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When American Expats Don’t Want Their Kids to Have U.S. Citizenship

In 2011, a dual American-Australian citizen gave birth to her first child in Perth, Australia, where she lives with her Australian husband.

After considering the implications of American citizenship, including the possibility of her son being drafted or taxed by a country where he may never live, she and her husband decided against applying for the moment.

A person born abroad to a U.S. citizen parent or parents will acquire U.S. citizenship at birth provided the statutory requirements of the Immigration and Nationality Act for transmission of U.S. citizenship are met, and regardless of whether the person is ever documented as a U.S. citizen (by obtaining a Consular Report of Birth Abroad of a U.S. Citizen, a U.S. passport, and/or a Certificate of Citizenship).passport

That said, U.S. citizens born abroad are technically liable for taxes even if their parents don’t register their birth with American authorities, according to Gregory Wald, principal at Squire Patton Boggs and added, “The tax liabilities of such individuals are likely to be quite minimal. I would imagine that it is more expensive to monitor for these individuals than the potential income that the Treasury are likely to receive from them.”

And therein lies the dilemma for many American parents abroad—especially those married to someone of another nationality: Do they document their child’s birth with American authorities, or not?

Some American parents are choosing not to. The reasons they cite are varied.  Taxation frustration is one of them.

Other Americans abroad registered their children as U.S. citizens only to question their decision later, especially after passage of the Foreign Account Tax Compliance Act, which requires U.S. residents and overseas residents to report certain foreign bank accounts or face penalties.

Other Americans abroad apply for their children’s U.S. citizenship without hesitation. “I want my children to have access to both cultures and choose the one that suits them. That possibility outweighs the negatives of double taxation. They can always choose to give up their U.S. passport if they want”, said an American-Spanish citizen.

Original Story at The Wall Street Journal