I am a dual (Aust and US) citizen and live in Australia. I have never been to the US but Mum is American. My bank wants to know...?
I am signing up for a new bank account here in Australia and the bank wants to know if I am am a US citizen. They say it's for taxation purposes.
Why are they asking me for my social security number? Does it mean that I'll get taxed more on my income once I start to earn money? I'm currently a university student and have no clue about this.
Also, my mum told me to never cancel my US citizenship and that it is very valuable should I ever want to live over there. Is there a downside to dual (US/abroad) citizenship?
I need some answers...
My bank didn't ask me this 10 years ago, why are they asking me now?
- sunshine_melLv 79 months ago
If you hold US citizenship, irrelevant of anything else, you have to report your taxes to the US government.
- Brother HesekielLv 79 months ago
The United States is one of the few countries on Earth that taxes worldwide income. While this sounds scary, it means nothing until you make "real" money. For 2019, the first $109,000 you make are exempt. The majority of people never make it to that point in their lifetime. But let's say you make $250,000 per year. After Australia taxed the sh*t out of you, you may have been left with $150,000 take home. If you file a US income tax return as you are supposed to do as a US citizen, Uncle Same would take you on the difference between $150,000 and $109,000, meaning on $41,000. The income tax on $41,000 is $6,426. Lesson to be learned: once you make about a quarter million a year, invest a $1,000 bill on a good tax professional, who then converts your "income" into investments so that they won't be income to begin with.
Unfortunately, the US now tries to get a stronghold on all US citizens living abroad, because very few actually file an income tax return. Once you tell your bank that you are a US citizen, they'll have to report your bank account to the IRS. But, again, until you make about a quarter million US$ ($350,000 Australian Dollars) per year in income, this is a non-issue.
And once you make $10,000,000 per year, your accountants and tax attorneys will simply invest a great deal of that money, so it won't be income. Warren Buffet, the richest man on Earth, pays very little income tax, because he doesn't take home a billion dollars a year. Why should he, as there's no way to spend it anyway. He simply keeps his "income" at a level that is consistent with his spending (and if you have corporate jets and corporate helicopters you don't spend much personal money anyway), and the rest he reinvests.Source(s): An immigrant from Europe, I live on the American Riviera and work as an attorney in Santa Barbara, California.
- Anonymous9 months ago
No ur not
- FoofaLv 79 months ago
Every US citizen regardless of residence must file a US tax return every year. But you shouldn't be doubly taxed because the US has reciprocal taxation agreements with Australia. You do however have to do the reporting. Yes, this is one major downside to holding US citizenship while living abroad (and is the primary reason people renounce US citizenship).
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- ibu guruLv 79 months ago
You are a US citizen, regardless where you live. And yes, US taxes all US citizens, legal permanent residents, temporary residents working in US, and other "US persons" as defined in law. US taxes ALL income from all sources worldwide, regardless where you live.
There is a double-taxation agreement with Australia, so your Australian taxes paid are credited against what you owe US. There is also Foreign Earned Income Exclusion for Americans living abroad, but it only applies to earnings from your job, not other income (like interest on bank account, rental income, etc.). You might not have to pay anything, but you still MUST file.
Your mom forgot to tell you that she put you firmly in the US Tax Trap. If you do not file annual income tax returns & pay as required, you are committing felonies. Also, US citizens (etc.) who meet certain criteria are required to file annual reports of all foreign bank & financial accounts (now FinCEN form 114), and/or Form 8938 for foreign assets. Failure to file these on time as required have truly draconian penalties.
Which is why the Australian bank has to report accounts held by Americans - and foreign banks don't want to have to comply with US laws in their own country. Which is why so many banks around the world now refuse to open any bank/financial account for Americans, including dual-nationals.
IRS is on the lookout for US dual-nationals who reside elsewhere - they want your money. And it is not uncommon to arrive in US to find IRS has a warrant out for tax evasion/tax fraud. So do not attempt to enter US until you solve your US tax issues.
Mom was supposed to get you a Social Security card when you were born & she got you your US passport. She needed that SSN to prepare her own US tax returns every year! So you both could be in serious trouble.
IF you decide to renounce your US citizenship, you must prove you have filed & paid your US taxes, and you may be subject to the Exit Tax - 42% of total worldwide assets. So the sooner you renounce - before you are old enough to start working, or have any savings, investments, assets, etc. - the better if you want to get out of the Tax Trap. Or do you plan to come to US, go to school, live in US, whatever, in the future?
- SigmondLv 49 months ago
You may need to pay US AND Australian taxes unless Australia has an agreement with the US to avoid that situation.
- Davie BwoiLv 59 months ago
The US taxes it's overseas citizens
- A.J.Lv 79 months ago
Dual citizen means a citizen of both countries. Citizens are eligible to vote in elections, obtain Passports, obtain government services, are free to travel, are covered by treaties and consuls around the world. US citizens must pay appropriate taxes. Generally it means you must file income tax and in dual citizen you will pay the higher tax rate of the two countries. It is best to try to discuss the details with your mum and the US Embassy in Australia.
An Australian citizen can visit the USA. A USA citizen can move here, work here, go to school here.
- Anonymous9 months ago
It used to be that the US only allowed people to enjoy dual citizenship until their 18th birthday. Upon a person's 18th birthday, if not living in the US, the person either had to claim their US citizenship and renounce all other citizenships (like your Australian one) or lose their US citizenship. It's not that way anymore. That changed in the 90's.
As an American, I can't tell you why an Australian bank would want to know your Social Security number. I do know that expats, US citizens living abroad, are not required to pay US income taxes, but that would have no bearing on why an Australian bank would want your Social Security number, if you even have one.
Being that you weren't born in the US but only have entitlement to US citizenship because of your mom's citizenship, you're probably technically not a citizen if you're over 18. You can claim your citizenship at any time, but you would have to contact the US government and file certain papers, the most common and expeditious way to affirm that citizenship being to apply for a US passport. A Social Security number isn't proof of citizenship since the numbers are given out to non-citizens, too. The number is for the purposes of working and paying taxes, as such, it is furnished to permanent resident aliens as well as work-authorized aliens, along with US citizens.
- samLv 69 months ago
yes, you will be taxed.