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Child born in US to UK parents

Child born in US to UK parents

Old Jan 8th 2014, 7:04 pm
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Default Child born in US to UK parents

i apologise in advance if this has been done lots of times (in which case - if someone can point me in the right direction of the thread!)

My daughter was born here in the US and my husband and i are here on a visa only (we are UK Citizens), We intend to leave sometime in the next year or 2 to take up employment elsewhere in the world (unsure where yet), and eventually return to the UK. She has a US passport currently, and i guess is classed as dual citizen.

something that is nagging me, but i guess that isnt that urgent as she is only 1, but what are the benefits/disadvantages of being a dual US citizen? I like the idea that she will have the choice of being able to return here one day to work if she chooses but, ive also heard that she is liable to tax even if she never works here. is that correct? could she come here one day aged, 21 for example and be met with a whopping tax bill?

thanks in advance
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Old Jan 8th 2014, 7:15 pm
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Default Re: Child born in US to UK parents

Originally Posted by Ditz33 View Post
what are the benefits/disadvantages of being a dual US citizen?
Main benefit is that it opens up a lot more doors in her adult life, she has the flexibility to live in either country. The main disadvantage is that she's responsible for reporting worldwide income to IRS each year and must file a US tax return for the rest of her life.

I like the idea that she will have the choice of being able to return here one day to work if she chooses but, ive also heard that she is liable to tax even if she never works here. is that correct?
Correct.

could she come here one day aged, 21 for example and be met with a whopping tax bill?
Probably not, as there's a tax treaty between the two countries. If she's living in the UK, she'll pay tax there, and most likely won't have to pay to the USA, even though she still has to file a US tax return to report the income.

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Old Jan 8th 2014, 7:23 pm
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Default Re: Child born in US to UK parents

She must also exit and depart the US using US passport...therefore you will need to get her a US PP.
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Old Jan 8th 2014, 7:29 pm
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Default Re: Child born in US to UK parents

Originally Posted by Jerseygirl View Post
.... therefore you will need to get her a US PP.
The OP says she already has a US passport.
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Old Jan 8th 2014, 7:30 pm
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Default Re: Child born in US to UK parents

Originally Posted by Pulaski View Post
The OP says she already has a US passport.
So she has...thanks.
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Old Jan 8th 2014, 7:31 pm
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Default Re: Child born in US to UK parents

Originally Posted by Jerseygirl View Post
She must also exit and depart the US using US passport...therefore you will need to get her a US PP.
do you mean, she'd always need a US passport? we had thought that this one expires we'd just get her a UK one.
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Old Jan 8th 2014, 7:32 pm
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Default Re: Child born in US to UK parents

Probably not, as there's a tax treaty between the two countries. If she's living in the UK, she'll pay tax there, and most likely won't have to pay to the USA, even though she still has to file a US tax return to report the income.

Rene
ok.
when do i need to start doing US tax returns for her?

Last edited by Noorah101; Jan 8th 2014 at 7:34 pm. Reason: fixed quotes
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Old Jan 8th 2014, 7:34 pm
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Default Re: Child born in US to UK parents

Originally Posted by Ditz33 View Post
do you mean, she'd always need a US passport? we had thought that this one expires we'd just get her a UK one.
She doesn't always need to keep a current US passport on hand, unless she's planning to enter/exit the USA. Whenever she wants to enter/exit the USA, she WILL need a current US passport at that time.

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Old Jan 8th 2014, 7:35 pm
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Default Re: Child born in US to UK parents

Originally Posted by Ditz33 View Post
ok.
when do i need to start doing US tax returns for her?
Since you're living in the USA right now, she'll be included on your tax return as a dependent while she's a child.

She doesn't need to do a US tax return until she has enough income to warrant filing one (check www.irs.gov to see how much that is...and that amount will be different 16+ years from now, when she might start having income).

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Old Jan 8th 2014, 7:46 pm
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Default Re: Child born in US to UK parents

Originally Posted by Noorah101 View Post
Main benefit is that it opens up a lot more doors in her adult life, she has the flexibility to live in either country. The main disadvantage is that she's responsible for reporting worldwide income to IRS each year and must file a US tax return for the rest of her life.


