Do I have to pay US taxes if I have dual citizenship?

Who do you pay taxes to if you have dual citizenship?

As a dual citizen, you face a unique set of circumstances. The U.S. taxes your worldwide income based on citizenship, while your country of residence likely taxes you based on where you live. This creates the potential for paying taxes twice on the same income.

How can a U.S. citizen avoid double taxation?

Foreign Earned Income Exclusion (FEIE)

The FEIE allows you to exclude a significant portion of your foreign earned income from U.S. taxation. For tax year 2025 (filed in 2026), you can exclude up to $130,000. If you're married and both spouses qualify, you can each claim the exclusion for a combined total of $260,000.

Is there a downside to dual citizenship with Mexico?

The drawbacks of dual citizenship in Mexico include complex application procedures, dual legal obligations, and potential double taxation. The application price for dual citizenship in Mexico is 8,755 Mexican Pesos in 2026 (Note that additional fees may change).

Who is exempt from paying taxes in the USA?

In the U.S., tax exemption generally applies to nonprofit organizations (charities, churches, educational institutions, etc.), certain government entities, and some low-income individuals or U.S. citizens abroad, though exemptions vary by tax type (income, sales, property) and jurisdiction, with the Internal Revenue Code (IRC) Section 501(c)(3) defining many charitable and educational exempt organizations. Individuals can also claim exemption from withholding if they owe no tax, and certain income for expats, while specific goods and services (like groceries or farm equipment) are often exempt from sales tax. 

Do I have to pay U.S. taxes if I live in Mexico?

Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits.

Do you lose social security if you have dual citizenship?

Dual citizenship generally doesn't negatively affect U.S. Social Security benefits; in fact, it can help you qualify by counting work credits from another country through "totalization agreements," allowing you to potentially receive benefits from both countries, though you'll likely get a partial U.S. benefit based on U.S. credits. These international agreements prevent paying Social Security taxes to two countries for the same work and help bridge gaps in coverage, enabling eligibility for benefits you might not otherwise get. 

Can I renounce my US citizenship to avoid taxes?

Get Expert Guidance on Your Renunciation Decision

According to the IRS, most Americans who renounce their citizenship don't owe any exit tax because they don't meet the “covered expatriate” thresholds. The State Department charges a flat $2,350 administrative fee for renunciation.

What are some benefits of having dual citizenship?

The key benefits of being a dual citizen include:

• Increased Mobility.
• Expanded Work Opportunities.
• Access To Social Services.
• Educational Opportunities.
• Property Ownership.
• Cultural And Family Ties.
• Complex Taxation.
• Legal Obligations.

Can I lose my U.S. citizenship if I have dual citizenship?

Americans aren't currently losing dual citizenship, but a new proposal, the Exclusive Citizenship Act of 2025, introduced by Senator Bernie Moreno, aims to end it, potentially forcing dual citizens to choose between their U.S. and foreign nationalities or risk losing U.S. status within a year of the law's passage. While U.S. law currently permits dual citizenship, this bill would require "sole allegiance," meaning those acquiring another nationality after the law's effective date could lose their U.S. citizenship automatically. The bill faces hurdles, requiring congressional passage and likely legal challenges.
 

Why do banks want to know if you have dual citizenship?

Knowing a customer's citizenship or dual citizenship can help banks assess risk, especially for international transactions.

Do dual citizens have to pay taxes in both countries?

Yes, dual citizens often have obligations to file and potentially pay taxes in both countries, as both countries' laws apply, but mechanisms like tax treaties and foreign tax credits usually prevent paying tax twice on the same income by offering relief for taxes already paid to the other country. The key is meeting each country's residency or citizenship-based filing criteria, requiring careful attention to reporting requirements, even if credits reduce the final amount owed.
 

What is the $600 rule in the IRS?

The IRS $600 rule refers to the reporting threshold for third-party payment apps (like PayPal, Venmo, Cash App) for income from goods/services, where they send Form 1099-K to you and the IRS for payments over $600 in a year. While the American Rescue Plan initially set this lower threshold for 2022 and beyond, the IRS delayed implementation, keeping the old rule ($20,000 and 200+ transactions) for 2022 and 2023, then phasing in a $5,000 threshold for 2024, before recent legislation reverted the federal threshold back to the old $20,000 and 200+ transactions for 2023 and future years (as of late 2025/early 2026), aiming to reduce confusion. 

Can you opt out of paying federal taxes?

No, you cannot legally stop paying federal taxes, as it's a legal requirement, but you can reduce your liability or manage owed taxes through legal means like adjusting withholding (W-4), setting up payment plans with the IRS, offers in compromise, or potentially bankruptcy for certain older debts. The IRS imposes significant penalties for non-payment, including fines, interest, liens, and asset levies, and considers frivolous arguments against paying to be a crime. 

How much tax do you pay on $100,000 in the USA?

On a $100,000 income in the USA, you'd pay roughly $17,000 - $19,000 in federal income tax (as a single filer, depending on deductions) plus payroll taxes (Social Security & Medicare), with your effective tax rate around 17-19%, but your marginal rate is 22%. State income tax varies widely (some states have none, others add significantly), so your total tax burden depends heavily on your state and filing status, but expect around $22,000 - $25,000 total after federal income, payroll, and typical state taxes. 

Which passport is stronger, the US or Mexico?

U.S. Passports Are Now On Par With Mexico As Freedoms Are Cut.

Does having dual citizenship affect anything?

Claims of other countries upon U.S. dual-nationals may result in conflicting obligations under the laws of each country. U.S. dual nationals may also face restrictions in the U.S. consular protections available to U.S. nationals abroad, particularly in the country of their other nationality.

Can I have both Mexican and U.S. citizenship?

Yes, you can have dual citizenship with the U.S. and Mexico, as both countries permit it, allowing you to enjoy rights and responsibilities in both nations, but you must use the appropriate passport for each entry and be aware of obligations like potential military registration (for males) and different tax/legal requirements.
 

What is the IRS 7 year rule?

The IRS 7-year rule generally refers to the extended time you need to keep tax records if you file a claim for a loss from worthless securities or a bad debt deduction, giving you up to 7 years from the due date of the return to claim a refund or credit for those specific issues. While the standard record retention is usually 3 years, this 7-year period ensures you have documentation for these specific, potentially complex, financial losses. 

How to avoid US exit tax for dual citizens?

Dual Citizenship at Birth

If you were born a dual citizen, you may be able to avoid the exit tax—but only if: You still hold citizenship in your other country at the time of expatriation. You have been a U.S. resident for no more than 10 of the last 15 years (as defined for tax purposes).

How to eliminate double taxation?

To avoid double taxation, use pass-through entities like LLCs or S Corps for business profits, pay owners reasonable salaries (deductible for the business) instead of just dividends, or reinvest earnings back into the company, while for international income, utilize foreign tax credits or tax treaties to prevent income from being taxed in multiple countries.