Author Topic: Dual Citizen Benefits?  (Read 1244 times)

ematicic

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Dual Citizen Benefits?
« on: June 19, 2018, 11:14:23 AM »
Greetings, I apologize first if I have missed a similar thread. I did a quick search and did not see anything close.

I am a US citizen, my wife is Austrian with a green card. My children are 4 and 5 and are Dual citizens until 18 when they have to declare. Does anyone have any tips or suggestions for investing, education that exist due to their dual citizen status. We live here in the US but my wife is keeping her Austrian citizenship. The children are more fluent in German than me, but I will get there one day.

As retired military we can fly pretty cheap on a Space A flight and look forward to doing that more often since the kids are old enough.

 Look forward to any tips or info. Thanks

salt cured

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Re: Dual Citizen Benefits?
« Reply #1 on: June 19, 2018, 02:39:07 PM »
My children are 4 and 5 and are Dual citizens until 18 when they have to declare.

Is this an Austrian rule? There is no such rule imposed by the United States.

MrsWolfeRN

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Re: Dual Citizen Benefits?
« Reply #2 on: June 20, 2018, 04:11:07 AM »
Yep, I have dual citizenship with the UK, never had to declare either one (born in UK with US mother and UK father, lived mostly in US since early childhood). I could even pass this on to my kids (just not their kids, unless they are born in the UK). If your children were born here I think you do have to register them with the Austrian embassy to claim their citizenship.

ematicic

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Re: Dual Citizen Benefits?
« Reply #3 on: June 20, 2018, 04:40:26 AM »
My children are 4 and 5 and are Dual citizens until 18 when they have to declare.

Is this an Austrian rule? There is no such rule imposed by the United States.

America does not allow dual citizenship with Austria. At least to my knowledge. My wife was told she could not be dual during the immigration process when we got her a green card back in 2007. My limited knowledge on the matter is why I am asking here! I would love to be wrong on this.

Hirondelle

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Re: Dual Citizen Benefits?
« Reply #4 on: June 20, 2018, 05:30:51 AM »
Letting them keep their citizenship post-18 would drastically reduce your education expenses as they could study all over Europe, which is way cheaper than the US. Universities in Austria are basically free (I think it's about $20/semester).

reeshau

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Re: Dual Citizen Benefits?
« Reply #5 on: June 20, 2018, 05:34:29 AM »
According to Mr. Google, it's not the US, but Austria that drove this for your wife:

Dual Citizenship Information: In general, the Austrian Nationality Act does not allow dual citizenship except for persons who obtain two citizenships at the time they were born (e.g. a person born to Austrians living in the US acquires both Austrian and US citizenships at the time of birth).

From http://www.austria.org/citizenship/

ematicic

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Re: Dual Citizen Benefits?
« Reply #6 on: June 20, 2018, 06:47:48 AM »
According to Mr. Google, it's not the US, but Austria that drove this for your wife:

Dual Citizenship Information: In general, the Austrian Nationality Act does not allow dual citizenship except for persons who obtain two citizenships at the time they were born (e.g. a person born to Austrians living in the US acquires both Austrian and US citizenships at the time of birth).

From http://www.austria.org/citizenship/

Very helpful! Thank you. Had it completely backwards.

Blonde Lawyer

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Re: Dual Citizen Benefits?
« Reply #7 on: June 20, 2018, 08:16:29 AM »
If having both post 18 becomes an option, one downside to consider is the limit on federal employment.  Dual citizens cannot get certain levels of security clearances unless they renounce the non-US citizenship.  I know some exceptions can be made.  Someone I went to law school with was able to get an internship at the US Attorney's office, after a lot of red tape, even though he is Canadian.  Other jobs, particularly in law enforcement, are flat out barred.

salt cured

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Re: Dual Citizen Benefits?
« Reply #8 on: June 20, 2018, 09:19:29 AM »
According to Mr. Google, it's not the US, but Austria that drove this for your wife:

Dual Citizenship Information: In general, the Austrian Nationality Act does not allow dual citizenship except for persons who obtain two citizenships at the time they were born (e.g. a person born to Austrians living in the US acquires both Austrian and US citizenships at the time of birth).

From http://www.austria.org/citizenship/

Very helpful! Thank you. Had it completely backwards.

Right. It seems to be a fairly commonly held myth that the US disallows dual citizenship (I was born with dual US-Canada and was told I'd have to choose at 18, which was false). According to Wikipedia (admittedly not an infallible source), your kids are fine to keep both citizenships. It's kind of annoying if you don't live in the US, but the pros outweigh the cons for most people, I'd say. Your wife would lose her Austrian citizenship if she took another citizenship however.

If you do end up living outside the states, make sure to register your male kids for Selective Service by the cutoff age if you want them to be eligible for federal benefits (e.g., student loans). They can get exceptions on a case-by-case basis if they don't register, but it's a hassle (believe me).
« Last Edit: June 20, 2018, 09:23:07 AM by salt cured »

ematicic

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Re: Dual Citizen Benefits?
« Reply #9 on: June 20, 2018, 09:57:05 AM »
Awesome information all! Greatly appreciate any and all advice.

