Dual citizenship has a nice ring to it. It has an air of globalism and a feeling of freedom.
Although that’s what dual citizenship sounds like on the surface, it’s important to examine the inner workings of such a significant change in citizenship status.
We’ll spoil the surprise: barring a few potential drawbacks, dual citizenship should be seen as a benefit for nearly all eligible people. You simply need to be equipped with the right perspective and knowledge before embarking on the journey.
Here’s a brief overview of the advantages and disadvantages of being a dual citizen:
The Potential for Double Taxation
We’ll start with the perceived disadvantages, because they’re far fewer in number than their more positive counterparts.
As a dual citizen, “double taxation” is the only major drawback you’ll have to navigate. As the name implies, double taxation incurs annual tax payments from both your homeland and the new country in which you’ve gained citizenship.
This can get expensive, especially if you’re drawing an income from only one country but paying taxes in two separate nations.
In the United States, the Internal Revenue Service (IRS)—America’s bureau of taxation—asks U.S. citizens to report all of their global income regardless of the country in which the money was made. If you have international business interests or real estate, for example, you’ll need to declare all of that income when you file your annual tax returns.
Conversely, if you are a U.S. citizen seeking dual citizenship abroad and subsequently move to a new country, the IRS will continue to expect a full report of your annual income. This is one of the major reasons why wealthy U.S. expats renounce citizenship when moving overseas.
Here’s the good news: outside of your duty to accurately report your income, the likelihood that you actually get hit with double taxation is extremely unlikely.
Many nations hold and honor treaties specifically to protect their citizens from double taxation.
If you’re planning on moving to the United States and would like to review American tax treaties with other nations, click here to view the IRS’ alphabetical listing of international accords.
Don’t let the threat of double taxation derail your dreams of dual citizenship. Protect yourself at all points by working with a financial professional to ensure you’re maximizing your money within the boundaries of international law.
The Financial Benefits of Dual Citizenship
Holding two passports and the ability to call two places “home” isn’t the only perk for dual citizens. There are also a handful of tangible financial benefits that include:
- Long-Term Cost Savings: Green cards can cost thousands of dollars. Between application fees and renewal costs, the U.S. Citizenship and Immigration Services (USCIS) can burden your cash flow. By becoming a dual citizen, however, you bypass these nagging costs entirely. This can be especially fruitful if you have children, who will automatically become citizens (at no additional cost) upon your naturalization in America.
- Educational Savings: As American colleges and universities grow increasingly expensive, the value of scholarships has become paramount. As a dual citizen, you and your family will have far more access to domestic financial aid resources, grants, and scholarships. You’ll also have a wider array of schools to choose from. So if you’d rather send your children to college in your home country, you’ll be able to make that happen.
- Expanded Business Opportunities: Dual citizens can overcome competitive job markets by accessing business opportunities on an international scale. This is especially true for people interested in starting careers in government employment. In the United States, for example, only citizens can apply for government jobs. In addition to working for state and federal institutions, dual citizens will obtain much broader access to jobs within the private sector at large.
- Opportunity for International Property Ownership: The global real estate market is expanding at a rapid pace. In fact, experts predict a nearly $400 billion growth trajectory by 2030. Dual citizens can access this burgeoning market by owning properties in multiple countries. Beyond the obvious convenience of having more than one residence to visit, these properties can also become a source of passive income through renting on a short and long-term basis.
Becoming a dual citizen broadens one’s horizon for financial opportunity at all stages of life.
In addition, while first-generation immigrants certainly benefit from dual citizenship, their children will reap even greater rewards as they reach adulthood.
Getting Started
Dual citizens make global cultures more dynamic. In America, immigrants have built, enhanced, and renewed the centuries-long tapestry of art, entrepreneurship, and history.
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