U.S. Citizenship & Your Children
When a U.S. citizen has a child born abroad, that child is often born a U.S. citizen, automatically. When this happens automatically and when it doesn’t, is often misunderstood. The laws also change from time to time, which changes things.
Because citizenship is automatic for so many, it’s not a decision of whether the parent(s) decide to pass on citizenship or not, it’s a decision of whether they complete the paperwork to make it formal or not.
Table of Contents
We’ve created this guide to help with two things;
1. To confirm if your child was automatically born a U.S. citizen
2. To discuss the pros and cons of completing the formalities of their U.S. citizenship
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Before we get started, check out the result from a Poll we ran in our Facebook Group for Americans abroad.
We asked, “If you had a choice when it comes to passing on U.S. citizenship to your children… would you?”
Here’s the interesting result from 175 people that live outside of the United States. The majority see the benefits and believe they outweigh the negative points.
Further in the article, you’ll hear from two international tax specialist that are both US citizens living abroad with their children that were also born abroad.
If I am a U.S. citizen and I give birth outside the United States, will my child automatically become a U.S. citizen?
It is common for children, especially those born overseas, to be granted citizenship automatically as soon as they are born if one or both of their parents are U.S. citizens.
There are specific conditions and it depends on Marital Status:
1. Child of Two U.S. Citizens Born Abroad in Wedlock
In accordance with section 301(c) of the Immigration and Nationality Act (INA), a child born abroad to two American parents will automatically acquire U.S. citizenship if at least one of the parents resided in the United States before the child was born. Consequently, at least one parent must be a U.S. citizen in order to transmit U.S. citizenship to the child.
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2. Child of U.S. Citizen and an Alien Born Abroad in Wedlock
If the U.S. citizen parent has been physically present in the United States or one of its outlying possessions prior to the person’s birth for the period required by the statute in effect at the time of the person’s birth (INA 301(g), formerly INA 301(a)(7), the person acquires U.S. citizenship at birth. For children born on or after November 14, 1986, at least two of the parents must have lived in the United States or one of its outlying possessions for at least five years prior to the child’s birth.
The U.S. citizen parent must have been physically present in the United States or one of its outlying possessions for 10 years prior to the person’s birth, at least five of which were after the age of 14, for the person to acquire U.S. citizenship at birth if the person was born between December 24, 1952 and November 13, 1986. In these circumstances, either the U.S. citizen parent or their alien spouse must have a genetic or gestational relationship with the child in order for the U.S. parent to transmit citizenship to the child.
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3. Child Born Out of Wedlock Abroad to Two U.S. Citizens
INA 301(c) provides that if at least one of the parents has a residence in the United States or one of its outlying possessions prior to the child’s birth, the child will acquire American citizenship under INA 309(a). Provided the U.S. citizen father does not meet the conditions of the “new” INA 309(a), the child will automatically gain U.S. citizenship if the U.S. citizen mother meets the qualifications for out-of-wedlock births to U.S. citizen mothers, which are outlined below.
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4. Birth of Out-of-Wedlock Child Abroad to a U.S. Citizen Father and an Alien Mother – “New” Section 309(a)
In accordance with the “new” Section 309(a) of the INA, a person born abroad after November 14, 1986 to a U.S. citizen father and an alien mother may acquire U.S. citizenship under 301(g) of the INA, provided:
- There is clear and convincing evidence that there is a blood relationship between the father and the child.
- At the time of the person’s birth, the father was a U.S. citizen;
- The father agrees to provide financial support for the child (unless deceased) until the child turns 18; and
- When the person is under the age of 18 years old:
- Under the law of the state or province where the person lives or resides,
- the father has acknowledged paternity in writing under oath, or
- a competent court has determined the paternity of the person.
In the case where the child is born overseas out-of-wedlock on or after November 14, 1986 to a U.S. citizen father who satisfies the requirements of INA 309(a) as outlined above, a child will receive U.S. citizenship if the father was physically present within the United States or one of its outlying possessions for five years before the child’s birth, including two years after the child turned 14.
Note that individuals born between November 15, 1968 and November 13, 1971 are able to obtain citizenship under either the “new” INA 309(a) and 301, or the “old” INA 309(a) and 301.)
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5. Out-of-Wedlock Child Born to a U.S. Citizen Mother Abroad
If the mother was a U.S. citizen at the time of the person’s birth and the mother was physically present in the United States or one of its outlying possessions for a continuous period of one year prior to the person’s birth, a person born abroad out of wedlock to a U.S. citizen mother between December 24, 1952 and June 11, 2017 may acquire U.S. citizenship under Section 309(c) of the INA.
Following the U.S. Supreme Court’s ruling in the case of Sessions v. Morales-Santana, 582 U.S. ___, 137 S.Ct. 1678 (2017), if a child is born abroad to a U.S. citizen mother and an alien father on or after June 12, 2017, the child may acquire U.S. citizenship at birth if the mother was a U.S. citizen at the time of birth or at least physically present in the United States for five years, including two after turning age 14, as required by Section 301(g) of the INA.
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Embarking on an international journey shouldn’t mean navigating the complex world of US taxation alone. If you’re living and working abroad, our friendly, supportive Expat Tax Online Help Facebook group is here to assist. We’ve designed a community that serves as a comprehensive guide and resource platform tailored for US expats.
