(Plain-English guide for parents, adult kids, and the new grand-babies)
by I. David Waxman, EA
The story so far
Many years ago, you left the alter heim (aka the USA) and built a new life in Israel. Now your children are adults, earning salaries, getting married, and welcoming their own children. If they hold U.S. citizenship, they inherit the same rights and responsibilities as any U.S. citizen—even if they’ve never set foot in the U.S. and don’t speak English.
In this post, we’ll dive into what it means for the next generation of US-Israeli citizens. From passing on that precious passport to the nitty-gritty of compliance (spoiler: it’s mostly reporting, not paying), we’ll break it down so you can guide your family with confidence. Let’s keep that Zionist legacy strong—while staying on the right side of Uncle Sam.
1) Passing on U.S. citizenship to children born in Israel
Method 1 — Consular Report of Birth Abroad (CRBA)
- What it is: The standard way to document U.S. citizenship for a child born outside the U.S.
- Where to start: U.S. Embassy Israel CRBA page: https://il.usembassy.gov/birth-and-citizenship/
- Key qualifications (physical presence / residence):
- Both parents U.S. citizens:
At least one parent must have resided in the U.S. or its territories at any time before the birth (no minimum in the statute). In practice, posts often ask you to document ~1 year of U.S. residence. - One U.S. citizen parent (the other is not a U.S. citizen):
The U.S. citizen parent must have been physically present in the U.S. for at least 5 years before the child’s birth, including 2 years after age 14.
- Both parents U.S. citizens:
Practical tips: Gather proof before you book—school transcripts, pay stubs, leases, W-2s, tax transcripts, utility bills, etc., to show residence/physical presence as needed. Also bring your own citizenship documents – SSN card, birth certificate, and US passport.
Method 2 — N-600K (citizenship via U.S. grandparent’s presence)
- Who it’s for: A child living outside the U.S. who has a U.S. citizen parent, but that parent doesn’t meet the CRBA physical-presence requirement. If a U.S. citizen grandparent had enough time in the U.S., the child may still qualify.
- Link: https://www.uscis.gov/n-600k
- Basic idea: The U.S. citizen parent files Form N-600K (Application for Citizenship and Issuance of Certificate Under Section 322).
- Key requirements (high level):
- Child is under 18 on the day of naturalization.
- Child is in the legal/physical custody of the U.S. citizen parent.
- Grandparent’s physical presence in the U.S. satisfies the statutory time test (generally the same 5-year/2-after-14 pattern).
- The child must enter the U.S. temporarily to complete the naturalization ceremony; citizenship is granted before age 18. The child will need a travel visa. There is no minimum stay required outside of the time needed to complete the bureaucratic process.
- Process snapshot: File with USCIS → case review → schedule a short trip to the U.S. for the interview/oath → receive Certificate of Citizenship.
- TIP #1 – apply for the child’s SSN while in the USA to minimize processing time. You can book an appointment at the social security office immediately following the the appointment at the USCIS.
- TIP #2 – you can apply at any USCIS office. Wait times vary widely from office to office. You might want to travel a day or so to apply at an office with reduced waiting times.
- When to choose N-600K: When CRBA is not available because the U.S. citizen parent can’t document the required U.S. presence—but a U.S. citizen grandparent can.
2) “OK, they’re citizens—now what?”
Core responsibilities for all generations of dual U.S./Israeli citizens
The Weight of Citizenship: Same Rules, No Exceptions
First things first: US citizenship isn’t a “set it and forget it” deal. If your child was born with it (or acquired it later), they owe the same duties as any native born in the USA. That means filing taxes, reporting assets, and keeping the IRS in the loop—even if they’ve never visited the US, don’t speak English. Why? Because the US taxes its citizens on worldwide income, no matter where they live. It’s a quirk of the system that catches many olim (new immigrants) off guard. But don’t panic— for most Israel-based dual citizens with no US ties, this boils down to paperwork, not penalties. More on that later. The key takeaway? Start the conversation early. As your kids hit their 20s and start building nests of their own, empower them with knowledge. It’s not just about compliance; it’s about protecting the freedom that citizenship affords.
