A US Person for FBAR purposes is any US citizen, US resident under federal residency rules, or US domestic entity that owns or controls foreign financial accounts exceeding $10,000 in aggregate during a calendar year. This definition is governed by FinCEN regulations under the Bank Secrecy Act, not the Internal Revenue Code.
The phrase “US Person” appears deceptively simple. In FBAR compliance, it is anything but.
Each year, thousands of taxpayers—expatriates, green card holders, digital nomads, executives, even retirees—fail to file an FBAR not because they hid money, but because they misunderstood who the law considers a US Person. The result can be catastrophic: civil penalties reaching six figures, frozen accounts, or years of costly compliance remediation.
This guide resolves that confusion with surgical precision.
1. What Is FBAR and Why the Definition of “US Person” Matters
1.1 FBAR in One Sentence
The FBAR—Form FinCEN 114—is an annual disclosure required under the Bank Secrecy Act (BSA) to report foreign financial accounts owned or controlled by US Persons when the aggregate value exceeds $10,000 at any point during the year.
1.2 FBAR Is Not an IRS Form (and That Changes Everything)
Although the IRS enforces FBAR penalties, FBAR is not an Internal Revenue Code filing. It arises under Title 31 of the United States Code, administered by the Financial Crimes Enforcement Network (FinCEN).
This distinction is critical. Many taxpayers incorrectly assume that income tax concepts—such as tax treaties, foreign residency elections, or even the absence of taxable income—affect FBAR obligations. They do not.
FBAR compliance hinges on a single gateway question:
Are you a US Person under 31 CFR §1010.350?
If the answer is yes, the analysis moves forward regardless of where you live, whether you owe US tax, or whether your foreign income is excluded.
2. The Legal Definition of “US Person” for FBAR Purposes
2.1 The Controlling Authority: 31 CFR §1010.350(b)
The definitive legal definition of a US Person for FBAR purposes is found in 31 CFR §1010.350(b), not in IRS publications or tax court cases.
Under this regulation, a United States person includes:
- A citizen of the United States
- A resident of the United States
- An entity created or organized under US law, including corporations, partnerships, LLCs, trusts, and estates
For individual filers, the first two categories—citizens and residents—do almost all the work.
2.2 What “United States” Means for FBAR
FinCEN defines the “United States” broadly. It includes:
- The 50 states
- The District of Columbia
- US territories and possessions (e.g., Puerto Rico, Guam, US Virgin Islands)
- Indian lands
This creates a subtle but powerful distinction: a person living in a US territory may be a US Person for FBAR even when income tax rules treat them differently.
2.3 Why FBAR Uses a Different Logic Than Income Tax
FBAR is an anti-money-laundering disclosure regime, not a tax collection mechanism. Its purpose is transparency, not revenue.
As a result:
- Tax treaties do not override FBAR obligations
- Foreign residency elections do not eliminate filing duties
- Joint tax filing does not consolidate FBAR responsibility
This divergence is one of the most common—and most expensive—sources of non-compliance.
3. Individuals Who Qualify as US Persons
3.1 US Citizens (Including Dual Citizens)
Every US citizen is a US Person for FBAR purposes. There are no exceptions based on:
- Place of residence
- Dual or multiple citizenship
- Length of time spent outside the US
- Whether US income tax is owed
A US citizen living permanently in Europe, Asia, or the Middle East remains fully subject to FBAR reporting if the account threshold is met.
This includes minor children. If a child is a US citizen and owns or controls foreign accounts exceeding the threshold, an FBAR must be filed—typically by a parent or legal guardian.
3.2 Green Card Holders (Lawful Permanent Residents)
A lawful permanent resident (green card holder) becomes a US Person for FBAR purposes once US residency begins.
Importantly:
- Physical presence matters
- A green card issued but never activated does not automatically trigger FBAR status
- Once residency begins, worldwide accounts become reportable
Many new residents fail to file FBARs in their first year because they mistakenly believe pre-immigration accounts are exempt. They are not.