GuitarStv

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Re: Dual Citizen Benefits?
« Reply #10 on: June 20, 2018, 11:19:49 AM »
Just remember that the US requires you to file US taxes every year . . . even if you haven't set foot in the country.  If you're Canadian (and I'd expect for most other countries) this means that you're going to be taxed twice for some things, you have to hand over private financial information regularly, and you lose access to some common financial planning instruments (tax free savings accounts, registered retirement savings plans, etc.).  There's a good summary here:

http://www.citizenshipsolutions.ca/2017/08/04/the-biggest-cost-of-being-a-dual-canadau-s-tax-filer-is-the-lost-opportunity-available-to-pure-canadians/

salt cured

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Re: Dual Citizen Benefits?
« Reply #11 on: June 20, 2018, 12:02:34 PM »
Just remember that the US requires you to file US taxes every year . . . even if you haven't set foot in the country.  If you're Canadian (and I'd expect for most other countries) this means that you're going to be taxed twice for some things, you have to hand over private financial information regularly, and you lose access to some common financial planning instruments (tax free savings accounts, registered retirement savings plans, etc.).  There's a good summary here:

http://www.citizenshipsolutions.ca/2017/08/04/the-biggest-cost-of-being-a-dual-canadau-s-tax-filer-is-the-lost-opportunity-available-to-pure-canadians/

Good points here, though income earned by an American abroad, up to about $100k, will not be subject to US income tax and RRSP tax shelters are recognized by the US (i.e., they are not subject to tax until withdrawal). This is not a defense of US tax policy concerning expat citizens, just more information.

Turning back to OPs question about how to benefit his kids, dual citizenship from the US and another country can be great for FIRE, especially if that other country has universal healthcare. I live and work in the US, earning 2x to 3x what I would in Canada (my home country) with a lower cost of living, but I'll be heading back north for FIRE.

sipsubsonic

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Re: Dual Citizen Benefits?
« Reply #12 on: July 19, 2018, 05:37:25 PM »
Alright, restarting this thread...

I also am eligible for dual-citizenship, US-Austrian. I am finishing school and will soon be starting income generating years. Generally speaking, in terms of targeting FIRE, does it make any sense for me to work in Europe during those years? What would have to be true to make it more advantageous for me to work in the EU over the US?

Follow-up question... Once FIRE is achieved, which EU countries are the most favorable to live in, in terms of tax efficiency?

Just trying to stoke this thread a little more. A lot of general information has been shared, but it's kinda vague. Any principles to use when making these decisions?

Hirondelle

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Re: Dual Citizen Benefits?
« Reply #13 on: July 20, 2018, 03:27:12 AM »
Alright, restarting this thread...

I also am eligible for dual-citizenship, US-Austrian. I am finishing school and will soon be starting income generating years. Generally speaking, in terms of targeting FIRE, does it make any sense for me to work in Europe during those years? What would have to be true to make it more advantageous for me to work in the EU over the US?

Follow-up question... Once FIRE is achieved, which EU countries are the most favorable to live in, in terms of tax efficiency?

Just trying to stoke this thread a little more. A lot of general information has been shared, but it's kinda vague. Any principles to use when making these decisions?

What can make it worth it: Healthcare (esp if you have a pre-excisting condition). Second though: maternal/paternal leave and generous PTO (5 weeks minimum in most countries). If you're planning on kids; college savings aren't as necessary in most of Europe. I think my Austrian friends pay $18 tuition fee per semester, while quality of education is often comparable or even better than many US universities.

For all the other factors it really depends on your situation. US salaries are generally higher and taxes are lower, yet how big these differences are depend on your field of work. Some jobs might even be better paid in Europe. I don't think any EU citizen will know the tax laws in all other countries so there you'd have to do your own research.

Whether it's worth it also depends on your goals. If all you want is to reach FI asap you're probably better of in the USA. On the other hand many people want to do slow travel during FIRE, including trips in Europe. Now if you'd be able to work/live here for a couple years, you would totally be able to do several 1-2 week trips throughout the continent on the cheap rather than flying across the Atlantic all the time for a rushed 2-week "see it all at once" trip. I'm not sure if you've already lived in Europe or anywhere out of the USA earlier, but if you've never lived abroad yet it could also just be a valuable experience for personal development and broadening your worldview. To me, things like that would factor in way heavier than if it takes me an extra year to get to FIRE or not.

Also, don't forget it's not just one option or another; you could totally do both. Your dual citizenship gives you the flexibility of being able to move wherever the jobs are without all the immigration issues others have to go through.

reeshau

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Re: Dual Citizen Benefits?
« Reply #14 on: July 20, 2018, 03:33:09 AM »
I am a US citizen, just in my second month in Ireland.  But, here is what I have found so far, having studied while considering whether to come here, and talking with colleagues from around Europe:

I think FIRE is more difficult in Europe than the US, because the general higher level of government involvement in personal affairs is geared toward traditional retirement age.  Since FIRE is, to a great extent, conducting yourself contrary to the norm, you have more to fight against.  That said, it is also important to understand where you would likely retire to, as earning money in one country, but living in another, can be fraught with tax consequences you have to consider.  I don't think there are really any surprises here.