Now let’s look at the pros and cons of completing the formalities of their U.S. citizenship.
Why are some American expat parents concerned about passing on US citizenship to their children?
The main concern that some American expat parents have is that they do not want their children to be burdened with all the U.S. taxation issues that they themselves find themselves dealing with. Despite the fact that this is likely there are many positive aspects too. Keeping U.S. citizenship gives them options around travel, work and education in the United States. Nevertheless, should their children face difficulty maintaining their tax obligations, they have the right to renounce it if they wish, and will have access to this option once they turn 18 years old.
The “Child Tax Credit Refund Upside”
Child Tax Credit Refunds play an important role in influencing most parents’ decisions to complete the necessary paperwork and register their child as a US citizen.
Once an SSN is issued to the child, the parent can claim the Child Tax Credit Refund each year until their child reaches 17 years old. There are conditions of course, such as income limits, but they are generous. A single tax filer can have income up to US$200,000 before the refund amount is restricted and it’s $400,000 for joint filers (as of tax year 2020).
Tax filers need to be careful how they file. If they claim the Foreign Earned Income Exclusion (Form 2555) then they automatically exclude themselves from the refund. There are other ways to file, especially if you’re in a country where you pay income tax, and plenty of it. If you’re working in a country such as the UK, Canada, Ireland, France, Germany, Australia, New Zealand (the list goes on and on) you can file your US tax returns using the FTC method (Foreign Tax Credit – Form 1116). This gives the tax filer full access to the Child Tax Credit Refund and here’s the big win… they can pay no US tax whatsoever and still get the refund every year. It’s not just a tax credit, it’s real money in your pocket.
Most ex-pats are startled when tax professionals tell them they’re getting a refund. Many are unaware that they would be entitled to money back. They frequently query how they can get a refund when they haven’t even paid taxes in the first place.
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U.S. citizenship offers many benefits in the form of;
What are some of the drawbacks of not knowing you are a U.S. citizen?
Many people discover later in life that they actually hold U.S. citizenship but have been unaware of this fact since birth. They may have spent the majority of their lives outside the United States if not all of it. They may not regard themselves to be a U.S. citizen, regardless of whether they were born in the country or their parent(s) passed citizenship on to them.
Once they confirm they are actually a US citizen, it’s usually not too long until they also find out about their US tax obligations and that’s where the fun stops. They discover they must file U.S. tax returns and report their worldwide income and hope the various tax treaties protect them from double-taxation, it’s all somewhat overwhelming and complicated. It’s the main objection and in truth, the main reason why US people living abroad give up their US citizenship.
It’s more than an inconvenience too. Preparing back taxes may incur significant fees, as well as a substantial payment to the U.S. government for tax liabilities including penalties and interest (for failing to file returns and/or failing to pay for tax liabilities on time). This is one of the reasons why some Americans opt to hire tax professionals to help them with these computations and procedures. There are even instances where people are forced to pay tens of thousands of dollars simply for not correctly filing their U.S. tax returns.
The IRS Streamlined Tax Amnesty program is the easiest, safest and cheapest way to become fully US tax compliant.
What are the most typical difficulties that American expats face while adopting a child?
Adopting a child can be a difficult process. You must prepare the necessary paperwork and take it to the U.S. Consulate in order to process the application. You must apply for a green card for your adopted child and remain in the United States for years before this green card may be converted to U.S. citizenship. You must also file extra documents; the procedure may be lengthy, but the results will be well worth the wait.
Thus, when dealing with situations like this, it is important for all American expat parents to be aware of it and knowledgeable about the applicable U.S. rules. To address their concerns, parents should first consult with the U.S. consulate to ensure that they fully understand the current U.S. rules surrounding U.S. citizenship for children.
When can the children of American expats renounce their US citizenship?
Giving up one’s citizenship can be a difficult decision, but those who renounce their U.S. nationality are not subject to tax obligations when they’re younger than 18 years old.
If one wishes to renounce U.S. citizenship, he or she can formally renounce it before a diplomatic or consular officer in a foreign country. The person seeking to renounce U.S. citizenship must sign an Oath of Renunciation in person before such an official of the U.S. government. In the same way, the CLN is sent to the former U.S. citizen with their cancelled US passport.
Neither U.S. citizens nor parents can renounce citizenship while in the U.S. (except in wartime). U.S. citizens under the age of 18 must convince a diplomatic or consular officer that they understand and are willing to renounce their citizenship voluntarily. In the case of a U.S. citizen under 14, U.S. common law requires that the child’s understanding be demonstrated by substantial evidence.
It is irrevocable to renounce one’s citizenship and can never be reversed without an administrative or judicial appeal, except to the extent that one has renounced citizenship prior to turning 18 years of age. Renunciants can have their citizenship reinstated if they notify the Department of State within six months of attaining 18 years of age. In those cases where an expatriate is no longer a U.S. citizen, the person is subject to the immigration laws of the U.S. as any other alien would be, including being ineligible for visas and inadmissible to the U.S.
The giving away of American citizenship is no small task; however, it relieves these people from some legal hassles and financial burdens that come with being an American citizen, in this day and age where everything must have taxes associated with them, I would recommend consulting our Expat Tax experts if you plan on doing so before taking such action because our firm handles all steps necessary for expatriation—from making sure your paperwork gets through properly at customs down to helping get rid of associations concerning it.
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