Your child's US passport: what parents should know about US taxes

A birth on foreign soil can be the passport you hand your child on day one. With the American passport the gift is especially generous: in Trump v. Barbara on 30 June 2026, the Supreme Court confirmed that children born in the United States are citizens at birth, even if their parents had no right of residence or were only in the country temporarily. Which other countries grant citizenship at birth is shown in our overview of birth tourism. One point deserves parents' attention from the very start with a US passport: taxes.

Why your child's US passport also means US tax obligations

In Germany, residence decides whether you are liable to tax, not your passport. The United States does it differently. The US tax authority, the IRS, puts it plainly: US citizens are taxed on their worldwide income from all sources, and the rules for filing and paying are in principle the same abroad as at home.

For your child, this means they are subject to US tax for as long as they are American, whether they grow up in Munich, Vienna or Zurich. That sounds more alarming than it is. Being liable to tax does not mean paying tax, and in a child's early years it often does not even mean filing a return. How citizenship-based taxation works, and why Germany taxes by residence instead, is explained in passport and taxes.

It pays to work through this in a fixed order. First, is a return due at all? Then, do any accounts have to be reported? And only last, is there a single dollar of tax left to pay? For most families in Germany, the answer to that last question is no.

Does your child have to file a US tax return?

The duty to file does not depend on the passport alone, but on income. The IRS sets thresholds every year. For tax year 2025, meaning the returns filed in 2026, Publication 501 sets these figures:

For a baby, a nursery-age child or a schoolchild with no assets of their own, the answer is usually clear: no return. Take a closer look if larger sums are invested in your child's name, such as a children's investment account that pays dividends over the years, or an inheritance from the grandparents. The low threshold for investment income can then be reached long before your child earns their first wage.

Deadlines for US citizens abroad

The regular deadline for a US tax return is 15 April. US citizens living abroad automatically get two extra months, until 15 June, without having to apply. If tax is actually owed, however, interest runs from the regular due date of 15 April.

Why filing can pay off even when it is not required

The IRS expressly points out that the special tax benefits for Americans abroad are only available to those who file a return. So as soon as your child has income of their own, the return is not just an obligation but also the route to the exclusions and allowances. What a US return looks like for someone living in Germany, and what the double tax treaty settles, is covered in the overview of US taxes for dual citizens.

Savings, accounts, investments: FBAR and FATCA for children

Alongside the tax return there is a second obligation that many parents overlook, because it has nothing to do with tax: reporting foreign accounts. From the American point of view, every German account in your child's name is a foreign account.

The FBAR report

A US citizen who has a financial interest in, or signature authority over, accounts outside the US must report them on FinCEN Form 114 if their combined value exceeded $10,000 at any time during the calendar year. This report is called the FBAR; it is filed electronically and is due on 15 April, with an automatic extension to 15 October.

Two points are worth knowing. First, what counts is the highest combined balance of all accounts, not the balance at year end. A savings account with €4,000 and an investment account with €7,000 are already enough. Second, the FBAR is due even if the accounts earn not a cent of taxable income. Once you know about it, the report takes little time.

FATCA: what your bank knows

Since the German-American FATCA agreement, signed on 31 May 2013 and in force since 11 December 2013, German banks also report the accounts of US citizens. Under the German implementing regulation (FATCA-USA-Umsetzungsverordnung), they collect, for US reportable accounts, the holder's name, address and US taxpayer identification number, the account number and the balance. The Federal Central Tax Office (Bundeszentralamt für Steuern) forwards this data to the IRS.

In practice, this means that if you open an account or investment account for your child and answer the question about any further nationality truthfully, the bank will ask for the US tax number. Have it ready. A properly reported account is no problem; an account with missing details will become one sooner or later. What exactly the bank reports and when it asks for a W-9 is explained in the article on FATCA and your bank.

US and German dual citizenship: will your child pay tax twice?

This is the real worry for most parents, and the answer is reassuring. US law has two tools that prevent genuine double taxation in most cases.

Foreign Tax Credit. Taxes your child has paid in Germany on income that is also taxable in the US can be credited against US tax. The credit reduces the US tax bill directly, not just taxable income. It is claimed on Form 1116. For income already taxed in Germany, little or no US tax is therefore often left after the credit.

Foreign Earned Income Exclusion. For income earned from work abroad there is also an exclusion. For tax year 2025 it was $130,000; for 2026 it is $132,900.

Which tool fits better depends on the type of income and on later plans. For investment income only the credit helps; with a first salary, both routes are open. The rule of thumb for parents: tax is rarely paid twice. The work lies in the forms, not in the tax burden.

What applies to German-Americans beyond tax is covered in German and US dual citizenship.

