How Many Expats Are Unknowingly Accidental Americans?

As the USA taxman widens his net still further, expats all over the world with relatives in the USA are getting scared.

The ‘accidental American’ issue is garnering even more publicity as the IRS ramps up its efforts to snare even more unaware individuals unlucky enough to have been born in the good old US of A. It’s ridiculous that a person born in the USA while the parents were either on holiday, on business or maybe even in transit across the pond should be considered an American citizen by default, and there are many thousands of worried individuals who’d agree. Those who’re discovered could well own the US taxman thousands of dollars, and the IRS, like the Mounties of old, almost always gets its man.

Expat taxpayers have a right to be concerned, especially if they’re working or planning to work in the USA and aren’t aware of their birth history. Washington taxes all its overseas citizens in their worldwide income, no matter how it’s obtained or whether the so-called citizen has ever visited the country in which he was accidentally born. The twist to the tale is that all those affected could become US citizens should they so wish, although a good few might well not want to be associated with the direction the USA seems to be taking at this stage in its history. Another section of the expat population is also vulnerable in this respect, as those whose parents are American citizens are also liable should a parent have left the USA before they were born.

Unfortunately, keeping your head down and hoping for the best doesn’t work, especially if there's a bank account with a foreign bank or an overseas investment, FATCA forces all foreign financial institutions to declare details of anyone suspected as being an accidental American by birth. Those most at risk are everyday folks with minor American connections who’ve never filed a US tax return as they have no idea they’re compelled to do so by law. One group which could be of interest to the US tax authority are now elderly retirees if they’re still alive – the progeny of US military personnel stationed in the UK and Europe during WWII who fathered illegitimate children with local girls then left in a rush to go back to their American wives once the war was over.