“Dual Citizenship” Tax Planning

I’m sure most people have seen pictures of new US citizens proudly waiving the US flag after taking their oath of citizenship. Although those photos always make me smile, I can’t help but wonder how many of those individuals retained a Cross-Border Tax Planning Lawyer to advise them concerning the U.S. tax implications to them of becoming a US citizen, before they took the oath. I suspect that most prospective US citizens wind up finding out about those tax implications as an expensive lesson, after they are already committed.

Unlike virtually all other developed countries, the US taxes its citizens on their worldwide income (with a few exceptions), without regard to their place of residence. Additionally, it subjects its citizens to US transfer taxes on the value of gifts of non-US property, as well as on the value of non-US property included in their estates at death. To help our clients plan for such taxation, we offer foreign citizens who are thinking of becoming “dual” citizens an exhaustive analysis of the US tax implications of taking US citizenship, in their specific factual circumstances. There are potentially several dozen important US tax implications of taking US citizenship, many of which remain unknown to new citizens until they are bitten by them. (A few of the tax implications of taking US citizenship are briefly discussed on other pages of this website, including those entitled “Delinquent FBAR Reports and Other Foreign Asset and Information Reporting” and “Expatriation Tax Planning for US and Dual Citizens,” and in some of our Cross-Border Tax Newsletters also posted on this website.)

We encourage prospective US citizens having business and investment interests abroad to learn about and plan for the worldwide tax consequences of US citizenship before taking the oath. To facilitate that end, our “pre-citizenship” tax analyses also include “pre-citizenship” tax planning.

For those who are already “dual” citizens, we provide comprehensive planning addressing the income and transfer tax implications of having ownership interests in businesses, investments or trusts located outside the US (see our webpage entitled “US Estate Tax, Gift Tax and Other Transfer Taxes”).

Finally, for those “dual”citizens who wish to relinquish their US citizenship (perhaps to avoid the expense and headaches of the many tax and reporting obligations associated with it after returning to their country of origin), we offer comprehensive expatriation tax planning and assistance (see discussion on the page of this Website entitled “Expatriation Tax Planning for US and Dual Citizens”).

As the foregoing makes clear, retaining an experienced international cross-border tax attorney to advise you concerning the cross-border tax implications of taking US citizenship before taking the oath is crucial to understanding the prospective tax costs of becoming a citizen. At Lance Cross-Border, we have decades of experience assisting our clients to develop a comprehensive cross-border tax plan before becoming US citizens. We also routinely assist those who are already “dual” citizens with tax planning for cross-border interests and with planning for relinquishing US citizenship, if that is their desire. We welcome any inquiries that you may have concerning your specific tax situation. Feel free to call us at (760) 578-5093, contact us via email at Brent@LanceCrossborder.com or by using our online contact form. We will respond to all relevant inquiries quickly, without any obligation.