Your Child Was Born in Canada to a US Citizen Parent: Citizenship at Birth, and the Tax Obligations That Come With It

A child born in Canada to a US citizen parent is, in most cases, a US citizen from birth. The citizenship exists whether or not the parents obtain a Consular Report of Birth Abroad, whether or not the child ever holds a US passport, and whether or not anyone tells the IRS. With it come the obligations of every US citizen: a US return once income exceeds the filing threshold, FBAR and Form 8938 on Canadian accounts, and the account traps (TFSA, RESP, Canadian mutual funds) that apply to any US person in Canada. The family's choices are limited: document the citizenship or not (it exists either way), structure the child's accounts around it, and, when the child is old enough, consider whether to keep it.

Key takeaways

• Acquisition: a child born abroad to one US citizen parent (married to a non-citizen) acquires citizenship if the citizen parent was physically present in the US for at least five years before the birth, two of them after age 14. A child born to two US citizen parents acquires it if either parent had ever resided in the US. Different rules apply to unmarried parents and to births before 1986.
• Documentation: a Consular Report of Birth Abroad (Form FS-240) from a US consulate, applied for before the child turns 18, is the standard proof; a US passport can be obtained on it. Without documentation, the child is still a citizen but cannot easily prove it (or, in practice, be found).
• Tax obligations: a US citizen child must file a 1040 when income exceeds the threshold (unearned income above about $1,350 or earned income above the standard deduction for 2025); the kiddie tax applies to unearned income; FBAR applies when the child's foreign accounts exceed $10,000 (a parent signs for a minor); Form 8938 above thresholds.
• Accounts: an RESP for the child is a foreign trust to a US-person subscriber (so the Canadian parent subscribes); a TFSA in the child's name at 18 is US-taxable; Canadian mutual funds in the child's name are PFICs; an in-trust-for account for a US-citizen child creates US reporting.
• Choices: the citizenship cannot be declined by the parents; the child can renounce at 18 (or, with consular assessment, earlier) under the expatriation rules, which are lenient for minors and for dual citizens at birth who have not lived in the US.

Acquisition at birth

Under the Immigration and Nationality Act, a child born outside the US to married parents, one a US citizen and one not, is a US citizen at birth if the citizen parent was physically present in the US for a total of five years before the birth, at least two of them after the parent turned 14. Time spent in the US as a child counts. A US citizen parent who grew up in the US and moved to Canada as an adult almost always meets it; one who was born abroad and rarely lived in the US may not. Where both parents are US citizens, citizenship passes if either had a US residence at any time. Rules for unmarried parents differ (the mother's presence requirement is shorter; the father must acknowledge and support the child).

The State Department documents the acquisition with a Consular Report of Birth Abroad, applied for at a consulate with the child's Canadian birth certificate, the parents' marriage certificate, and evidence of the citizen parent's physical presence (school records, tax returns, employment). The CRBA must be applied for before the child's 18th birthday; after that, the person applies for a passport directly with the same evidence.

Citizenship acquired at birth does not depend on the CRBA. The child is a US citizen from birth by operation of law.

Tax obligations of a US citizen child

A US citizen child in Canada has the same obligations as any US citizen, scaled to a child's finances:

• Filing. A 1040 is required when gross income exceeds the threshold: for a dependent child, unearned income above about $1,350, earned income above the standard deduction (about $15,750), or combinations. Most children have no filing obligation until they have investment income or a job. A child with income above the threshold files; the parents cannot include the child's income on their return except by the election for unearned income under $13,500 (Form 8814).
• Kiddie tax. Unearned income of a child under 19 (or under 24 if a student) above about $2,700 is taxed at the parents' marginal rate.
• FBAR. Required if the child's foreign accounts exceed $10,000 in aggregate; a parent or guardian files for a minor. A child with a $15,000 savings account files.
• Form 8938. Above the thresholds; rare for a child.
• Canadian side. The child is a Canadian resident, files a Canadian return when required, and has no US-related Canadian obligation.

