Do I need to pay taxes as a dual citizen if I have income both from the US and abroad?

Question

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)?

Answer 1

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.