Factors in favor of FIRE in the US:
Tax level, particularly capital gains tax
Investing costs and availability

Factors in favor of FIRE in Europe:
Public health care system
Public pension system

So, specifically for Ireland, which is the extent I have really examined so far:
Income tax rate is 20% up to euro 34,500 singles / 43,550 married couples.  40% after that.
Capital gains rate 33%--so, penalty on low earners (in effect, discourages investment) but while high, still better than income tax for high earners
Penalty interest level of 50% on savings, as a result of a 2008-era law still in place.  They call this DIRT.  You can guess the attitude on large amounts of savings.
Our company's defined contribution plan (equivalent of a 401k) is run by an insurance company, as they all are.  No Fidelity / Schwab here.  The low cost index funds are .6% per year.
Funds from the pension are available at 65, with some limited provision for access at early retirement, as early as 50.
Trading fees to buy or sell a stock in Ireland is 1%.  Not that there is a lot listed here; it seems Schwab is very popular, as they support the extra paperwork for foreign ownership, and allow access to US funds.  There are a lot of "discount brokers" out of the Netherlands, too.
I don't plan on staying the 10 years needed for an Irish public pension.  However, due to the tax treaty with the US, my public pension taxes aren't lost--they will give some contribution to my Social Security payment, in lieu of years worked in the US.  Ironically, it will be less than if I had worked in the US...

The obvious worry in the US is covering healthcare before Medicare.  While Ireland has a public healthcare system, there is a vibrant private system working alongside it.  While the public healthcare is good, the commonly observed issues with such a system exist:  long waits for specialists, patients held in the hallway in overcrowded hospitals, etc.  But better than trying to live without in the US, or something you can't even afford to use because of the deductible.  If you were going to retire to this, you will need to have established some work history--the Irish government is skeptical of people just retiring here.

As I said, I have talked with a number of colleagues from other European countries, who also have differentials / blended situations to work out--there is free movement of labor, but that doesn't mean there are no disconnects.  It seems that while the details may be different, the general trend is the same:  the caretaker government steers you toward an "on time" retirement and support in old age, although there is pressure to increase that due to costs.  But the cost of doing that, high taxes, particularly on passive income (relative to the US situation) means that the impact of your Mustachian ways is blunted somewhat.  I think this is also shown by the very limited number of FIRE blogs I have found from European voices, although that could be a matter of interest or even awareness, too.

sipsubsonic

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Re: Dual Citizen Benefits?
« Reply #15 on: July 22, 2018, 04:48:30 PM »
Got ya, thank you both very much! Gives me a much clearer picture of things over there.

letsdoit

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Re: Dual Citizen Benefits?
« Reply #16 on: July 23, 2018, 12:25:52 PM »
there must be some reason why Europeans chose to raise their families in the US instead of over there

itchyfeet

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Re: Dual Citizen Benefits?
« Reply #17 on: July 23, 2018, 01:14:42 PM »
I am an Australian and I work for a French company amd mostly with French people. The mindset towards retirement savings is really different to Australia.

The govt pension is really central to their retirement planning and they will go to great lengths to protect their pension entitlements. The pensionis structured to really reward working to the official retirement age, amd penalise stepping away from the norm. Very socialist.

In Australia the old age pension (social security) is just a safety net that people fall back on if they donít have sufficient other savings. Even though a majority of retirees still receive the pension (at least in part), it is more of a plan B for most rather than plan A. It plays a completely different role in the psyche of people as it is in no way linked to your career earnings, and especially not late career earnings like in France.

I feel that itís far easier to FIRE in Australia than in France, because of the way you are incentivised to keep working in France.



Kitsunegari

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Re: Dual Citizen Benefits?
« Reply #18 on: July 23, 2018, 07:45:29 PM »
there must be some reason why Europeans chose to raise their families in the US instead of over there

As a European in NA, altho not US, most people reside where they can find suitable work, then have families when they can afford them.

Hula Hoop

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Re: Dual Citizen Benefits?
« Reply #19 on: July 24, 2018, 01:27:51 PM »
I am an Australian and I work for a French company amd mostly with French people. The mindset towards retirement savings is really different to Australia.

The govt pension is really central to their retirement planning and they will go to great lengths to protect their pension entitlements. The pensionis structured to really reward working to the official retirement age, amd penalise stepping away from the norm. Very socialist.

In Australia the old age pension (social security) is just a safety net that people fall back on if they donít have sufficient other savings. Even though a majority of retirees still receive the pension (at least in part), it is more of a plan B for most rather than plan A. It plays a completely different role in the psyche of people as it is in no way linked to your career earnings, and especially not late career earnings like in France.

I feel that itís far easier to FIRE in Australia than in France, because of the way you are incentivised to keep working in France.


It's the same here in Italy.  Italians are constantly complaining because the official retirement age has been raised to 67. Even quite wealthy Italians seem to work to the official retirement age because that is just the mindset here.  They aren't really encouraged to save for retirement - rather they make retirement contributions with each paycheck and then plan to retire at 67.