The accounts

RESP. The RESP is opened by the subscriber for the child; a US-person subscriber has a foreign trust with Forms 3520 and 3520-A. The Canadian parent should be the subscriber. The child as beneficiary receives EAPs that are US-taxable to the child (earnings and grant portion) when paid; the child reports them on a 1040 if the filing threshold is met, and the distribution from a foreign trust is reported on the child's Form 3520.

TFSA. When the child turns 18 and can open one, it is taxable in the US and potentially a foreign trust. A US-citizen young adult in Canada should not hold a TFSA; the RRSP is the account that works.

Canadian mutual funds. In an in-trust-for account or the child's own account, they are PFICs with Form 8621 each; hold individual securities or US-listed ETFs instead.

In-trust-for accounts. An informal trust for a US-citizen minor may be a foreign trust for US purposes depending on its terms; formal trusts are; both create reporting.

RRSP at 18. Contributions deductible in Canada; treaty deferral in the US; on the FBAR. The right account.

The choices

Documenting. Obtaining the CRBA and passport confirms the child's status, allows US travel as a citizen, and creates a record. Not obtaining them does not remove the citizenship; it means the child grows up as an undocumented US citizen who may discover the status (and the unfiled years) as an adult when a bank's FATCA process asks about US place of birth or US parentage.

Renouncing. A US citizen can renounce at 18 (a minor can with consular assessment of maturity and voluntariness, rarely granted before 16). The expatriation rules are lenient: a person who became a citizen of the US and Canada at birth, has remained a Canadian citizen and resident, and has been a US resident for no more than 10 of the last 15 years is not a covered expatriate under the net worth and tax liability tests (the five-year compliance certification still applies). A young adult who renounces before accumulating assets and after filing (or having no obligation to file) five years of returns exits cleanly. The fee is $2,350.

Keeping it. The child can live in the US as of right, work there without a visa, and pass citizenship to their own children (subject to the physical presence rules). Many families keep it and manage the compliance.

Worked example

A US citizen father (raised in Chicago, moved to Toronto at 30) and a Canadian mother have a daughter in Toronto. The father meets the five-year presence test.

• Citizenship. The daughter is a US citizen at birth. The parents obtain a CRBA and passport.
• Childhood. No filing obligation (no income). The mother opens the RESP as subscriber. Gifts from grandparents go into a savings account in the daughter's name (FBAR when it exceeds $10,000; the mother files on her behalf) and into individual stocks, not Canadian mutual funds.
• University. EAPs from the RESP: taxable to the daughter in Canada at her low rate; the earnings and grant portion taxable in the US on her 1040 (if above the threshold) with Form 3520 for the foreign trust distribution; the AOTC available to the father as her dependent if income permits.
• At 18. She skips the TFSA, opens an RRSP when she has earned income, and files US returns when her income requires it.
• At 22. She decides between keeping US citizenship (she plans to work in New York) and renouncing (clean exit as a dual citizen at birth with five years of compliance). She keeps it.

Official sources

The State Department explains that a child born abroad to a US citizen parent may acquire US citizenship at birth if the parent meets the physical presence requirements, documented by a Consular Report of Birth Abroad. — U.S. Department of State, Acquisition of U.S. Citizenship by a Child Born Abroad, https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/us-citizenship/Acquisition-US-Citizenship-Child-Born-Abroad.html

"If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad." — Internal Revenue Service, U.S. citizens and resident aliens abroad, https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad

Practitioner note

The family's first decision is not whether the child is a US citizen (that is settled by the parent's history) but who opens the RESP, and the answer is the Canadian parent. The second is the CRBA: document the citizenship or let it surface later through a bank's FATCA questionnaire when the child is 30 with fifteen years of unfiled returns. We recommend documenting it and managing it; the accounts are the easy part if they are set up right from the start.

See also: Planning a move? Start with the Canada-to-US tax checklist and browse every corridor by city, province, and state.

Next step

Fairlight prepares the citizenship acquisition analysis, the account structuring for a US-citizen child in Canada, and the child's US filings when income requires them. See cross-border pricing or book a call.