had children born there, they will have dual citizenship, and there is some important information you need to be aware of.
Current US rules state that children born in the USA will receive US citizenship alongside that of their parent nation. These rules apply to children born to Service and/or civilian personnel posted to the USA. Children born in the US are contacted and can rescind their citizenship at age 18 at no cost. Personnel need to be aware that this arrangement will apply to any children with dual US nationality, and inform their families appropriately so they can make fully informed decisions that suit their own personal circumstances.
New taxation arrangements became law in the US in 2010, and were introduced to combat tax evasion by US persons holding account and other financial assets abroad. It was not aimed at facilitating the taxation of those who happen to have been born in the US but who hold another nationality and reside there.
Individuals who hold dual US/UK citizenship can apply for a waiver of US taxation if their UK tax affairs are in order and a tax return is submitted. Individuals who hold dual US/UK citizenship will be granted a waiver from US taxes provided their foreign-earned income is within the exclusion credit, currently equivalent to just over £81,000, and their UK tax affairs are in order. Further information can be found on the US government website.
The US authorities make individual contact on an individual’s 18th birthday with a request to surrender US citizenship without the requirement to submit a tax return. The US Internal Revenue Service will be alerted if the child travels to the US or when they renew a passport, so it is essential that a US tax return is complied with. Many British accountancy companies can offer this service. Professional, independent taxation experts can provide further, tailored advice. The only other way an individual can avoid being liable to file a US tax return is if they take a decision (at their own cost) to renounce US citizenship. This cannot be done by parents or guardians, only by the individual themselves. Any consideration of rescinding US citizenship warrants very careful deliberation since it is generally irreversible. The cost is approximately £1,850.00. This can be done at the Embassy of the United States in London. Detailed information can be found on the U.S. Embassy & Consulates in the United Kingdom website.