Many people around the globe have a dual nationality, including a US nationality. They often do not realize that they have to fulfil important US taks obligations, even in case they never set foot on US territory in their life.

The US tax system is one of the few tax systems in the world that taxes individuals on the basis of nationality. This criterium differs from mosts countries, which will tax individuals on the basis of residence and of the source of their income.

As international exchange of data is growing all the time and due to ever increasing penalties for failure of individuals to meet their tax obligations, every year it becomes more important to consider this issue and to take proper measures, either to properly comply with the US tax obligations or to consider even giving up dual citizenship.

The US Internal Revenue Service reminds U.S. citizens, including those with dual citizenship who have lived or worked abroad during all or part of 2013, that they may have a U.S. tax liability and a filing requirement in 2014. For them, the filing deadline is Monday, June 16, 2014, for U.S. citizens and resident aliens living overseas.

U.S. citizens need to report their worldwide income, including income from foreign trusts and foreign bank and securities accounts. Certain taxpayers may also have to fill out and attach to their return Form 8938, which is a Statement of Foreign Financial Assets if the aggregate value of those assets exceeds certain thresholds.

Taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2013 must file electronically with the Treasury Department a Report of Foreign Bank and Financial Accounts (FBAR) by June 30, 2014. Non compliant tax payes should realise that the penalties for not filing the FBAR report are immense.

The fact that a US tax return is to be filed does not automatically imply that one will have a US tax obligation. It is possible that use can be made of foreign income exemptions and US international tax credits in order to avoid double tax between the US and the individual’s country of residence. On the other hand, it regularly occurs that foreign tax payers still owe a balance of tax due in the US.

It can be observed during recent years that more and more dual nationals, living outside the US are giving up their US nationality. For them, this may be the best way to get rid of the burden of the annual US tax filings and of the risk for unreasonable penalties.

Read more on the IRS website: http://www.irs.gov/uac/Newsroom/IRS-Reminds-Those-with-Foreign-Assets-of-U.S.-Tax-Obligations-2014