My parents are US citizens who, moved to Brazil and had me 32 years ago. We never went back. The US doesn't know about me I'm sure. I don't even have any US documents.

But I wonder still, I have worked for years, and just learned US citizens need to pay US income tax, but I have never paid US taxes. Now I want to travel more, and I worry, if I go to US they will arrest me and make me pay?

  • expatriates.stackexchange.com might also have some useful information for answering this question. – Jason Aller Mar 20 at 1:36
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    "The US doesn't know about me I'm sure. I don't even have any US documents." I wouldn't be so sure about that. One of the jobs of U.S. consuls is to keep track of the affairs of expatriates including whether they have children. They might not be aware you exist, but the odds are closer to 50% than 5% than they are aware of you and are simply taking no action. Generally speaking, the smaller the community of expatriots is in a country, the more likely it is that they are aware of you. They are especially likely to be aware of you if you are affluent enough to owe U.S. taxes. – ohwilleke Mar 20 at 3:34
  • @ohwilleke do US consuls take steps to keep track of expatriate births beyond recording applications for consular reports of birth abroad? How else would they know? – phoog Mar 20 at 3:39
  • @phoog US consuls are expected to be well connected in the expatriot community, to be well connected to prominent people in the community generally, and to know all of the prominent expats in their territory personally. I had an uncle who was one in Tanzania and as much info came in informally as through the bureaucratic process. I suspect that this is less true in more urban and more developed areas, however. The main reason to know this is so they can organize evacuation of Americans in times of war. – ohwilleke Mar 20 at 3:42
  • @ohwilleke I can assure you that the US consular staff in Amsterdam would not have known me from Adam when I was living there. A little internet searching suggests that there are estimated to be about 70,000 US citizens living in Brazil. Not all of those people will be "prominent," of course. I expect the consular service has better things to do than tracking down unreported births. – phoog Mar 20 at 4:12
up vote 3 down vote accepted

It is likely that you don't owe any taxes even though you have worked for many years in Brazil.

Earned income that is earned outside the U.S. by natural persons who are U.S. citizens (as oppose to entities like corporations) up to a certain amount that is indexed for inflation is excluded from taxation under Section 911 of the Internal Revenue Code. The cut off is $104,100 U.S. per year in 2018 (about 347,000 Brazilian Reals per year).

Also, unearned income and any excess earned income can benefit from the standard deduction and personal exemption from U.S. income taxation unburdened by your foreign earned income up to the threshold. This can be quite substantial. Similarly, if you have children, they would benefit from the child tax credit which would reduce your income tax obligation.

And, any U.S. federal income tax due on your unearned income to the extent that it exceeds the standard deduction and personal exemption from U.S. income taxation is reduced by any Brazilian taxes you paid on your Brazilian income as a result of the foreign tax credit.

The bottom line is that unless you are very affluent and have significant unearned income, it is unlikely that you owe any U.S. income taxes.

Even if you do owe U.S. taxes after these considerations, they wouldn't arrest you. You have to be "willfully" violating U.S. tax laws for it to be a criminal offense and this is one small corner of the law where ignorance of the law is an excuse. And, the Internal Revenue Service would first have to send you several notices by mail setting forth the amount that they think that you owe, allowing you to dispute that amount, and the declaring that you owe it, before you have a potentially criminal tax violation that is well defined enough and communicated to you well enough that you can willfully fail to file a tax return or can willfully fail to pay.

So no, they will not arrest you and make you pay, at least not until they send you lots of notices which you ignore.

On the other hand, if you do owe any U.S. income taxes there is no statute of limitations on collecting those taxes for years in which you were required by U.S. tax law to file a tax return but did not (basically, years in which you owed U.S. taxes). So, if you, for example, won a big lump sum payment playing the lottery when you were 20 years old and owed U.S. income taxes as a result (even though you didn't know it), those taxes could still be collected by the IRS when you are 40 years old since you did not file any U.S. tax return for the year in which you had taxable U.S. income.

Finally, under the Tax Cuts and Jobs Act of 2017 enacted in December last year, U.S. taxation of the foreign income of U.S. persons was reformed in the most significant way in the last seventy years or so, and the taxation of U.S. persons on foreign source income is greatly curtailed for 2018 going forward. This is not retroactive, but could mean that as you come into your higher income earning years in middle age, that the taxation of U.S. citizens on their worldwide income is no longer a serious concern for you, even if it would have been under U.S. tax law before then.

Enforcing laws that have since been repealed is also rarely an administrative priority for the IRS. It is also hard (to the point of being economically not worth it) to enforce U.S. tax laws against someone who has no U.S. assets.

It is also possible that even though you were a dual citizen at birth, that you could have taken an act (e.g. voluntarily serving as an officer in the Brazilian military) that could cause you to lose your U.S. citizenship. So, even if you were a U.S. citizen at birth, it is not 100% certain that you are a U.S. citizen now.

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    It's almost impossible for the performance of an expatriating act to cause someone unknowingly to lose US citizenship since the act must be undertaken with the intention of losing citizenship if is to effect the actor's expatriation. – phoog Mar 20 at 3:45
  • @phoog Many of the possibilities are difficult to trigger, I chose the most likely example of the possibilities. – ohwilleke Mar 20 at 3:47
  • Thank you. But if I do not owe taxes, do I still need to fill the forms? Can I get in trouble for that? – maria Mar 20 at 12:16
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    @maria Generally you only need to fill out the forms if you owe taxes or had taxes withheld from your income. – ohwilleke Mar 20 at 16:19

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