Correct.


Probably not, as there's a tax treaty between the two countries. If she's living in the UK, she'll pay tax there, and most likely won't have to pay to the USA, even though she still has to file a US tax return to report the income.

Rene
This.

I fall into the same category (born in US to UKC parents who were over for work).
When she starts earning above the threshold (as linked to by Noorah) she will have to file a US tax return but unless she's earning over circa $90k (and this value may have changed by that point in time) she is unlikely to owe any taxes.

She will have to file FBAR if it applies (if she has >$10k aggregate value across all accounts outside the US at any point in any given year) and FATCA may also apply.

You don't need to worry about these for many years but it is important that she (and you) know the requirements at the point that she starts earning as failure to file the paperwork correctly could be costly.

She will need to enter/leave the US on a US PP but other than that can use whichever one she fancies (assuming you will get her a UK PP too which I would advise since it has no negative impact of any kind since she is American by Birth and British by descent)
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Old Jan 8th 2014, 7:55 pm
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Default Re: Child born in US to UK parents

Originally Posted by Ditz33 View Post
do you mean, she'd always need a US passport? we had thought that this one expires we'd just get her a UK one.
As Noorah said, for all travel to/via the US she'll need a US passport.

As a practical point, if you return to live in the UK, or anywhere else in the European Onion, your daughter will need a British passport as if she uses her US passport she will only get "stamped in" as a visitor, as US citizens need work and residential visas in Europe.
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Old Jan 8th 2014, 8:00 pm
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Default Re: Child born in US to UK parents

Originally Posted by Bink View Post
.... she is American by Birth and British by descent)
I can't remember the exact rules, but if she lives in the UK for three (?) years she can become eligible to pass on British citizenship to her children. If she never returns to live in the UK, she will be the last of your line to be a British citizen (unless of course her children go through their own immigration process into the UK).

I think, under the current rules, if she doesn't live in the UK for three years before her children are born, her children could get a visa to live in the UK, and become citizens after living in the UK for five (?) years.

Last edited by Pulaski; Jan 8th 2014 at 8:11 pm.
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Old Jan 8th 2014, 8:08 pm
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Default Re: Child born in US to UK parents

Originally Posted by Pulaski View Post
I can't remember the exact rules, but if she lives in the UK for three (?) years she can become eligible to pass on British citizenship to her children. If she never returns to live in the UK, she will be the last of your line to be a British citizen (unless of course her children go through their own immigration process into the UK). I think, under the current rules her children could get a visa to live in the UK, and become citizens after living in the UK for five (?) years.
Correct. She's still British by descent though, whether the citizenship can be passed on or not. Her children cannot pass on citizenship though in the same way (they would need to be born there, live there for 5 years ~ I think you're right with that ~ or have a link to it through the father).

So since I lived in the UK for >25 years even though I'm British by descent, my son can still get a British PP.
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Old Jan 9th 2014, 2:06 am
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Default Re: Child born in US to UK parents

Please also note that if you move overseas, your child will only pass along US citizenship to their offspring born overseas if she spent 5 years in the United States, 2 of which occurred after their 14th birthday.

Why is this a problem? There have been a few cases of 'second-generation expats' traveling to a new country, having a baby, and then discovering they cannot pass along US or UK citizenship, and the new country does not give citizenship by birth. Basically the children are born 'stateless' unable to obtain a passport. Can be quite a problem.

http://www.smh.com.au/lifestyle/life...126-189xc.html

Last edited by penguinsix; Jan 9th 2014 at 5:22 am.
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Old Jan 9th 2014, 3:34 am
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Default Re: Child born in US to UK parents

Tax on worldwide income will be a pain if your daughter moves between countries and there will be a different tax treaty each time. If she stays in the UK it won't involve any extra tax amounts.

The big issue will be the constraints US citizenship will put on her financial life. She will find it difficult to invest and open some financial accounts and there will be the constant worry of US reporting.
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