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Dual Nationality UK and USA

My client has a dual nationality UK and USA, he lives in UK and Pays Tax here.

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I have aquired a client who is a director of a small company in the UK , the company pays Cortporaton Tax in UK and the director pays incme tax here. 

The client was born in USA  and came to UK when he was six months old, he therefore holds dual nationality UK and US. As the client came to UK some 24 Years ago as an infant he is not registered with the IRS in USA as a tax payer.

I would be grateful if some one can let me know whether my client should register with the IRS in the USA and declare his income over there.

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By Accountant A
18th Feb 2020 15:21

V Mehta wrote:

I would be grateful if some one can let me know whether my client should register with the IRS in the USA and declare his income over there.

You mean should now or should already have?!

I believe the answer is yes but David Treitel is your man for a definitive opinion on this site.

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By vinylnobbynobbs
18th Feb 2020 16:32

I have a client whose son was born in the US and left when he was quite small to return to the UK. parents both British.
When he got married a few years ago he went to the US on his honeymoon, his first visit to the US since he left.
Awkward questions were asked at border control and although never liable to tax in the US he had to complete and file US tax returns (very expensive - took specialist advice)
I would speak to a US tax advisor.

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By David Treitel
18th Feb 2020 18:07

Great question. In most cases individuals in these circumstances will be US citizens, subject to US tax. Because of the GILTI tax rules one hopes that the UK limited company has elected to be disregarded for US tax purposes.

A US income tax return for 2019 is required to be filed with the IRS by US taxpayers if worldwide income and gains exceed just $5 (!) (married filing separately), $400 (self-employed), $12,200 (single) or $24,400 (married filing jointly). If needed, a US income tax return for 2019 is due to be filed by 15 June 2020; but might easily be extended until 15 December 2020 by filing an IRS Form 4868 by 15 June 2020 - followed by writing a letter to the IRS by 15 October 2020. An FBAR for 2019 must, however, if needed be filed with the US Treasury by 15 October 2020. https://www.irs.gov/individuals/international-taxpayers/taxpayers-living...

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By garethgreen
24th Feb 2020 14:01

I believe it is possible to revoke US citizenship, which might be advantageous from a tax perspective for future years (saving US compliance costs, even if there is no extra US tax liability).

Has your client been disclosing to UK banks that he is a US citizen? They are often very wary, due to FATCA.

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