Future Children, Renunciation of Citizenship, Heritage and Taxes

Hi there,

This topic could probably live under a number of topics. But, I think I could really use a parent's perspective, so that's why I've decided to put it here.

To be entirely transparent I don't have any kids yet, but I'm considering what my situation would mean for any eventual future children.

For context, this year I will turn 28 and I am applying for ILR this winter with 5 years spent between Tier 2 and Tier 1 work visas, and I am now considering the possibility of renouncing my US citizenship as eventually I want to get married and buy a house and all that good stuff... and to be frank - my partner is not super thrilled about Uncle Sam drooling over his finances simply because of my country's policies.

We've started to actively save to buy a house which means for the first time I've been starting to read more about the FBAR and the Exit Tax and all of the boring but relevant tax things that go hand in hand with being abroad and handling larger sums of money. It's pretty clear that it would be a lot more convenient for everyone if we bought a house and got married after I've done my 12 months on ILR and gone through the process of getting a British passport. Then ultimately if I ditched the US citizenship.

But, my only reservation for this is that if we then sometime down the line decide to have children, they wouldn't have any claim to US citizenship despite my "first generation heritage" for lack of a better word... Don't get me wrong. I am not that eager to sign up any future offspring to the draft or to introduce them to Uncle Sam's unusual tax practices once they get their first job as a teen. But what if they grow up to resent me for the fact that I denied them that "right of passage" or heritage for relatively selfish and mundane reasons?

Upon personal reflection, I think that if either of my parents had had another citizenship but had given it up prior to my existence, meaning that I no longer qualified for various heritage visas or even citizenship I would be a little annoyed by it, but I think that my perspective might be skewed because it's unlikely that my parents would have passed anything down as annoying as the American citizenship is to have while being abroad. (Unless we consider Eritrea.... but we won't for the sake of brevity! ).
It's also extremely difficult to say where America will be in 20 years time and if it will even be a desirable extra passport to have, or if it might even somehow get more annoying for those living abroad.

So my question to the expat mummys and daddys out there is: Do you think that my hypothetical offspring could grow up to hate me for renouncing my US citizenship thereby sort of robbing them of access to some of their roots or heritage?

If anyone has navigated a similar situation before I'd be keen to hear about how you handled it for yourself.

Many thanks in advance, hope you are all looking forward to another great weekend. xxx

I don't, and can't at my age (and health), have children, but I think a factor that might come into consideration is how much extended family you still have in the US, and whether the hypothetical future kids will be going to the US to visit them frequently and forming bonds there.  I think if they are going to be given tastes of a thing, but as tourists and not citizens, and they learn that your actions took away that opportunity from them, they might 'feel' the loss.  Whereas, if you have no family to visit and you don't plan to go back, except as an occasional sightseer, then they won't know any different, and you'll have saved them a bit of financial reporting ordeal.

I’m not in the same situation at all as our 2 children were minors when we became US citizens. As adults one of them lives in California but plans on moving to Australia in a few years with her Australian/American husband and the other now lives in England.  As adults they can choose to give up their US citizenship should they wish, and I think in your situation I would probably want to give them the path to US citizenship. As children born to a US citizen I can’t think that it would too onerous a burden on them and when they are adults they can make their own decision on retaining dual citizenship or giving up one of the other.

I don't, and can't at my age (and health), have children, but I think a factor that might come into consideration is how much extended family you still have in the US, and whether the hypothetical future kids will be going to the US to visit them frequently and forming bonds there.  I think if they are going to be given tastes of a thing, but as tourists and not citizens, and they learn that your actions took away that opportunity from them, they might 'feel' the loss.  Whereas, if you have no family to visit and you don't plan to go back, except as an occasional sightseer, then they won't know any different, and you'll have saved them a bit of financial reporting ordeal.

Building off this, there's also the question of if you have family there that may need support at any point. This has come up a lot in conversations with my husband because I imagine that, eventually, my parents will rely on me (I'm an only child) and I would hate to be in a position where I wasn't legally able to be there to support them because I was no longer an American citizen so was limited in how long I could be in the country, etc. Especially now that we've seen the pandemic situation and the ban on travellers as well. This may not apply to your situation, but it's something else to consider about how you plan to engage with the United States going forward.

Hello, thank you very much for your replies!

