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Getting a Second Citizenship by Descent: What Changes for Your U.S. Taxes?
Short answer: claiming another citizenship doesn't change your U.S. tax status if you're still a U.S. citizen. The IRS says U.S. citizens are taxed on worldwide income from all sources, and the filing rules are generally the same whether you live in the United States or abroad. Source: IRS, U.S. citizens abroad The IRS pages we checked don't make an exception for people who also hold another citizenship.
Moving abroad doesn't end filing
The IRS says a U.S. citizen working and living abroad must file a U.S. income tax return unless they renounce U.S. citizenship under certain circumstances covered by the expatriation tax rules. Source: IRS FAQ Whether you have to file depends on your income, filing status and age; you count gross income from worldwide sources, including any foreign earned income you exclude. Source: IRS, Filing requirements
Avoiding being taxed twice
Many Americans abroad qualify for the foreign earned income exclusion and the foreign tax credit, but only by filing a U.S. return. Source: IRS To claim the exclusion you must have foreign earned income, your tax home must be in a foreign country, and you must meet either bona fide residence abroad for a full tax year or physical presence abroad for at least 330 full days in 12 consecutive months. Source: IRS, Foreign earned income exclusion
Foreign bank accounts (FBAR)
If you open an account in your new country, watch the FBAR rule. A U.S. person must file an FBAR (FinCEN Form 114) if they have a financial interest in, or signature authority over, foreign financial accounts whose combined value exceeded $10,000 at any time during the year. It doesn't matter whether the account earned taxable income. Source: IRS, FBAR The FBAR is filed electronically through FinCEN's BSA E-Filing System, not with your tax return. It's due April 15, with an automatic extension to October 15. Source: IRS, FBAR
You may also have to file Form 8938 if your specified foreign financial assets are above the threshold that applies to you. Source: IRS Gifts or bequests of more than $100,000 from a nonresident alien or foreign estate must be reported on Form 3520. Source: IRS
Deadlines if you live abroad
U.S. citizens living overseas on the regular due date get an automatic 2-month extension to file, to June 15 for calendar-year filers, and can ask for more time to October 15 on Form 4868. Even with an extension, you pay interest on any tax not paid by the regular due date. Source: IRS
The other country's taxes
Each country has its own tax rules, and we haven't verified them here. Check with that country's tax authority, and see IRS Publication 54 for U.S. details. Source: IRS