Tax Implications for Babies Born in the U.S.: Potential Tax Pitfalls

Birthright Citizenship

Although litigation is ongoing, in most cases babies born in the U.S. automatically acquire U.S. citizenship. While enjoying visa-free access to many countries with a U.S. passport, U.S. citizenship brings global tax obligations; guardians may face complex nonresident statuses and cross-border assets. This article explains residency, benefits, reporting, and potential pitfalls step by step to help you plan ahead and stay compliant. NOTE: This article is written for Chinese guardians of babies born in the U.S. , so the English version is automatically translated.

1. Citizenship and Tax Residency

Children born on U.S. soil are generally U.S. citizens. U.S. citizens must report and pay taxes on worldwide income regardless of where they live (global taxation system). Age alone does not affect this requirement.

Under Chinese regulations, if parents are Chinese citizens and have not established residency abroad, a U.S.-born child may retain Chinese citizenship (travel document), leading to a nationality conflict. If parents were already residing overseas at birth, the child typically cannot obtain Chinese citizenship. Regardless of nationality conflict, U.S. tax obligations remain unchanged, although Chinese banking procedures may differ significantly.