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What is an Accidental American?

“I was recently asked to complete ‘form W9’ while in a bank appointment, which they told me indicates that I am an American citizen, but my country of permanent residence is Canada and always has been. I have never visited America, but I am now being told my reported taxes need to be reviewed/altered. Why is this?”

What is an Accidental American?

A person that is referred to as an ‘Accidental American’ is most commonly someone that was born in the United States to foreign parents, who had happened to be visiting the US at the time of birth and have since returned to their home country. It can also be a person born to American parents while living in a foreign country, because despite automatically becoming a citizen of the country you are born in, you will also become an American citizen by default of your parents.

These scenarios are very often undiscovered by the person until later in adulthood, which can cause devastating issues financially due to the US tax laws. Despite never setting foot in America, they are legally bound to the same tax laws under their US citizenship as any other person that resides permanently in America. Therefore, dual citizenship between the persons home country and the IRS without knowledge means that they have failed to pay taxes or report income to the IRS, potentially causing years-worth of tax debt, penalties and interest.

If a person is aware that they were born in America, but continues to reside in a foreign country, they must not assume that they are no longer classed as an American Citizen. This is only possible if they have taken the necessary steps to renounce their US citizenship and have successfully obtained a ‘Certificate of Loss of Nationality’ from the US Department of State. There are many people that are choosing to renounce, rather than file their taxes to the US authorities every year, however this is not a straight-forward process. Not only will the person have to file the last six years of back taxes to be able to renounce, but there are also additional fees to do so.

The Foreign Accounts Tax Compliance Act (FATCA) was enacted in 2010, and subsequently began to identify any American Citizens living overseas who have failed to report either their US expat tax returns, or their foreign financial accounts that are valued at $10,000 and above.

If you have found yourself to be an ‘accidental American’ and are unsure of how to manage your taxes and reporting obligations due to citizenship confusion, you must seek specialist advice to minimize any accrued interest and penalties. We can offer you a free introduction to a hand-selected US tax expert, that can then provide you with tailored advice, helping you to understand your US citizenship tax responsibilities.

Once you have completed our straightforward US tax introduction form, we will evaluate your situation before personally connecting you to the most suitable, trusted experts in our network.

Last updated: 17 April 2020