A United States person must file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year.
Who is a United States Person?
A “United States person” means:
- A citizen or resident of the United States;
- An entity created or organized in the United States or under the laws of the United States. The term “entity” includes, but is not limited to, a corporation, partnership, and limited liability company;
- A trust formed under the laws of the United States; or
- An estate formed under the laws of the United States.
The definition of Resident of the United States
United States Resident: A United States resident is an alien residing in the United States. To determine if the filer is a resident of the United States, apply the residency tests in 26 U.S.C. § 7701(b). When applying the § 7701(b) residency tests, use the following definition of United States: United States includes the full company of States, the District of Columbia, all United States territories and possessions (e.g., American Samoa, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the United States Virgin Islands), and the Indian lands as defined in the Indian Gaming Regulatory Act.
Note: Tax treaties with the United States do not affect FBAR filing obligations.
Residency tests in 26 U.S.C § 7701(b):
The residency rules for tax purposes are found in I.R.C. § 7701(b). Although the tax residency rules are based on the immigration laws concerning immigrants and nonimmigrants, the rules define residency for tax purposes in a way that is notably different than immigration laws. Under the residency rules of the Code, any alien who is not a RESIDENT ALIEN is a NONRESIDENT ALIEN. An alien will become a RESIDENT ALIEN in one of three ways:
- By being admitted to the United States as, or changing status to, a Lawful Permanent Resident under the immigration laws (the Green Card Test);
- By passing the Substantial Presence Test (which is a numerical formula measuring days of presence in the United States); or
- By making what is called the "First-Year Choice" (a numerical formula under which an alien may pass the Substantial Presence Test one year earlier than under the normal rules). Refer to the discussion of "First-Year Choice" in Chapter 1 of Publication 519, U.S. Tax Guide for Aliens.
Under these rules, even an undocumented (illegal) alien under the immigration laws — and who passes the Substantial Presence Test — will be treated as a RESIDENT ALIEN for tax purposes.
Substantial Presence Test
You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States for at least:
- 31 days during the current year; and
- 183 days during the 3-year period — which includes the current year and the 2 years immediately before that — counting:
- All the days you were present in the current year;
- 1/3 of the days you were present in the first year before the current year; and
- 1/6 of the days you were present in the second year before the current year.
Example:
You were physically present in the United States on 120 days in each of the years 2010, 2011, and 2012. To determine if you meet the substantial presence test for 2012, count the full 120 days of presence in 2012, 40 days in 2011 (1/3 of 120), and 20 days in 2010 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2012.
Days of presence in the United States
You are treated as present in the United States on any day you are physically present in the country, at any time during the day. However, there are exceptions to this rule. Do not count the following as days of presence in the United States for the substantial presence test:
- Days you commute to work in the United States from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico.
- Days you are in the United States for less than 24 hours, when you are in transit between two places outside the United States.
- Days you are in the United States as a crew member of a foreign vessel.
- Days you are unable to leave the United States because of a medical condition that develops while you are in the United States.
- Days you are an exempt individual.
Exempt Individuals
Do not count days for which you are an exempt individual. The term "exempt individual" does not refer to someone exempt from U.S. tax, but to anyone in the following categories:
- An individual temporarily present in the United States as a individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas.
- A teacher or trainee temporarily present in the United States under a "J" or "Q" visa, who substantially complies with the requirements of their visa.
- A student temporarily present in the United States under an "F," "J," "M," or "Q" visa, who substantially complies with the requirements of their visa. If you have been a "F" student for more than five consecutive years while living in the US, you are no longer consider "temporarily" present. You need to seek a special exemption. If you do not, you are likely now a US person for tax purposes and have an FBAR filing requirement.
- A professional athlete temporarily in the United States to compete in a charitable sports event.
If G-4 visa holder is not a full time employee, then the exemption will not apply.
If you need assistance filling out your FBAR, or if you have questions or concerns about past FBARs you may have misfiled, or not filed at all, contact us. We can help. Call us at888-727-8796 or email info@irsmedic.com.
