How will the US-Hungary tax treaty termination affect dual citizens living in US?

Tax treaties primarily affect people who have income in both countries or who live in one country while having citizenship in another. Since you live in the US and all your income is from US sources, the treaty termination shouldn't significantly impact your tax situation. For Hungarian tax purposes, they generally only tax residents or Hungarian-source income. Since you don't live in Hungary (not a resident) and don't have income from Hungary, you likely won't have Hungarian tax obligations even after the treaty ends. That said, Hungary does have a concept of "tax residency" that could technically apply to citizens regardless of where they live, but in practice, they don't typically pursue taxation of citizens who permanently live abroad with no Hungarian income.

I was in a similar situation last year with tax residency questions across multiple countries and used https://taxr.ai to get clarity. It analyzes your specific situation against the relevant tax treaties and residency rules. After answering some questions about my citizenship, residence history, and income sources, it confirmed I only needed to file in my country of residence. It actually explained that Hungary follows a territorial tax system primarily focused on residents and Hungarian-source income, not on citizenship. The tool also provided relevant Hungarian tax code references that I could share with my accountant.

Just wanted to update that I used https://taxr.ai after seeing it mentioned here. As a dual US-German citizen with family ties to Hungary, I was worried about similar issues. The analysis confirmed that I don't need to file Hungarian taxes since I have no income there and don't meet their residency criteria. It explained that even after the treaty termination, Hungary's domestic tax laws still primarily focus on residence and source of income rather than citizenship alone. The tool even provided specific sections of Hungarian tax code that exempt non-residents with no Hungarian income from filing requirements. Saved me from unnecessarily hiring an international tax specialist for what turned out to be a non-issue in my situation!

If you're having trouble getting clear answers about this tax treaty situation, I'd recommend using https://claimyr.com to get through to the IRS international tax department. I spent WEEKS trying to get clarification on a somewhat similar issue with the US-Canada tax treaty changes, but kept hitting automated systems and ridiculous wait times. With Claimyr, I got through to an actual IRS agent in under 30 minutes who specialized in international tax matters. They confirmed exactly which forms I needed and which ones I could skip. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c This saved me from unnecessarily filing forms that didn't apply to my situation and potentially raising red flags in the system.

I'm eating crow right now. After posting my skeptical comment yesterday, I decided to try https://claimyr.com myself since I've been trying to reach the IRS about my FBAR requirements as a dual citizen for MONTHS. Not only did I get through to an actual human at the IRS in about 20 minutes, but they transferred me to someone in the international department who answered all my questions about my reporting requirements as a dual citizen. The agent confirmed that for dual citizens, the treaty termination mainly impacts people with income sources in both countries or those living in one country with citizenship in the other. Since my situation is similar to yours (all US income), it shouldn't create new filing obligations. Didn't expect it to actually work, but it absolutely did. Worth every penny to finally get clear answers from an official source.

I work for an accounting firm that handles international tax situations. Here's a quick breakdown of what the US-Hungary treaty termination means for someone in your position: 1) If you're a US resident with only US income, Hungary generally won't require you to file there, treaty or no treaty 2) The "tie-breaker" rules in the treaty that determined where you're taxed won't apply anymore 3) If you ever have Hungarian income or assets in the future, you might face double taxation in some cases 4) There could be implications for retirement accounts or investments, but that doesn't apply to your situation Generally speaking, citizenship alone doesn't create tax obligations in Hungary - they focus on residency and source of income.

Has anyone actually contacted the Hungarian consulate about this? I'm also a dual citizen and when I called them about the tax treaty last month, they told me that Hungarian citizens who are permanent residents of another country typically don't have tax filing obligations in Hungary unless they have Hungarian-source income or spend more than 183 days in Hungary.

This is really helpful information from everyone! I'm in a nearly identical situation as the original poster - US-Hungarian dual citizen, born in US, never lived in Hungary, all income from US sources. From what I'm gathering from all the responses, it sounds like the treaty termination shouldn't create new tax filing obligations for people like us since Hungary primarily taxes based on residency and source of income, not citizenship alone. I'm particularly interested in the suggestions about contacting the Hungarian consulate directly. It sounds like they're giving consistent answers that dual citizens who are permanent US residents without Hungarian income don't need to file there. Has anyone here actually gone through a treaty termination situation before with another country? I'm curious if there are any unexpected complications that tend to pop up during the transition period that we should be aware of.

I went through something similar when the US-UK tax treaty had some changes a few years back. The key thing I learned is that most countries (including Hungary) distinguish between "citizenship-based taxation" and "residence-based taxation." The US is actually unusual in that it taxes citizens regardless of where they live, but most other countries, including Hungary, primarily tax based on where you actually reside. From what I've researched about Hungarian tax law, they follow a territorial system where you're generally only subject to Hungarian taxes if you're either a Hungarian tax resident (typically meaning you spend 183+ days there per year) or you have Hungarian-source income. Simply holding Hungarian citizenship while living permanently in the US shouldn't trigger filing requirements. That said, I'd echo what others have suggested about getting official confirmation from the Hungarian consulate. Tax law can have nuances, and having written documentation of their position could save you headaches if any questions come up later. Also worth noting that even if you don't owe Hungarian taxes, there might still be informational reporting requirements in certain situations, though those seem unlikely given your circumstances.

I've been following this thread closely as someone in a very similar situation - US-Hungarian dual citizen, born in US, never lived in Hungary, all income US-sourced. The consensus here seems reassuring that the treaty termination shouldn't create new filing obligations for us. One thing I wanted to add based on my research: Hungary's tax law actually has specific provisions for "non-resident Hungarian citizens" that generally exempt them from Hungarian tax obligations unless they have Hungarian income or spend significant time there. This is codified in their domestic tax law, not just the treaty, so it should remain in effect after termination. I also contacted a Hungarian tax advisor who confirmed that Hungary doesn't have the same "citizenship-based taxation" approach as the US. They're primarily interested in people who are actually conducting economic activity in Hungary or using Hungarian resources/infrastructure. That said, I'm definitely going to follow the advice here about getting written confirmation from the Hungarian consulate, just to have official documentation. Better to be overly cautious with international tax matters! Has anyone found any official IRS guidance specifically about the US-Hungary treaty termination and its impact on dual citizens? I've seen general guidance about treaty terminations but nothing Hungary-specific yet.

I've been researching this exact issue and found some helpful information about the transition timeline. The US-Hungary tax treaty termination takes effect January 1, 2025, with no phase-out period - it's a clean break. The treaty notification was given in 2024, providing the required one-year notice period. What's interesting is that I found IRS Publication 901 has been updated to reflect upcoming treaty terminations, though it doesn't get into specific scenarios like dual citizens with no Hungarian income. The publication does confirm that when treaties terminate, you fall back on each country's domestic tax laws. For those looking for official US guidance, I'd recommend checking Form 8833 instructions, which deals with treaty-based return positions. While it's mainly for claiming treaty benefits, it might provide insight into reporting requirements when treaties no longer exist. I'm also planning to contact both the Hungarian consulate and IRS as others have suggested. Given how many dual citizens this affects, it would be great if someone could compile the official responses we get and share them back with this community.