To NOT want my children to get US passports?

(139 Posts)
Daffodilly Sat 16-Feb-13 20:45:25

DH is American (by birth) but also has British citizenship. We met, live and had our children in UK. No current plans to move to US.

Children are entitled to get US passports as well as UK ones. But my understanding is that at same time they are issued with a social security number too and being US citizens has implications for future tax situation. US citizens are taxed on worldwide income, regardless of where they live.

I feel this could be a huge burden to place on our children when they may never choose to live or work in US. DH places significant value on US citizenship for them.

Knowsabitabouteducation Tue 19-Feb-13 13:06:36

Unless you want to move to the US within 3 years, don't worry about back taxes. Just start to get your affairs in order.

You basically need to keep calendar year records of your income, and then do a 1040 before June 15th next year. It's pretty easy if your finances are simple.

As for your 17 year old, you have a short time to get her Consular Report of Birth Abroad, which will establish her US citizenship.

If she decides at a later date that she wants to study or settle in the US, she will have her paperwork cut out (and expenses), whereas it is very easy to do it now while she is still under 18.

Many thanks Knowsabit, I guess they have an obligation to be reasonable! I suppose it cannot hurt to contact them as it's not like we've deliberately misled them and it seems like there are plenty of others in this situation. It's just the way the forms are written that makes me so nervous! I never minded doing returns when I was living there but that's because I usually got a refund.

megandraper Tue 19-Feb-13 13:16:22

Don't forget that any tax-free savings you have in the UK (ISA's / Premium Bonds etc.) or tax-free benefits (child benefit etc.) are not tax-free from a US perspective, and need to be declared.

lljkk Tue 19-Feb-13 13:16:40

notMrsR
CAB can't help you.
There are some helpful ex-pat forums.

This is what i think is true (am not expert):

Don't panic. ExPats fail-to-file tax returns a lot, It's very common.

I wouldn't bother with that form.

Get hold of the right forms for the right tax year (I guess you owe for 2012?) and file them soon. Your return isn't due until June 2013 and you can even request a deadline extension until September, I think. If your income in 2011 was over threshold you'll just have to file late taxes for that year too and any previous when you made lots of money; there will be some late penalties paying tax owed but not outrageous.

If you never owed taxes in previous years you don't have to worry about failing to pay tax installments last year; but you will have to worry about paying tax instalments for 2013 if you'll continue to have income over the threshold (because you were liable for tax last year, iyswim). That part I find tricky!

I would probably try the stupid Turbotax thing just because of the convenience of e-filing. I've had hmm experiences of bad advice from accountants so I would shy away from hiring one of them unless you think your situation is enormously complicated; I reckon I will pay less in penalties than I would to an accountant, and the accountant is never liable for any mistakes on your return, anyway. Technically you could sue accountant, but probably not worth it.

Your DS19 almost certainly does not have to file because he wouldn't owe anything, either (read upthread for details).

By the time you work thru allowances & deductions you may not owe for 2012, either. BUT if you can establish that now, then you will be in a good position whenever a year crops up that you do owe taxes, because you'll have paperwork to show you've been open & honest about previous income.

Knowsabitabouteducation Tue 19-Feb-13 13:18:48

You can't efile from overseas, ll.

You have to print out your return, sign it, and take it to the post office.

Thanks all. What a wealth of knowledge on MN! I'm going to speak to one of DH's partners who is also from the USA and ask him what he does, it seems that he's been diligently filing ever since he moved here many many years ago-- but that's because he intends to return one day, whereas I don't. However I don't want to burn any bridges. In the meantime I'm off to investigate how to get my hands on the tax forms, and talk to our company accountant about what I need to declare.

And Knowsabit I've just downloaded the application for DD, seems straightforward. We'll have a (hopefully) nice mother-and-daughter session going down to the Embassy for an appointment. And just in time as she's 18 in a few months, she can decide what she does after that!

dabdab Tue 19-Feb-13 13:30:59

But why is it illegal for US citizens to enter on an alternative passport if they are dual? My dc are dual, and we are travelling to US this summer - I was wondering about not renewing and just having them travel on UK passports because I would like to avoid the expense and the pain in the bum hours of waiting at Embassy for all 3 dc to get renewed
What will happen if we did travel on UK passports?

they threatened to arrest my dh. he basically got out of it by saying that he's travelled there hundreds of times before, and does he (the immigration guy) really want to be the first to cause a stink? but he won't go there again.

also, born in the us, no us passport, no social security number.

i would not go there on a different passport if you have a us passport.

dabdab, good question.

extra revenue from having to have a us passport, and then you get embroiled in the tax situation. win-win for them.

i would not go there on a different passport if you have a us passport.

sorry, i meant, do not go there on a different passport if they've decided you are a US citizen.

note: you may not have any say in this.

Acinonyx Tue 19-Feb-13 14:40:12

You MUST use your US passport to enter the US. Both dh dd do this. Dh once tried to use hi UK passport because he forgot his US one. At immigration, they saw he was born in the US. To make it worse, it was clear dh was trying to hide the fact that he was in fact a US citizen hmm not dh's finest hour. He was taken for questioning and strictly speaking, could have been deported on the next plane back. he got a stiff warning, and I had to hang around with dd for hours not knowing what on earth was going on.

So definitely you must enter on your US passport. We won't try that again anytime soon.

lljkk Tue 19-Feb-13 14:54:08

Are you sure, Knowsit? Because FreeFile looks okay, I think that counts as e-filing; 2012/3 forms including 2555 here.

Thanks for the tip about CG counting as annual income, btw, I could never decipher whether that was the case or not (I've filed returns both ways in past).

Knowsabitabouteducation Tue 19-Feb-13 16:20:55

You can't e-file with TurboTax. I think the sting is taking FEIE.

That's unless things have changed this year.

I don't think not being able to e-file is a show-stopper though.

"Taxpayers with an AGI (Adjusted Gross Income) of $57,000 or less can electronically file their tax return for free using freefile. Taxpayers with an AGI greater than $57,000 can either use the Free File Fillable Forms or efile by purchasing commercial software. A limited number of companies provide software that can accommodate foreign addresses. To determine which will work best for you, get help choosing a software provider."

(http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad)

Also
"U.S. Embassy
24/31 Grosvenor Square
London W1A 1 AE
England

Walk-In Assistance:
Tu-Th: 9 a.m. to 1 p.m. & 2 p.m. to 4 p.m.
Phone Service:
M-F: 9 a.m. to 12 p.m.
Tel: +44-207-894-0476
Fax: +44-207-495-4224"

from same page

Also you may be able to exclude $95K of your foreign earned income if you meet certain conditions -- e.g. you live the vast bulk of your time in a foreign country.

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