@Helen123 , generally agreeing with @SusanY1 , excellent and generally complete reply, I am still a bit troubled about the following:
Your friend whom are NRA ( Non-Resident Alien with no current locus in USA ( they live in the UK ) had a baby in the USA ( thus having a right to be a citizen of USA , has a bank account in the USA with >= US$10,000. This will generate interest income belonging to the child. Question now is does the child have to file a US return ?
My understanding of a child born in the USA of NRA ( US Customs & Immigration definition and not the IRS def. ) is still an Alien, till the child gets a US passport i.e. an effort has been made to take advantage of the birthright citizenship. Therefore in the UK the child would be a resident of UK and be taxed on foreign income on parent's income tax return. I am not very familiar with the current UK tax laws ( was during the Thatcher era when I live there ). Note that generally & under treaty most countries use residency laws to determine tax on foreign passive income --- generally interest and dividend incomes..
Does this make sense ?
pk
