I recently read an article making the case of not registering the birth of your child with the US consulate. It is echoed in the following post on the Isaac Brock Society website about the Consular Report of Birth Abroad.
What happens if you don’t register your child?
If both parents of a baby born abroad are U.S. citizens, or one parent is a U.S. citizen who fulfills the five-year residence requirement, then in theory the baby is automatically a U.S. citizen at birth under 8 USC § 1401. In practise, there are obvious barriers to the U.S. government’s ability to identify such children if they have another citizenship and do not wish to be identified, to the extent that dual citizenship is demonised as a “loophole” in FATCA.
Naturally, it is more difficult for a child born abroad to remain an “undocumented American” if both parents are U.S. citizens — a U.S. border guard who sees two parents presenting U.S. passports but their two children presenting non-U.S. passports will probably get suspicious. Similarly, it’s hard for citizens of non-Visa Waiver Program countries: visa application forms ask for biographical details on the applicants’ parents. Even if a determination is made that the children are non-citizens (for example because the American parent did not reside in the U.S. for long enough), the consular officer may well deny them tourist visas to go visit Grandma on grounds of alleged “immigrant intent” and force them to get green cards instead as the only way to get around this de facto travel ban — which also has the effect of turning them into U.S. persons for tax purposes.
Along with the rising number of people giving up citizenship — an estimated eight thousand last year, based on the FBI’s report of 4,650 renunciants added to NICS — this is more evidence of a shift in attitudes among Americans abroad towards their relationship with the country from which they emigrated.
I somehow think that teaching your kid that it is ok to lie by omission is not the kind of life lesson that you want to teach them.
But going back to taxes, assuming that you are using the foreign tax credit (instead of the foreign earned income exclusion), have less than $110,000 of income – this is actually one of the few cases in which the IRS would issue a check (of $1,000 per child) to US citizens abroad in the form of the additional child tax credit, so why not take it (but it requires an SSN for the child, which requires a birth certificate) – in less than 3 years, you’ll have saved enough money for them to renounce US citizenship should they decide to go down that route, you’ll still have 15 years X $1,000.