I have parents in the US who I do feel obligated to occasionally visit, but I am not an only child. I do have a younger brother, who has been stationed in Asia for a while but heading home very soon hopefully but I wouldn't describe him as a care-taker personality.

I haven't fully planned out what I would do should they need long-term care and it is only complicated by the fact that they are the sort that don't really trust or believe in medicine.  However, I have often been troubled by the fact that if I had to get back quick it would probably take me at least 24 hours from the point of contact (in the best case scenario) to get to the airport, hop on the next 12 hour flight, and then drive to wherever my parents are.

My parents have been quite involved with my brother's children due to his military status and his first wife's criminal history, but sadly my relationship with them is somewhat strained, primarily because my pursuit of higher education and a more global lifestyle has been interpreted as a betrayal of tradition and a rejection of the family. Because of this I am not super excited for any potential kids to spend meaningful amounts of time with my parents in America for fear that they will inflict similar psychological damage on them that I suffered under as a kid. But I suppose I do plan to continue to visit my parents every couple of years or so, mostly out of obligation so presumably I would have to bring along their future grandchildren too because they have some sort of unspoken right to know each other?

Families are hard. 

I seem to be the opposite of you as my kids have US, EU and UK passports.  We actually paid a ton of money to get my daughter her UK passport but thought it's where she considers home and she might need it if the Brexiteers start kicking out Europeans.  The more passports the merrier. 

I don't visit the US that often because it's expensive and a pain but I'm looking forward to going back after COVID. 

Similar start to you.  Came to the UK on a Tier 2.  Planned to use this as a stepping stone to get my dream job in China after 2-3 years (company's plan too).  Did what everyone said would happen and met a boy... blah blah blah

Personally, I don't find the US tax issues too, well, taxing.  I have ZERO assets in the USA.  We keep anything of any worth in my husband's name (so yes, I literally have all my eggs in his basket).  I've investigated UK law in the event of a divorce and I'd still be protected (hey, you gotta know these things!).

I did my 2020 taxes on Tuesday and it took me 46 minutes from start to finish.

And I am getting a refund of $2,800... why?  Because I have two kids.  So instead of filing FEIE, I file FTC and claim the additional child tax credit.  Each kid gets $1,400 into their savings account each year (and the amount goes up all the time, it's proposed or approved to be $2,000 per child from 2021). 

When my kids are between 18 until 18 and 6 months, they will have the option to renounce their US citizenship at no cost.  I will allow them to make whatever choice they want to at that point, without bias.  They will each have well in excess of $20,000 in their accounts (principle not interest) to put towards education or a downpayment, or anything they want.  All from Uncle Sam.

I promise my kids will be fully informed of whatever the pitfalls of taxation is at that point and how they want to move forward.  I'll also teach them about US taxes so that it's not scary and cumbersome. 

Right now, they think it's AWESOME that they are American and British.  And they like to gang up on my husband that the three of us are both American and British and he's only British. 

It's 100% a personal choice.  But for me, there were no cons in keeping my citizenship and passing it to them.  They have a "get out of jail free card" when they are 18.  With a bit of luck, the US won't be as embarassing by the time they are adults and they will be happy for the options.

I couldn't renounce my citizenship.  Just my personal choice.  If I did, it would be for reasons other than taxes. 

Thanks everyone. I've decided not to renounce and hearing your experiences has been really useful. I also didn't know there were tax incentives for children! I thought they were just keeping track for overpopulation reasons! 

We keep anything of any worth in my husband's name (so yes, I literally have all my eggs in his basket).

One final question: what does/did your husband/partner think about having to declare about their assets/bank accounts etc to the USA? Or did you guys refuse? What I mean by "refuse" is that I know there is an option to file a little differently where you don't declare the foreign spouse's income and just pay a slightly higher rate for yourself instead...

Honestly I don't even have anything to hide. I earn a little more than my partner does at this stage in our lives. So it's not even like I've got this secret sugar daddy hiding millions in offshore bank accounts. 

We're not married yet, but fingers crossed the American tax craziness doesn't put him off!  Today I floated the prospect of keeping my citizenship "just in case" and judging by his initial reaction it doesn't seem like it's going to be a deal breaker!

Thank you all again very much!

My tax returns have his first name and last name....  which is one of the most common names in the world.  For SSN it says NRA. So that’s taxes.  I file Married Filing Separately.  It’s literally his name.  The end.

FBAR is through the treasury and a paperwork exercise.  Again, just his name.