3.3 Residents Under the Substantial Presence Test
Non-citizens may also qualify as US Persons if they meet the Substantial Presence Test (SPT) under IRC §7701(b).
In simplified terms, SPT generally applies if:
- You are physically present in the US for at least 31 days in the current year, and
- Your weighted presence over three years equals or exceeds 183 days
Once SPT is met, FBAR obligations apply—even if your visa status is temporary (e.g., H-1B, L-1).
4. Residency Nuances That Trigger FBAR Unexpectedly
4.1 First-Year Residency Elections
Individuals who elect to be treated as US residents in their first year under IRC §7701(b)(4) are considered US Persons for FBAR purposes during the elected period.
This election can retroactively pull foreign accounts into FBAR scope—an outcome many filers do not anticipate.
4.2 Treaty Tie-Breaker Rules Do Not Save You
Claiming non-US residency under an income tax treaty does not eliminate FBAR obligations.
FinCEN and the IRS have been unequivocal: treaty positions affect income taxation, not Title 31 reporting. If you are a US Person under domestic law, FBAR applies.
4.3 Living Abroad Does Not Equal Non-US Status
One of the most persistent myths is that long-term residence abroad changes FBAR status. It does not.
US citizenship or residency status—not geography—controls the analysis.
5. Who Is Not a US Person (and Why That Matters)
5.1 Non-US Citizens Without US Residency
Individuals who are neither US citizens nor US residents under the green card or substantial presence rules are not US Persons for FBAR purposes.
This includes:
- Foreign spouses with no US residency
- Foreign business partners without US presence
- Nonresident aliens with only passive US income
Even if these individuals hold joint accounts with US Persons, they themselves have no FBAR filing obligation.
5.2 Joint Accounts Do Not Transfer Status
FBAR status is personal. A non-US spouse does not become a US Person merely by sharing an account with a US citizen.
However, the US Person must still report the full value of the joint account—one of the most common compliance traps.
5.3 Why Correct Classification Is a Risk-Control Strategy
Misclassifying yourself as “not a US Person” is one of the fastest paths to severe FBAR penalties.
Correct classification, supported by statute and documented analysis, is often the difference between clean compliance and years of defensive filings.
6. FBAR Exceptions, Exemptions, and Special Situations Most People Miss
6.1 Foreign Accounts That Are Explicitly Exempt from FBAR
FBAR is broad, but it is not unlimited. Certain foreign accounts are expressly exempt under FinCEN regulations and official instructions. Understanding these carve-outs is essential to avoid both over-reporting and under-reporting.
-
US Military Banking Facilities Abroad
Accounts held at US military banking or financial facilities (e.g., on-base banks) are not considered foreign financial accounts for FBAR purposes. -
US Government Accounts
Accounts owned by a US government entity, including agencies and instrumentalities, are exempt. -
Correspondent / Nostro Accounts
Interbank settlement accounts used exclusively between financial institutions do not trigger FBAR reporting. -
Foreign Assets Held Inside US Retirement Plans
Foreign investments held within a US-based IRA, 401(k), or other qualified retirement plan are excluded from FBAR.
Critically, these exemptions are account-specific, not person-specific. Being a US Person does not disappear simply because one account is exempt.
6.2 Foreign Pensions: A Common and Costly Misunderstanding
There is no blanket FBAR exemption for foreign pension plans.
Many expats incorrectly assume that government-mandated retirement accounts (e.g., UK pensions, CPF, superannuation) are automatically excluded. In reality, unless the account qualifies under a narrow regulatory exception, it is treated like any other foreign financial account.
This is one of the most frequent sources of unintentional noncompliance discovered during voluntary disclosure reviews.
6.3 Signature Authority Without Ownership
FBAR applies not only to ownership, but also to signature authority.
If you can control the disposition of funds in a foreign account—directly or indirectly—you may have a reporting obligation even if you do not own the account.
