If you are the American-born child of non-U.S.-citizen parents who just happened to give birth to you on U.S. territory, you face a conundrum if you moved away from the U.S. as a child and have been living in your parents' home country since then. Your place of birth makes you eligible for U.S. citizenship, and that means you're subject to the tax laws even if you have never worked in the U.S. This fact has been creating problems for people known as accidental Americans, who were maybe born to tourists or students who were here for a short time. You need to straighten out your situation now lest you be required to pay hefty penalties for inadvertently missing tax requirements that you didn't realize you had to fulfill.
Age Can Help
If you're still just a teenager, your situation may or may not be urgent. If you've never earned money, you're not going to have to file any forms. But if you had a summer job in your home country and didn't file U.S. tax forms, you could owe penalties simply for not filing forms that tell the U.S. you earned money, even if the amount was well under the limit for earnings exempt from U.S. taxes. If that alone sounds confusing, consider yourself lucky; some people don't find out they have to file U.S. tax forms until they're much older, meaning they have a lot more income and many more years that could be subject to penalties.
Once you become a legal adult, you have the opportunity to renounce U.S. citizenship if you have no plans to ever return to the U.S. But if you choose to keep your citizenship, then you have to file tax forms every year.
If you've been working in your home country and need to start filing tax forms, you first need to look at your entire financial situation and get caught up. This can involve reporting large savings accounts, property you end up owning, or other financial assets in your name. You must contact a tax attorney or accountant who is familiar with U.S. tax laws for citizens living abroad because one mistake on the forms could increase your penalties. A good tax attorney will also be up to date on the latest tax laws, which could help lower or wipe out penalties depending on your situation.
If you're one of the lucky ones who has not yet worked at all, even a summer job, you need to contact an attorney and an accountant anyway to go over what forms you need to fill out each year. Remember, just because the U.S. allows a certain amount of foreign income to be U.S.-tax-free doesn't mean you don't have to report it.
Talk to a tax attorney based in the U.S. if you can, or work with an attorney in your own country who has a working relationship with U.S.-based tax law offices. These professionals can help you navigate tax laws so that you can earn money in peace and decide what to do about your unintended citizenship.
For a tax attorney, contact a law office such as Dermot F Kennedy.