Resp for dual national child

[MIKE2000Z28]

I'm an American living in Canada married to a Canadian. We have one child who is going to be a dual national once I file the paperwork. Is it possible for my wifes grandmom to open up a Resp and contribute to it and my daughter would just report the income on a 1040 when she turns 18? She would probably would have little income to begin with.

[nelsona]

Yes, although your Cn spouse could also be the plan sponsor, since she is not a USC. But the mother-in-law would be best, since this avoids any need for special filing in years when it would benefit you to file jointly with your spouse on 1040.

[nelsona]

Sorry, applies for grnadmom too. Its not the child's citizenship that matters, but the plan sponosr's

[MIKE2000Z28]

Thanks Nelsona, i thought that was the case. I put my wife as a NRA on my 1040. I just file myself.

[formerpatriot]

MIKE2000Z28:
Make sure you understand all the consequences of being a dual citizen before you apply for your child's US citizenship.

[Ron.Henderson]

Now why would you want a Canadian-born child to start filing 1040s at the age of 18? What a silly thing to do.

I'm attaching a text that I've seen posted to a few different groups, which has some good advice on the subject of kids born outside the US with a claim to US citizenship:

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Situation: child born outside US to one US-citizen parent, with another citizenship already (typically that of the non-US parent, or the country of birth).

Question: should I register my child’s birth with a US consulate?

First off, does the US parent qualify to pass on US citizenship? They must have lived 5 years in the US, 2 of those years above the age of 14. If not, then the child cannot become a US citizen (except possibly via the grandparent route; note also different rules for unwed mothers). If the parent qualifies, the child is not recognized as a US citizen until the birth is reported, and one is not required to register the birth.

Advantages of registration:

One, if the US parent is tax-compliant and qualifies, they can bring in $1400/year thanks to the child tax credit, even if they pay no US tax. (My personal view is that this is not enough to justify becoming tax compliant or betraying a child’s anonymity. At the very least the money should be invested for the child’s education, not spent, and the parent should offer to pay for renunciation at age 18.)

Two, the child can easily obtain a US passport if moving to the US is desired.

Three, travel to the US with the US-citizen parent may in some cases go more smoothly. US law requires that US citizens enter the US with a US passport. This law is very rarely enforced, and there is no penalty for violating it. However, it’s possible that a parent entering the US with a US passport, alone with a child with only a non-US passport, could face questions. Obviously citizenship is not passed on automatically in all cases, the US parent needs to meet certain criteria (detailed above) for the child to be a US citizen, but CBP officials don’t necessarily know the finer points of immigration law so there might be unpleasant delays and discussions. Furthermore, one would technically be committing some sort of perjury completing an ESTA waiver for a US-citizen child with a non-US passport, and if a visa is required to enter the US, there are reports of visa applications being denied if the US consulate believes the child to be a US citizen.

Disadvantages of registration:

The US government will know that your child exists.

Note however that reporting the child’s birth does NOT mean that you have signed them up for a lifetime of US tax compliance, or that they will be denied access to financial services or other opportunities in their home country. These problems only arise if you or they truthfully disclose US citizenship. For children with non-US birthplace and non-US citizenship (most typically, citizens of their home country) their US citizenship is completely undetectable. Do NOT disclose this citizenship to financial institutions or employers. Do NOT enter the US tax system. Don’t be silly.

What to do?

If you have already registered a birth abroad, it’s not the end of the world. The child can renounce after they turn 18. (If done within six months there’s a small advantage in terms avoiding covered expatriate status, but this really means nothing unless great wealth is involved; the fee is still $2350.) A recorded birth does NOT mean that the IRS will one day hunt them down if they haven’t been filing US taxes. If they remain outside the US they can live a fully normal life, provided they know to never disclose their US citizenship.

If you have not registered, the child has the option of “claiming” their US citizenship later. Apparently it’s more difficult to do this after they turn 18, but I don’t know the details. At very least one should assemble the documents required and put them in a safe place so that the child could obtain a US passport, if so desired, after the parent’s untimely death.

[Ron.Henderson]

Note that the above is general advice applying to all countries. In Canada it's very easy to be a dual citizen, there is no denial of banking services or employment discrimination, and FATCA enforcement is extremely loose so even those born in the US can avoid reporting by declining to identify themselves as US citizens. However, in some European countries a US birthplace, or admission of US citizenship, makes it extremely difficult to open even a simple bank account, let alone investments or other financial services. In these cases a dual citizen born outside the US needs to keep their parentage very, very quiet if they want to live a normal life without having to renounce.