Couples Pursuing Surrogacy Parenting in America: Navigating US Tax Obligations

3 min
Published on: 27-06-2023 Last modified on: 12-02-2024


Discover the essential steps and considerations for couples pursuing surrogacy parenting in America. From understanding US tax laws to filing returns, obtaining Social Security Numbers, and potential renunciation, Americans Overseas offers expert guidance to ensure compliance and peace of mind.

For couples who have chosen surrogacy parenting in America, understanding and managing US tax obligations is crucial when their child reaches the age of twelve. 

The child’s US citizenship entails filing US tax returns, complying with FBAR reporting, and obtaining a Social Security Number. Americans Overseas is here to support you throughout this process, providing the necessary advice and expertise to ensure compliance and alleviate any concerns. 

Couples often choose surrogacy parenting in America as a means to fulfill their dream of having a child. With the child being born in the United States, the child automatically becomes a US citizen. 

However, these new parents must understand the potential US tax obligations rules considering the US has a different tax system. Based on citizenship, not on where you live. 

In this article, we will explore the financial consequences and obligations, including: 

If you find yourself in this situation, Americans Overseas is here to provide guidance and advice.

Understanding US Tax Obligations for Couples with Surrogacy Parenting

US Tax Return

When your child is born in the US, they become subject to US tax laws, regardless of their place of residence. This means that as parents, you will need to file a US tax return on behalf of your child (there are thresholds). It is essential to understand the tax implications and seek professional assistance to ensure compliance with US tax laws.

FBAR (Foreign Bank Account Report)

In addition to filing a US tax return, your child may also be required to file an FBAR if they have foreign financial accounts exceeding the 10.000 dollar threshold (at any time during the year, the balance of all accounts added together). 

The FBAR is a report of foreign bank accounts and other financial assets held outside the United States. Failure to comply with FBAR reporting requirements can result in significant penalties. Americans Overseas can assist you in understanding the FBAR filing obligations and guide you through the process. There is no tax owed.

Obtaining a Social Security Number

To fulfill their US tax obligations, your child will need to obtain a Social Security Number (SSN). The SSN is essential for various purposes, including filing tax returns, claiming benefits, and establishing a credit history. In most cases, your child received an SSN at birth. 

Otherwise, you can apply for an SSN for your child by visiting the US embassy, please visit the website of the US Embassy in your country for the specific steps. Americans Overseas can provide you with guidance on the application process.

Giving up US Citizenship

While some children born to US citizens abroad may choose to retain their US citizenship, others may decide to renounce it due to the associated tax obligations and complexities. 

Renouncing US citizenship requires careful consideration and proper legal guidance. Americans Overseas can offer advice on the implications of giving up US citizenship and assist in the renunciation process. 

Americans Overseas can help

We, the founders of Americans Overseas, were born in the Netherlands and obtained 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 more questions about the US exit tax and the US tax obligation, you can contact us at Americans Overseas.

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Frequently asked questions

Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.

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