Yes. It is possible to claim a child born overseas to a United States citizen parent as a dependent on a US income tax return. There is more information on this from the IRS itself here:
https://apps.irs.gov/app/vita/content/07/07_06_015.jsp?level=basic
It is also important to note that, for US tax purposes, a child born during the year is considered to have been alive for the entirety of that tax year. So, for example, a child born on December 30th, 2016 entitles the parent to one full dependency exemption for 2016 (in other words, the exemption isn't prorated simply because the child was born later in the year).
With that said, there is actually much more to your US tax situation than just a child born overseas. Some of this you may know already, and some of it you may not. Please bear with us while we explain.
If you are a United States
citizen (or a Permanent Resident) and are married to a non-citizen, then you
have some options on how to file your USA tax return, although current United
States tax laws do not make this process particularly easy.
Option # 1: You can file your US tax return as Married Filing
Separately (which is usually a somewhat unfavorable tax filing status), and
just report your own income there. TurboTax can walk you through this
process, and help you create the necessary Form 1040. If your spouse does
not already have an ITIN number, or a Social Security number, then this return
would have to further be printed and paper filed. If your spouse has a
valid ITIN or SSN, then the tax return would be eligible for e-filing. If
there is no ITIN or SSN, then in any place where the nonresident spouse's
taxpayer ID number is required on a tax form, you would take a black or blue
pen and manually write "nonresident alien" or abbreviate as "NRA."
You can also claim a personal
exemption for your spouse, if your spouse had no gross taxable income for U.S.
tax purposes, and was not the dependent of another taxpayer. This mirrors
the similar rule for US citizens and resident aliens filing as Married Filing
Separately to claim the personal (dependency) exemption for their spouse, where
that spouse has no taxable income, is not filing a separate tax return, and is
not claimed as a dependent on any other taxpayer’s return. But, in order
to do this and claim the personal exemption, your spouse must also have a valid
Social Security Number or an ITIN.
Option # 2: You can elect to include your
nonresident spouse on your US income tax return (which may be more or less tax
favorable than Married Filing Separately); and file as Married Filing Jointly;
but you would need to file a paper Form 1040 tax return in order to do
so. The somewhat complicated process for completing this type of tax
return is explained in detail at the IRS.gov website here:
https://www.irs.gov/individuals/international-taxpayers/u-s-citizens-and-resident-aliens-abroad...
Such a tax return (Option # 2) is probably best done by a professional tax
preparer.
If you choose Option # 1 and have any difficultly with that, then having the
tax return prepared by a professional is also an option here too.
TurboTax has a helpful
Frequently Asked Questions webpage about this subject, and you may wish to look
at that as well. Here is the link:
https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Claiming-a-Non-Citizen-Spouse-and-Children-...
Also, you can read the complete answer to a similar question that was asked
here about a year ago. There is some good information and advice in there
as well:
https://ttlc.intuit.com/questions/3089728-how-can-i-file-taxes-with-my-new-foreign-spouse-who-doesn-...
This TurboTax FAQ article is also helpful:
https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Claiming-a-Non-Citizen-Spouse-and-Children-...
Now then, assuming that you
own a bank account or maintain other financial assets in Germany or any other foreign country
(that includes in the EU as well as elsewhere), there are certain foreign
financial account reporting requirements that you must meet annually as a US citizen, in
addition to filing a primary tax return (Form 1040, etc.)
In fact, there are two
separate disclosure forms that may be required; each also has different
reporting rules. One is known as IRS Form 8938, and can be
attached to the relevant yearly Form 1040 tax return. The other is FinCen
Form 114, which can only be filed via the internet. The following
Internal Revenue Service webpage describes them in some detail, and provides
their dollar value reporting levels:
https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
Form 8938 is included in
TurboTax; FinCen Form 114 is not, and you may need to access that reporting
webpage separately, if your foreign financial assets total over the
limit(s). Note that you can get to the FinCen reporting internet site
through the above IRS link.
We understand that this can be a lot of information to absorb; but it is all (potentially) relevant to you and your situation. Now you have it for a future reference source.
Thank you for asking this important question, and congratulations on your new daughter.
