Who Are Accidental Americans?

Imagine waking up one day to discover you’re a citizen of a country you barely know. That’s the reality for many global citizens called Accidental Americans. These are people who are considered U.S. citizens, often without realizing it. It sounds like the plot of a quirky comedy. For those living it, it’s more paperwork than punchlines.

How Does This Happen?

  1. Born in the United States, but Long Gone: If you were born on U.S. soil, you’re likely a citizen. This applies even if you moved to another country before you could talk.
  2. Born Abroad to U.S. Parents: Got a parent who’s American? You may have inherited their citizenship automatically, even though you may have never set foot in the States.
  3. Completely Unaware: Many accidental Americans have no idea they hold U.S. citizenship until life throws them a curveball. For instance, opening a non-U.S. bank account or filing taxes in their home country.

The Challenges of Accidental Citizenship

Being an accidental American isn’t all stars and stripes. Here’s what you may face:

  1. Tax Troubles: The U.S. taxes its citizens on their worldwide income, even if they haven’t lived there since diapers. This means filing U.S. tax returns and possibly reporting foreign bank accounts (FBAR!) or assets (FATCA!). Missed something? The penalties can be brutal.
  2. Renouncing Roadblocks: Want to give up your U.S. citizenship? It’s not as simple as handing over a passport. There’s a hefty mandated fee (no less than $2,350) and a requirement to clean up your U.S. tax filings first.
  3. Banking Woes: Thanks to FATCA, banks around the world are required to report accounts held by U.S. citizens. Some financial institutions, wary of the red tape, prefer to avoid U.S. citizens altogether, leaving accidental Americans scrambling for basic services.
  4. Emotional Toll: For many, it feels like being trapped in a citizenship they didn’t ask for. The process of figuring out what to do—let alone fixing it—can be overwhelming.

Help is on the Way (Kind Of)

Organizations like the Association of Accidental Americans (AAA) or Congressman like Darin LaHood who are introducing legislation like the Residence-Based Taxation for Americans Abroad Act (2024) trying to step-up the fight for fair treatment. They’re pushing for:

  • Simpler, cheaper processes for Accidental Americans to renounce citizenship.
  • A shift from citizenship-based taxation (a U.S. specialty) to an often more logical residency-based system.

Also, you may consider renouncing your U.S. Citizenship which has several steps including filing all back taxes and any amounts owed, paid. You will also have to file form 8854 as part of your final tax return “to certify compliance with tax obligations in the 5 years before expatriation and to comply with their initial and annual information reporting obligations under section 6039G.”

The Global Conversation

European governments, especially France and the Netherlands, are beginning to speak up for Accidental Americans. They are urging the United States to rethink their policies. While there’s been some movement on making compliance easier, the road to meaningful change is still a long one.

What Now?

If you’re an Accidental American, don’t panic. Get informed, reach out for expert advice, and know you’re not alone. With growing awareness and advocacy, there’s hope for a future with fewer headaches and more freedom. After all, citizenship should feel like a choice, not a surprise!

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Scott Grandfield. U.S. Tax ExpertScott Grandfield, EA, NTPI Fellow – Business Development & Tax Advisor

With over 30 years of tax expertise, Scott Grandfield specializes in U.S. tax and trust returns for Americans living abroad.