A child’s U.S. citizen parent must meet the following physical presence requirements:

  • The parent has been physically present in the United States or its outlying possessions for at least 5 years; and
  • The parent met such physical presence for at least 2 years after he or she reached 14 years of age.

A parent’s physical presence is calculated in the aggregate and includes time accrued in the United States during periods when the parent was not a U.S. citizen.

The child has to file US taxes from birth, based purely on American citizenship. As unreal and unfair as this may sound. The thresholds for FBAR and the US tax return can ensure that the child is not yet obliged to declare in the first years of his life.

American worldwide tax duty

America is the only first-world country in the world that enforces a tax duty on American citizens, wherever they live or work  (with or without passport, green card holders, and others). 

This may put a huge burden on people living abroad. They are faced with a double tax liability with additional costs, considerations, and administrative burdens.

The US has a different tax system than most countries in the world. The tax system, CBT (Citizen Based Taxation), is a tax system based on citizenship, not on residentship. Whether filing will result in you paying actual taxes in the US depends on personal circumstances, and double taxation treaties made with the country in which you live and or work. Not filing taxes in the US is a criminal offense.

Why is this becoming an issue now?

President Obama introduced the FATCA (Foreign Account Tax Compliance Act) in 2010, to track down Americans who were keeping bank accounts without reporting those to the tax authorities. This law forces all financial institutions (banks, insurance companies, pension funds, etc.) across the globe to provide all information regarding American clients to the American government.

Failure to comply will result in exorbitant fines. Further agreements were made with foreign governments to make sure that the law was being applied. The financial institutions require an SSN/ TIN of the client to get the data transferred properly.

Americans living abroad

American people living abroad, who failed to report their foreign bank accounts (FBAR), could expect high fines. $10,000 per account number or 50% of the amount in the account, whichever is greater.

Fortunately, the American government and its Tax Authorities (IRS) do make allowances for this group. Americans living abroad, who were unaware of this law, have the one-time option to file their taxes via a special amnesty program. This prevents fines and is called Streamlined procedure or Relief procedure. If desired, there is a way to renounce citizenship, a highly personal irreversible choice that does not exempt one from the US tax liability unless properly completed the US tax return.

If you have any questions about your tax obligations as a child of an American parent, you can contact us at Americans Overseas.

More information on your tax obligation as a child of an American parent

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother. When we heard about this for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?).

It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.

If you have any questions about your tax obligations as a child of an American parent, you can contact us at Americans Overseas.


Contact us for more information