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I'm a Hungarian-US dual citizen (born in the US to Hungarian parents) but I've lived outside the U.S. for most of my life. I have an American passport and SSN. I've never filed a tax return in the US, as I am filing and paying taxes in Hungary. It became only recently clear to me that I have to file a tax return int the US, but don't have to pay taxes unless my annual income exceeds $91,500. I am planning on opening a brokerage account online with Interactive Brokers, where they ask for my SSN. Will this action have any effects on my tax filing obligations in the US? Do I need to fill out other forms than the 1040 and 2555, (i.e: 1099)?

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  • Nit: as a US citizen living and working elsewhere, you can exclude from US tax using form 2555 earned income (pay for work) up to a limit that changes each year and was 91.5k in 2010. But unearned income like investments is fully subject to US tax, although if it is also taxed by the other country you get to credit that against your US tax (per category of income) on form 1116 so your total tax equals the higher of the rates the two countries would apply separately. Jun 6 at 7:18
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If you open a brokerage account, it's certain that at the END of the calendar year a 1099-INT or 1099-DIV or related tax document will likely be sent to the IRS. What happens after that point is unknown.

If you are asking if you will get "caught" by opening a brokerage account, no one here can answer that question. Based on the change in banking/securities laws after 9/11 there are many more reporting burdens that the brokerages and banks follow.

If you are a US citizen, even if you are living abroad, as you already know you are obligated to file a return (even though most likely you will owe no tax).

Whether you open a brokerage account or not, it won't change that obligation. The obligation is born out of your citizenship, not your activities in the US.

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