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Tax Law (Questions About Taxes)/What does an American mother have to do, so her children that are born in Canada are not required to report all earnings to the IRS and pay American taxes for their entire lives, even if they never visit the United States?

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U.S. citizens born abroad are technically liable for taxes even if their parents donít register their birth with American authorities, according to Gregory Wald, principal at Squire Patton Boggs. But Uncle Sam is unlikely to chase these people down, he added. ďThe tax liabilities of such individuals are likely to be quite minimal. What does an American mother have to do, so her children that are born in Canada are not required to report all earnings to the IRS and pay American taxes for their entire lives, even if they never visit the United States? The mother did not donít register their birth with American authorities (never had a US passport), do they still have to renounce their citizenship, yes or no? http://blogs.wsj.com/expat/2015/02/18/when-american-expats-dont-want-their-kids-

Answer
Hello,

Not every child born abroad to the U.S. mother automatically becomes a U.S. citizen.
Consult the U.S. Embassy in Canada to find out whether your children qualify for U.S. citizenship. It depends on your age when you left U.S. to live abroad, and father nationality.

If you get a confirmation that your children are indeed U.S. citizen by birth through the U.S. mother then they need to renounce citizenship to get full lifetime exemption from the U.S. tax reporting requirements and financial reporting requirements.

The problem is that even if you do not register your children as U.S. citizens it is your responsibility as a parent to report financial assets held in children names. If you fail to do so or report children as non-US persons, you jeopardize your own tax compliance. See http://www.taxesforexpats.com/articles/financial-account-reporting/filing-fbar-f

Tax Law (Questions About Taxes)

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IJ Zemelman, EA MBA

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I am an IRS-authorized EA and principal of a Tax Preparation firm focusing on U.S. Expatriates. We specialize in all tax issues faced by American citizens living abroad - such as foreign earned income, tax treaties, foreign spouse, etc. Visit our website - www.TaxesForExpats.com - for more information.

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18 years professional tax experience, 12 with expatriate taxes.

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Expatriate tax information on www.TaxesForExpats.com

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MBA from Zicklin School Of Business, IRS Enrolled Agent

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