Nonresident FBAR Election
Nonresident FBAR Elections for 6013(g) & 7701(b): While US persons have an FBAR filing requirement, nonresident aliens are not required to file the FBAR. When a nonresident make an IRS election to be treated as a resident alien in order to file joint tax returns with their spouse, they make a 6013(g) election. Under 7701(b), a nonresident may make an election to be treated as a US person for tax purposes. If these elections are made, does that mean the same person is also a U.S. person for FBAR (FinCEN Form 114) filing?
The answer depends on the election.
Let’s review the basics of FBAR Filing & Nonresident Elections
Federal Register (Vol. 76, No. 37) & FBAR Filing Nonresident Elections
In the Federal Register Volume 76, Number 37, there were two issues: 7701(b) and 6013(g) or (h):
- “Commenters also raised questions with respect to the term ‘‘resident’’ in the definition of United States person. These commenters sought clarification on the treatment of individuals who make certain elections under section 7701(b) of the Internal Revenue Code.
- FinCEN believes that individuals who elect to be treated as residents for tax purposes under section 7701(b) should file FBARs only with respect to foreign accounts held during the period covered by the election.
- A legal permanent resident who elects under a tax treaty to be treated as a non-resident for tax purposes must still file the FBAR.
- Commenters also sought clarification about the interaction of elections under section 6013(g) and (h) of the Internal Revenue Code and the definition of resident.
- FinCEN wishes to clarify that the determination of whether an individual is a United States resident should be made without regard to elections under section 6013(g) or 6013(h) of the Internal Revenue Code.”
7701 (b) Election
7701 refers to Definitions, and 7701(g) refers to the definition of resident alien and nonresident alien — and how to elect to be treated as a resident alien.
If a person elects to be treated as U.S. person for tax purposes with a 7701(b) election, FinCEN will require the person to file an FBAR during the portion of the year in which the election results in the person being considered a U.S. resident.
6013(g) or 6013(h)
6013(g) is different and more limited.
In general, 6013 refers to joint tax return filings.
With IRC 6013(g) and 6013(h), a non-resident seeks to be treated as a resident for limited purpose of filing a joint tax returns with their U.S. person spouse, and/or finishes the year as resident if they were a nonresident at the start of the year.
If a nonresident is only a resident due to a 6013(g) or 6013(h) election, that in and of itself does not trigger an FBAR filing requirement for the individual.
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