Not American? You still might have to file U.S. taxes

dual citizen couples taxes

Think your taxes are a pain? Imagine if you had piles of U.S. tax forms to fill every year, and you weren't even an American.

That's the reality for many foreigners who marry Americans.

U.S. citizens are on the hook to file and pay taxes regardless of where they live or work. And couples including an American may need to make joint tax filings to the Internal Revenue Service.

They can sometimes save themselves the hassle of reporting to the U.S. government by choosing to file separately — as long as the foreign spouse isn't earning money from the U.S.

But that means they can't claim certain deductions or hold joint accounts.

Adam Millard, 39, was living in Beijing when he met his Canadian wife.

"We joined our finances [and] that's when things became considerably complex," Millard said. "All of a sudden, my wife, who is not a U.S. citizen, has never worked, lived or owned anything in the U.S. ... was subject to reporting and sending information to a country she had no ties with."

adam millard
Millard is thinking about giving up his U.S. passport.

Things can get even more complicated for couples living abroad, like the Millards. They're caught by another law that requires Americans to report all financial accounts overseas.

Related: Meet the 'accidental American' with a big tax bill

Any joint accounts or other financial assets that have one American beneficiary have to be disclosed to the U.S. government.

"I have to be far more aware of what I'm signing my name to, or setting up for my wife and I -- being a two-citizen family has made it exponentially more difficult," said Millard.

Many couples choose to keep their finances separate in an attempt to reduce the paperwork, said Chris McLemore, senior counsel at Butler Snow. That can be a source of stress in itself.

"Decisions like that start to test marriages, because that's not how you would normally arrange your affairs," he said.

Related: Giving up your U.S. passport? It's going to cost you

For example, some couples abroad might decide against jointly owning their home, because that would complicate their U.S. tax burden. A home purchased in the U.K. and sold later, for example, would be eligible for capital gains tax in the U.S. if one of the owners were American, said McLemore.

For Millard, the logistics of tax filing is a mess. Accountants told him he could only file his return electronically if his wife had a U.S. taxpayer identification number.

He felt this was intrusive, so instead chose to mail his 100-page annual return, at a cost of $100 in postage and thousands more in accountant fees. He also had to submit more papers to explain why he didn't file online.

To make matters worse, banks in Denmark -- where they now live -- refused to offer them a joint account because of burdensome new disclosure rules covering American-owned assets abroad.

That made it hard for them to find a home loan when they wanted to buy an apartment.

Related: Why expats are ditching their U.S. passports

Millard is not sure he'll ever return to America, and is thinking about renouncing his citizenship. He estimates he pays as much as $8,000 a year in taxes and accountant fees -- a cost he's reluctant to pay because he doesn't get the benefits of living in the U.S. as his job keeps him abroad.

"I grew up in the U.S., and appreciate the opportunities it gave me, [but now] I view my U.S. citizenship as a tax in of itself and see myself renouncing in the next few years unless the situation changes," Millard said.

The IRS didn't respond to a request for comment.

Read next: Nobody escapes U.S. taxes - even astronauts

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