The downsides of American citizenship and how to solve them

Honest planning means writing down the downsides and putting a solution next to each one. For your child's US passport, it looks like this:

On the other side of the scales there is a great deal: the right to live, study and work in the US without a visa, without a lottery, without a sponsor. A visa can be refused or revoked; citizenship is a right. That is exactly why, for many families, the US passport is the most valuable passport they can give their child. Other routes to a second passport for children are set out under Family.

Renouncing American citizenship: what applies to children

Some parents wonder in the very first year whether they should get rid of the US passport straight away. That is not possible, and it is not necessary either. Giving it up is a decision your child will make later, and the law sets good conditions for it.

Only the person themselves can renounce

Under the Immigration and Nationality Act, a US citizen loses their nationality only if they act voluntarily and with the intention of giving it up. The usual route is a formal renunciation before a US diplomatic or consular officer abroad. Parents cannot make this declaration for their child, because what counts is the free will of the person renouncing.

The fee for processing the Certificate of Loss of Nationality has been $450 since 13 April 2026. Before that it was $2,350. How the consulate appointment works and which tax forms go with it is explained in the guide to renouncing US citizenship.

The exit tax and the two exceptions for children

Anyone who gives up US citizenship can, as a covered expatriate, fall under the exit tax, which treats their assets as if they had been sold on the day before renunciation. The law, however, has two exceptions that are tailored precisely to children with a US passport:

• Dual citizens from birth. Anyone who became both a US citizen and a citizen of another country at birth, remains a citizen of that country and is taxed there as a resident, and was resident in the US for no more than 10 of the 15 years before renouncing, is not subject to the income and net worth tests.
• Renouncing before 18½. Anyone who renounces before turning 18½ and was resident in the US for no more than 10 tax years before renouncing is also exempt from these tests.

A child born in the US who is German through their parents, lives in Germany and is taxed there will, as a rule, meet the first exception as a matter of course. One condition remains in both cases: tax compliance for the past years has to be certified. Anyone who meets it gives up the passport without exit tax. The tests in detail and Form 8854 are explained on the page about the US exit tax when giving up citizenship.

When returns were never filed

Many German-Americans only realise as adults that they had obligations. There are orderly routes for this too:

• Streamlined Foreign Offshore Procedures. Anyone who lives abroad, has no home in the US, spent at least 330 full days outside the US in one of the last three years and did not wilfully fail to meet their obligations files the returns for the last three years and the FBARs for the last six years, and pays the tax and interest. No penalties are then charged.
• Relief Procedures for Certain Former Citizens. This procedure applies to people who renounced after 18 March 2010, never filed a return as a US citizen, did not wilfully fail to meet their obligations, had net assets under $2 million both at renunciation and at filing, and whose tax for the five years before renunciation and the year of renunciation comes to no more than $25,000 in total. They file returns for six years, owe neither tax nor penalties for those years and are not treated as a covered expatriate. The IRS offers the procedure with no fixed end date.

Parents who take these obligations off their child's shoulders from the start and deal with them properly year after year need none of these procedures. That is the real advantage of planning early.

What parents should do from birth

With a simple routine, your child's US tax status becomes a side issue. The documents themselves, from the birth certificate and apostille to the first US passport, are covered in documents after a birth abroad. On the tax side, add this list:

1. Apply for the US tax number and keep it safe. The bank will ask for it as soon as you open an account or investment account for your child, and every later return needs it.
2. Keep track of your child's accounts. Once a year, note the highest balance of all accounts and investment accounts in their name. That way you know straight away whether the FBAR threshold of $10,000 has been reached.
3. Keep an eye on investment income. Interest and dividends in the child's name count towards the low threshold for unearned income.
4. Check for a first return with the first income. Apprenticeship pay, a holiday job or a small business of their own is the moment the thresholds really start to matter.
5. Keep the paperwork. German tax assessments and the bank's annual tax certificates later serve as evidence for the credit.
6. Decide together at 17. If your child no longer wants the US passport at some point, the window before 18½ is a favourable one. If they keep it, the routine simply carries on, from then on in their own hands.

The parents' view of the birth itself, from the timeline to the first American passport, is in child born in the USA.

US passport and second passport: how both fit your family planning

The American passport is a right to live and work in one of the largest economic areas in the world. With it, your child grows up with two strong passports: the German one for Europe and the American one for North America. The tax side comes with it, much like renewing the passport: it needs doing, nothing more.

For you as parents, the picture is different. A birth in the US does not give you a passport yourselves. If you want to secure a second passport for the whole family, look at citizenship by investment, where spouses and children are included in the application. The programmes are compared under Programmes and Comparison, the tax side under Taxes. The overview of birth tourism shows which countries of birth exist besides the US and how you can combine a birth abroad with a family passport.

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