Dual Citizen & Dual-Status Aliens

Holding dual citizenship or dual residency, or being a dual-status alien, can create complicated tax situations. Dual citizenship and dual status residency bring unique considerations that come from navigating the tax obligations of two different countries. This is further complicated by the fact that the U.S. enforces tax laws on Americans regardless of if they have foreign status in another country, even if they live there. Because the U.S. aggressively enforces its international tax reporting requirements, it is crucial that dual citizen and dual-status individuals, and business owners operating in foreign countries, adhere to U.S. reporting and taxation requirements on income and assets. Non-compliance can result in severe penalties.

The international tax law lawyers at Hone Maxwell LLP help dual citizens and dual-status aliens comply with U.S. tax reporting requirements, file the correct documents and meet critical deadlines. Our U.S. licensed attorneys in California, Mexico and Singapore are well-versed in, and familiar with, dual citizen and dual status tax challenges and solutions. Our attorneys provide the foreign tax guidance needed to meet U.S. international tax law requirements while minimizing the risks of over-paying tax obligations. Additionally, planning and problem solving for dual citizens and dual-status aliens requires addressing the laws of multiple countries. Our attorneys also have relationships with professionals in foreign jurisdictions, which allows them to collaborate and create comprehensive solutions that consider all countries.

It is important to note that numerous treaties between the U.S. and foreign nations can establish reduced tax rates or provide exemptions to prevent double taxation for certain taxpayers. Although the applicability of these treaties depends upon the taxpayer’s status, and the benefits are generally not available to U.S. citizens and green card holders, there are basic benefits under U.S. law that can be utilized.

Special Tax Benefits for Dual Citizens and Dual-Status Aliens

There may be special tax credits available to qualifying dual citizens and dual-status aliens living abroad. They include:

  • Foreign Earned Income Exclusion (FEIE): The FEIE, as well as the foreign housing exclusion and the foreign housing deduction, are based on income received for services performed in a foreign country under a certain set of parameters. Eligible dual citizens and dual-status aliens may qualify to exclude a portion of their foreign earned income from U.S. taxes.
  • Foreign Tax Credit: Dual citizens and dual-status aliens who pay taxes in their country of residence may be able to claim credit against their U.S. tax liability for those taxes paid.

International Tax Reporting Requirements for Dual Citizens and Dual-Status Aliens

The U.S. requires that all its citizens, including those with dual citizenship and dual-status aliens living abroad, report all income on their U.S. tax returns. Importantly, under the Foreign Account Tax Compliance Act (FATCA) and U.S. tax law, dual citizens and dual-status aliens may also be required to file the following forms:

Meanwhile, non-American individuals living and working in the U.S. have distinct tax reporting requirements based on citizenship and residency status.

HMLLP helps individuals and businesses worldwide, and of all status types, in identifying the applicable international and U.S. tax reporting laws for their situation to avoid penalties. Should issues arise, HMLLP assists clients in addressing and resolving them. 

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