Nothing to fear.  Absolutely nothing.

Another consideration is renouncing would mean giving up social security (I paid in to get a decent payout when I retire, even though I haven’t worked in the USA since I was 29.  My estimated ss monthly payment at 65 is over $1500 a month. Way more than I’ll get from the UK National insurance system that I will have paid soooooo much more into. 

Genuinely our biggest fear is my husband will win the lottery and I won’t.   

My tax returns have his first name and last name....  which is one of the most common names in the world.  For SSN it says NRA. So that’s taxes.  I file Married Filing Separately.  It’s literally his name.  The end.

FBAR is through the treasury and a paperwork exercise.  Again, just his name.

Nothing to fear.  Absolutely nothing.

Same.  We keep our finances separate, so I just mention him in passing.

Another consideration is renouncing would mean giving up social security (I paid in to get a decent payout when I retire, even though I haven’t worked in the USA since I was 29.  My estimated ss monthly payment at 65 is over $1500 a month. Way more than I’ll get from the UK National insurance system that I will have paid soooooo much more into.

Are you sure you lose your SS if you renounce?  Non-citizens can collect US Social Security benefits that they've earned, so I don't see why former citizens would lose their right to it?
 

Genuinely our biggest fear is my husband will win the lottery and I won’t.   

My husband has a lot more premium bonds than I have. 

https://www.taxesforexpats.com/articles/expatriation/considering-giving-up-your-us-citizenship-facts-you-need-to-know-about-social-security.html

Only because I had considered it as well.

Fair point. That’s really great that they allow you to keep social security. 

Prior to moving to the UK I worked at a university and was responsible for assisting the international students. Basically everyone came to the US on a student visa, and then we had a European student who was issued what was essentially a green card. She didn't understand why, nor did we. We thought it had been issued in error. It turned out her mother was a former US citizen, and this student didn't know that. She knew her mother was born in the US, but didn't think she was ever a citizen. She also found out her maternal grandparents were US citizens and were still living in the US.

What we had found out was that her mother renounced her US citizenship prior to her birth. Long story short, her mother became a citizen of European country and cut her ties with her family in the US. This student said she felt a bit "betrayed" by her mother for doing this, as she had family she never knew about, as well as the visa hurdles. Families can be challenging, but from what this student said, it sounded like her mother just wanted to be "European." This was years ago and I'm not in touch with the student, but she was super keen to stay in the US and eventually apply for citizenship once eligible.

Slightly different to the situation above, but my friend born in the US to British parents found out when she had her first child that she was not eligible to pass on her US citizenship to her children. Even though she had no ties to the US other than it's where she was born, she was hoping her kids could have citizenship so that they could take advantage of any opportunities that came their way. She had left the US as a child and hadn't lived there since, so the issue was lack of US residency (the US Embassy's website has more info on this: https://uk.usembassy.gov/u-s-citizen-services/birth/transition-requirements/). She and her family really enjoy holidays in Florida, so her kids get ESTAs, but it's a huge hassle when they arrive in the US because immigration want to know why the kids aren't travelling on US passports. She explains they aren't elligble and that she's tried to get them citizenship, but every single time they go to the US, immigration is really difficult with her. My friend's UK passport shows the US city where she was born, so if she had tried to enter the US on a UK passport, US immigration would question why she wasn't entering on a US passport and why her kids weren't either. I would think that for a former US citizen (who was born in the US) who was coming to the US for a holiday (for example) on their UK passport would probably receive quite a bit of questioning as to why they didn't have US passport. And if travelling with their children, there would be questions as to why the children don't have US passports. If it gets messy for my friend just going on holiday with her kids, I can only imagine it would be even messier for a former US citizen trying to visit on their UK passport.

I'll be applying for UK citizenship this year (just waiting on my ILR decision!), and I'm super excited about having dual citizenship. I don't have kids yet, but my UKC husband and I are very pleased that they'll have dual citizenship from birth. As adults, they'll be able to decide for themselves where they want to live and won't have to deal with the Home Office. Nobody wants to deal with the Home Office, and having the luxury to never deal with them is worth its weight in gold.

For anybody considering giving up US citizenship, I would really think about the pros and cons. Really reflect on it, and ask if this is a short-term solution to something (such as not wanting to file taxes), or is this something that may be very valuable long-term (ie: going back to the US to care for a sick relative at short-notice).