Bank enforcement (FATCA):
Israeli banks will ask if you’re a U.S. citizen. If yes, they’ll request your U.S. Social Security Number and a signed Form W-9 (taxpayer certification).
No U.S. income? You still have filing & reporting (informational) obligations even when no U.S. tax is ultimately due.
Annual income tax return
- Form 1040: U.S. citizens report worldwide income.
- Applies if your 2025 income exceeds $15,750 (single) or double that for married. The amounts increase every year for inflation.
- In many Israeli-resident cases, foreign tax credits for high taxes paid to Israel reduce U.S. income tax to nil.
- Form 2555 (FEIE): Can exclude salary earned in Israel, but is often unnecessary if foreign tax credits already eliminate U.S. tax.
Foreign account & asset reporting (very common)
- FBAR (FinCEN e-filed, “FinCEN Report 114”):
If the aggregate of non-U.S. financial accounts exceeds $10,000 at any point in the year, all such accounts must be reported (banks, brokerage, pensions/kupot, etc.).
Signature authority counts, too. (Spouses, business signers—watch this!)- TIP – there is no minimum age for the FBAR or other reporting requirements. If your family sets up a custodial account for the child, then file the FBAR for the child if the value exceeds the reporting threshold.
- Form 8938 (FATCA statement):
Additional asset reporting filed with the 1040 for higher balances (thresholds vary by filing status and residence outside the U.S.). - Form 5471: U.S. shareholders of certain Israeli companies ( Ltd / בע״מ ) may have corporate reporting (and possibly GILTI).
- Form 8621 (PFIC): Applies to many Israeli mutual funds/ETFs and certain kupot; can create real U.S. tax and complex annual reporting.
- Form 3520/3520-A: For foreign trusts, and for receipts of large gifts/inheritances from non-U.S. persons/estates.
When might U.S. tax actually be due?
- Self-employment income (SE tax),
- NIIT (3.8%) on investment income at higher levels,
- PFIC tax from Form 8621 (for Israeli mutual funds and kupot),
- GILTI/Subpart F for owners of certain controlled foreign corps,
- U.S.-source income (e.g., U.S. rents, dividends without sufficient FTCs, etc.).
3) “I’m tired of all this… Can I renounce?”
Yes—renunciation is an available path for adults, but it’s serious and irreversible.
- Where to learn more / start:
U.S. Embassy Israel page on renunciation: https://il.usembassy.gov/renouncing-u-s-citizenship/ - What to expect (very brief):
- In-person appointment(s) at a U.S. Embassy/Consulate; sign DS-4080 oath and related forms.
- Fee: A significant government fee (as of 2025, commonly quoted at $2,350; confirm current fee when booking).
- CLN (Certificate of Loss of Nationality): Issued after approval; processing can take months.
- Tax exit filings:
- Form 8854 (notify the IRS you expatriated and certify five years of compliance).
- Determine if you’re a “covered expatriate” (net worth/income-tax liability/5-year compliance tests). Covered status can trigger a mark-to-market exit tax and other consequences.
- Special rules exist for certain minors who relinquish before age 18½ and meet residency limits.
Renunciation is not for everyone. For many families, a well-managed compliance plan (especially around PFICs/kupot and business ownership) can keep U.S. tax to zero or minimal while staying fully compliant.
4) How we help (Cole & Waxman Tax Services)
- Citizenship pathway planning: CRBA vs. N-600K feasibility, documentation checklists, and timelines.
- Compliance systems for the next generation: Simple, repeatable workflows for FBAR, Form 8938, 8621 (PFIC), and business filings (5471/GILTI).
- Portfolio alignment: Reducing PFIC exposure where possible; coordinating with Israeli advisers.
- Renunciation counseling (when appropriate): Pros/cons, timing, minor-exception analysis, tax exit planning, and Form 8854.
Important disclaimer
This article is for educational purposes only and not legal or tax advice. U.S. immigration and tax rules are complex and facts matter. Consult qualified professionals before acting.