When is Dual Citizenship Not a Good Idea?

If you have dual citizenship, you are a citizen of two countries at the same time. While dual citizens do enjoy certain benefits – access to two social service systems; the option to live, work and own property in two countries; and the ability to travel with relative ease between the two locations – there are some disadvantages. Here are some reasons why a U.S. citizen might think twice before seeking dual citizenship.

Limited assistance abroad. As a dual citizen, you are bound by the laws of two countries, and either has the right to enforce its laws on you. If you commit a crime (or are accused of committing a crime), determining under which country’s laws you should be prosecuted can get complicated. If you are abroad, the other country may hinder the U.S. government’s efforts to help you. Your options for assistance may be limited or even non-existent.

Military service. Mandatory military service can create challenges for dual citizens. If you are a dual citizen of the U.S. and a country that has mandatory military service, you can lose your U.S. citizenship under certain circumstances: if you serve as an officer in the foreign military, if the foreign military force is engaged in war against the U.S., if you volunteer for service (rather than submitting to mandatory service), or if you intend to renounce your U.S. citizenship.

In general, U.S. policy recognizes that dual citizens might be legally bound to fulfill military obligations abroad, and many individuals can do so without jeopardizing their U.S. citizenship status.

Double taxation. A financial drawback of dual citizenship is the potential for double taxation, a situation in which you owe income taxes to two countries. The U.S. imposes taxes on its citizens for income earned anywhere in the world, so if you are a dual citizen living abroad, you may owe taxes in the U.S. for income earned abroad, plus owe taxes in the country where you earned the income.

There are income tax treaties in effect between the U.S. and some countries that can reduce or eliminate a U.S. citizen’s tax liability in the U.S. (while they are living/earning abroad). A treaty between the U.S. and the Philippines, for example, overrides the income tax laws of each country so dual citizens can avoid double taxation (though you might still be required to file a return in each country).

According to the IRS, some states in the U.S. do not recognize the provisions of tax treaties, so you might still be on the hook for state taxes. Tax laws are complicated and change periodically, so it’s always a good idea to consult with a qualified tax specialist. For example, you may even get a tax benefit: See Do You Get U.S. Tax Deductions on Real Estate Abroad?

Career problems. If your career goals involve a position with the U.S. federal government or access to classified information, dual citizenship could prevent you from gaining the security clearance you need to work in these fields. If you are born into dual citizenship, you may encounter fewer problems than if you actively sought out dual citizenship.

Lengthy, expensive process. One final disadvantage of dual citizenship is the process itself. If you're not born a dual citizen – and seek to become one through through marriage or naturalization – the process can take years and cost thousands of dollars, depending on the country’s laws regarding citizenship.

While there are numerous benefits to dual citizenship, the disadvantages should be considered carefully before launching the long, complicated process of achieving that status.

Because dual citizenship is complex – and the rules and laws regarding citizenship vary from one country to the next – consult with qualified experts, including tax accountants and experienced citizenship lawyers. For more information, see Advantages & Disadvantages of Dual Citizenship.