Limited relief exists for officers and employees of US-regulated financial institutions whose employers file consolidated FBARs. Outside these narrow categories, signature authority almost always requires disclosure.
7. Hypothetical Scenarios: How FBAR Rules Apply in Real Life
Scenario 1: John & Maria (US–Non-US Marriage)
John is a US citizen living in Spain. Maria is a Spanish citizen with no US residency. They share a joint Spanish bank account that peaked at $75,000.
Outcome: John must file an FBAR reporting the full account value. Maria has no FBAR obligation whatsoever.
Scenario 2: Ayesha (H-1B Professional)
Ayesha is an Indian national working in the US on an H-1B visa. She meets the Substantial Presence Test and maintains bank accounts in India.
Outcome: Ayesha is a US Person for FBAR purposes and must report her Indian accounts once the $10,000 aggregate threshold is exceeded.
Scenario 3: Daniel (Treaty Tie-Breaker Error)
Daniel is a UK citizen with a US green card. He claims UK tax residency under the US–UK tax treaty and assumes FBAR does not apply.
Outcome: Daniel is still a US Person for FBAR purposes. Treaty positions do not override Title 31 obligations.
Scenario 4: Estate Filing Oversight
A US citizen with foreign accounts passes away in June. The executor files the final income tax return but ignores FBAR.
Outcome: The executor must file the decedent’s FBAR for the year of death and the estate’s FBAR for the following year. Failure exposes the estate to penalties.
8. FBAR vs FATCA (Form 8938): A Critical Comparison
| Category | FBAR (FinCEN 114) | FATCA (Form 8938) |
|---|---|---|
| Governing Law | Bank Secrecy Act (Title 31) | Internal Revenue Code (Title 26) |
| Filed With | FinCEN (BSA E-Filing) | IRS (attached to tax return) |
| Threshold | $10,000 aggregate | $50,000–$600,000 depending on status |
| Who Files | All US Persons | Specified individuals filing returns |
| Territories Included | Yes | No |
| Penalty Regime | Severe (civil & criminal) | Civil penalties |
The key takeaway: FBAR and FATCA overlap but do not replace each other. Many compliant taxpayers must file both.
9. How to Determine If You Must File an FBAR
-
Confirm US Person Status
Assess citizenship, green card, and Substantial Presence Test. -
Identify Foreign Financial Accounts
Include bank, brokerage, insurance, pension, and investment accounts outside the US. - Determine Financial Interest or Signature Authority
-
Calculate Maximum Aggregate Value
Use the highest balance at any point during the year. -
File FinCEN Form 114 Electronically
Through the BSA E-Filing system by April 15 (automatic extension to October 15).
10. Pro Tips, Enforcement Reality, and Common Pitfalls
10.1 Pro Tips from the Field
- Maintain year-end and peak balance documentation
- Convert balances using Treasury year-end exchange rates
- Coordinate FBAR with FATCA disclosures
- Document legal analysis for ambiguous cases
10.2 Common Pitfalls That Trigger Audits
- Assuming “no tax owed” means “no FBAR required”
- Ignoring foreign pensions
- Partial reporting of joint accounts
- Missing filings after immigration or emigration
FBAR enforcement is data-driven. International banking transparency agreements have dramatically increased detection.
11. FAQ: US Person for FBAR Purposes
Is FBAR only for US citizens?
No. US residents under green card or Substantial Presence rules must also file.
Do non-US citizens ever need to file FBAR?
Yes, if they meet US residency criteria.
Do I need to file FBAR if I live abroad permanently?
Yes, if you are a US Person and exceed the threshold.
Is FBAR required if my foreign accounts earned no income?
Yes. FBAR is based on account value, not income.
What happens if I fail to file?
Penalties can reach $10,000 per non-willful violation and far more for willful violations.
Can I fix past FBAR mistakes?
Yes. Options include delinquent FBAR procedures and voluntary disclosure pathways.