U.S. citizens who also hold another nationality must treat all of their foreign financial accounts as U.S. assets for tax and reporting purposes. The passport used to open an account does not change the obligation to comply with U.S. regulations such as the Foreign Account Tax Compliance Act (FAT CA) and the Report of Foreign Bank and Financial Accounts (FBAR).
- FATCA requires foreign financial institutions to disclose information about U.S. account holders to the Internal Revenue Service (IRS).
- FBAR (FinCEN Form 114) must be filed by any U.S. person who, at any time during the calendar year, has a financial interest in or signature authority over foreign accounts whose aggregate value exceeds $10,000.
These rules apply regardless of whether the account was opened using a U.S. passport or a foreign passport. The U.S. government does not recognize a dual citizen’s choice of passport as a basis for exemption. Failure to report can result in substantial penalties, including civil fines and, in severe cases, criminal prosecution.
Practical compliance steps for dual citizens
- Identify all foreign accounts: bank, brokerage, mutual fund, insurance, and crypto‑related accounts held in any country.
- Determine reporting thresholds: FBAR triggers at $10,000 aggregate; FATCA thresholds vary by filing status and income.
- File the required forms: FBAR is submitted electronically through FinCEN’s BSA E‑File system; FATCA reporting is done on Form 8938 attached to the annual tax return.
- Maintain accurate records: keep statements, account numbers, and the highest balance for each account for the entire year.
- Seek professional advice: U.S. tax law is complex, and errors can be costly. A qualified tax professional can help ensure all obligations are met.
In short, dual citizenship does not provide a loophole to avoid U.S. tax and reporting duties. All foreign financial holdings must be disclosed in accordance with FATCA and FBAR requirements, irrespective of the passport used to open the accounts.
