7 Harsh Legal Obligations of US Citizens

Being a US citizen comes with undeniable perks, but it also carries some of the harshest legal obligations in the world. 

From global taxation to strict reporting requirements, these rules can feel overwhelming. 

Understanding these duties – and exploring the alternatives – can help you explore citizenship more strategically and reclaim control over your lifestyle.

Much of what we do here at Nomad Capitalist focuses on what a second passport or residence can do for you by asking questions such as:

• What freedoms will that new citizenship give you?
• Will your new residence permit give you more travel options? 
• Which second passport will act as the best insurance policy if things go south in your home country?

Navigating the world of citizenship and obtaining a second passport has become increasingly difficult, and in recent years, we’ve seen significant changes. 

Golden visa and citizenship-by-investment programs are becoming more problematic, with rates rising and the required ‘donation’ increasing in many jurisdictions. 

Don’t put it off any longer; apply to become a Nomad Capitalist client, and we will help you legally go where you are treated best.

Obligations and Duties of a US Citizen

As Nomad Capitalist founder Andrew Henderson once discussed with the BBC, citizenship is now a commodity. 

As you build your passport portfolio, you can use flag theory and second passports to spread your risk across different countries to protect yourself and activate a liberating international lifestyle. 

But if we only viewed second passports as commodities, we would be missing out on the bigger picture.

One of the most important elements of creating a Nomad strategy is finding the places where you truly feel at home. The fact is that many folks no longer feel at home in their home country.

The good news is that we can all go where we’re treated best and find the places where we are welcomed and at home. 

And, when we find those places where we feel we truly belong, our citizenship can become more meaningful, influencing us to give back and contribute to the community that is our new place of citizenship.

After all, every citizenship brings with it both rights and responsibilities. The traditional concept of citizenship is imbued with these responsibilities, focusing not only on the rights you claim as a citizen but on how you can contribute back to the community and nation in which you live.

It’s a symbiotic relationship, one that scholars and philosophers have been discussing for thousands of years. Societies thrive on the give and take of this relationship.

Some, however, take the relationship to the extreme. The United States is one place where the conversation about rights is so intense that it has produced generations of entitled citizens.

And yet, the US government also imposes more ‘responsibilities’ upon its people than any other country on earth. You won’t find many of these legal obligations listed on the United States Citizens and Immigration Services website. 

Their focus is on the more palatable citizenship rights and responsibilities like the right to express yourself and the responsibility to participate in the democratic process. 

But the obligations of being a US citizen include numerous restrictions, regulations, sanctions and demands that other countries simply do not hold over their citizens’ heads.

These legal obligations come as part of the package deal of US citizenship, but they aren’t widely known. 

They’re more like the terms and conditions written in fine print that you blindly accept when installing new software on your computer. You would never read them, but you’re bound to them.

Everything we do here at Nomad Capitalist is about transparency and following the law 100% of the time. Going where you’re treated best also means that if you don’t like the conditions, you can leave. 

Since US citizens are subject to these obligations no matter where they are in the world, Mr Henderson ultimately voted with his feet and decided to renounce his US citizenship.

You have options. You can choose your citizenship and its accompanying rights and responsibilities.

The bottom line is that you have to be aware of the fine print, especially as a US citizen. The laws that you must follow – the real obligations of US citizens are not just about where you live but about the citizenship that follows you no matter where you go.

7 Duties of a US Citizen

So, here are the real obligations of being an American citizen: the rules you didn’t know you were signing up for the day you were born or the day you took the oath.

Report and Pay Taxes on Your Entire Worldwide Income

The US is one of only two countries in the world that applies citizenship-based taxation.

That means that you must file and pay taxes on everything you earn, no matter where you earn it or where you live.

The US does offer Foreign Earned Income Exclusion, which some people can take advantage of. However, not everyone can use it, and it only excludes a certain amount of income from taxation.

So, as a US citizen, no matter where you live in the world, you have to pay income tax. Whether you have a job, a business, or you’re self-employed, you’re going to be limited to making US$130,000 a year tax-free. And if you’re a trader or have some passive income, then you won’t have any tax relief at all.

Report All Foreign Accounts

As a US citizen, you must report all foreign bank accounts and other foreign financial accounts, as well as corporations, foundations and trusts.

The IRS uses a law called FATCA to force every banker in the world to act as its unpaid adviser. If your combined holdings in foreign bank accounts – personal and financial – exceed US$10,000, you must file Form FBAR (Report of Foreign Bank and Financial Accounts) FBAR to report those accounts to the IRS.

No Business with OFAC Countries/Citizens

US Citizens are forbidden from doing business with countries and individuals on the Office of Foreign Asset Control (OFAC) sanctions list. 

The OFAC is responsible for banning any business interaction between US citizens and governments or individuals from Iran, North Korea, Russia, Syria, Venezuela and Cuba.

Anything in those countries is off-limits. For example, if you do business in a country like Georgia, that is not that far from Iran. 

