American Expatriates and the Issue of Dual Citizenship

Last updated on September 15, 2023

In most cases, if you were born in the U.S. you are considered a U.S. citizen, even if you are living abroad and have citizenship in another country. With dual citizenship, though, comes dual responsibility. There are specific guidelines for filing and paying taxes for individuals who have citizenship in both the United States and abroad.

After the IRS began to implement the foreign account tax compliance act (FATCA) by making agreements with various foreign governments, taxes became more difficult for those with U.S. citizenship. FATCA was intended to curb tax evasion.

U.S. citizens living overseas have to report their assets and income to the IRS. They also need to report certain foreign financial accounts on their income tax return. These IRS reporting requirements mean more time spent doing complex paperwork. Often, taxpayers choose to hire a tax professional to help to prepare their U.S. returns.

Additionally, many foreign financial institutions (FFIs), including banks, are required to report to the IRS information regarding their transactions with U.S. taxpayers. This has led to banks growing reluctant to entertain clients who have U.S. citizenship. This is sometimes a contributing factor in why American expatriates elect to renounce their U.S. citizenship.