You could be invited to participate in deals with Iranians. But, because of OFAC, US citizens can’t do business with Iranians. There is also a list of specific individuals from various different countries on the OFAC list.

There are also people on the list from places like Myanmar and even companies that US citizens are forbidden from doing business with.

You may never come in contact with any of these individuals sitting at home doing business in the US, but the more you globalise your life and your business, the more you will realise that Iranians are just regular individuals living in another part of the world, and you can lose out on deals because of this rule. 

Even non-US companies can lose out, as we saw with the ZTE debacle. 

ZTE dealt with Iran and other sanctioned countries, and the US government cut them out of the market.

No Bribing of Foreign Officials

Under the Foreign Corrupt Practices Act (FCPA), US citizens are forbidden from bribing foreign officials. This rule may seem like a no-brainer until you realise what counts as bribing.

Those who do business in frontier and emerging market economies understand that ‘bribery’ is the only way to get things done. It’s a standard business practice. 

Because of FCPA limitations, US citizens and companies are at a disadvantage.

Just look at the Wall Street Journal, and you’ll quickly find reports of one company or another being investigated for FCPA violations. They may have to pay hundreds of millions of dollars if found in violation. 

This is American imperialism at its worst, saying, ‘You have to live up to the US government standards even when you’re doing business overseas’.

These morals are often applied out of context and without regard to local business culture.

Prosecution for Crimes Committed Overseas

US citizens are subject to US law regardless of their location. This means that if you go overseas and consume psilocybin, this is technically a crime that you could be prosecuted for in the United States. 

Several issues, like extradition laws and questions of political sovereignty, often keep US citizens from being prosecuted for lesser crimes. Still, there are certain crimes that the US government enforces without question.

Of course, there are some crimes where this law serves a necessary and important purpose, such as trafficking. 

It’s just another legal obligation of which you should be aware. You are responsible to the US government for your actions overseas.

Register for Selective Service

The responsibility to register for Selective Service and potentially serve in the military still exists in the United States. 

There is no military draft, but according to the United States Citizenship and Immigration Services (USCIS), it’s your responsibility as an American to bear arms and defend the country from all enemies, foreign and domestic.

So, even if you leave the country, they can still make the argument to bring you back. They will even tell you that when you renounce your citizenship. In theory, any unserved military obligations could stick with you as a former US citizen.

Living Abroad and Jury Duty and Civic Duties

The jury pool is taken from electoral rolls and DMV records of licensed drivers and non-driver IDs.

If you’re still a registered voter or have maintained your US driver’s license, you’re technically still on the list and could be called to jury duty. If you receive a notice and don’t show, charges could be brought against you.

However, if you are called for jury duty while overseas, a simple indication that you are not in the US, you will likely be excused from this responsibility.

When it comes to civic duties, these aren’t really US citizens’ obligations in terms of the law. They are the softer requirements that the USCIS actually lists on their website.

While you’re not required to stay informed of the issues affecting your community, and you’re not required to vote, these are things that they say are your obligations. 

Their website specifically states that you must defend the country if the need arises, participate in your local community, and respect the rights, beliefs and opinions of others.

Historically, people have been targeted for going against the grain. And, as the culture in the United States becomes more divided by culture wars, the less you get along with people, the harder it could be for you to stick around.

Can You Find a Citizenship Without the Harsh Obligations?

It’s absolutely possible to find citizenship with fewer obligations and more freedom. 

If you’re feeling the pressure as a US citizen, it could be time to explore options in countries that offer more lenient tax policies and fewer extraterritorial demands. 

Many nations, such as Malta or St Kitts and Nevis, provide pathways to citizenship through investment, allowing you to legally acquire a second passport while minimising the burdens often tied to US citizenship, like worldwide taxation.

By investing in a country’s economy, real estate or government programs, you can secure a second citizenship that aligns with your goals of freedom and flexibility. 

These programs enable you to diversify your citizenship portfolio, reduce your legal and financial obligations and embrace a lifestyle where you’re treated best.

Ultimately, there’s a whole world out there that could welcome you with open arms. If you feel you’re not getting the life you want from the United States, we can help you find something better.

Duties and Responsibilities of a US Citizen: FAQs

Escape the Obligations and Duties of a US Citizen

As we frequently discuss in our articles about US taxation, the only way out of these obligations is through renouncing your US citizenship. 

You may not be familiar with what it means to renounce US citizenship, and it certainly isn’t the answer for everyone.

However, if these obligations create too many problems for you and you have decided that you no longer want any part of the US system, contact the Nomad Capitalist team to learn more about renouncing your US citizenship and what opportunities could lie ahead.

We help seven- and eight-figure entrepreneurs and investors create a bespoke nomad strategy using our unique, tried-and-tested methods. 

You’ll keep more of your own money, create wealth faster and be protected from whatever happens in just three steps. Discover how to achieve this here.