US Person for Tax Purposes: What Every American Expat Needs to Know
According to the IRS, being classified as a “US person for tax purposes” determines your filing requirements, not necessarily what you’ll owe in taxes. Most American expats owe little to nothing after applying available tax protections.
What is a US person definition? A US person for tax purposes includes US citizens, US residents (green card holders or those meeting the substantial presence test), US partnerships, US corporations, and US estates or trusts. This classification determines your US tax obligations regardless of where you live worldwide.
Many expats miss the key point: US person status is about filing obligations, not automatic tax liability. Most Americans abroad use the Foreign Earned Income Exclusion or Foreign Tax Credit to eliminate their US tax bill entirely.
What Does “US Person for Tax Purposes” Really Mean?
When people ask, “What is a US person? ” The answer goes beyond just citizenship. The IRS definition includes several categories of individuals and entities.
For Individuals:
- US citizens (regardless of where they live)
- US residents, including:
- Green card holders (lawful permanent residents)
- Foreign nationals who meet the substantial presence test
For Entities:
- US partnerships
- US corporations
- Estates and trusts created or organized in the US
The ‘US person’ definition matters because US persons must report their worldwide income to the IRS. However, reporting income doesn’t mean you’ll pay taxes on it.
How Do I Know If I’m Considered a US Person?
Are You a US Citizen?
If you’re a US citizen, you’re automatically a US person for tax purposes. This includes:
- Natural-born US citizens
- Naturalized US citizens
- US citizens born abroad to US citizen parents
Your status continues even if you live permanently abroad, hold dual citizenship, or haven’t lived in the US for decades.
Do You Meet the Substantial Presence Test?
Foreign nationals become US persons if they’re green card holders or meet the substantial presence test. This test calculates your US presence over three years.
2025 Tax Year Calculation:
- All days present in 2025, plus
- 1/3 of the days present in 2024, plus
- 1/6 of the days present in 2023
If the total equals 183 days or more, AND you were present at least 31 days in 2025, you’re considered a US resident for tax purposes.
Example: Maria, a Spanish consultant, spent:
- 100 days in the US in 2025
- 120 days in 2024 (120 ÷ 3 = 40)
- 90 days in 2023 (90 ÷ 6 = 15)
- Total: 100 + 40 + 15 = 155 days
Maria doesn’t meet the substantial presence test and isn’t a US person for tax purposes.
What Are My Tax Obligations as a US Person?
Being a US person for tax purposes means you must:
- File annual US tax returns if your income exceeds the minimum thresholds
- Report worldwide income to the IRS
- File additional forms like FBAR if you have foreign accounts exceeding $10,000
- Meet FATCA reporting requirements for certain foreign assets
But here’s the good news: Most US persons living abroad owe little to no US taxes after applying these two main protections:
Foreign Earned Income Exclusion (FEIE)
For 2025 (filed in 2026), you can exclude up to $130,000 of foreign earned income from US taxation if you meet either:
- Physical presence test (330 days outside the US in a 12-month period)
- Bona fide residence test (genuine resident of a foreign country)
Who doesn’t love a tax break? Download our easy-to-use excel calculator to get an estimate of how the foreign earned income exclusion can save you money.
Foreign Tax Credit (FTC)
This provides a dollar-for-dollar credit for foreign taxes paid on income subject to US tax. This credit often eliminates your entire US tax liability if you live in a high-tax country.
Most expats in low-tax countries benefit from FEIE, while those in high-tax countries often fare better with the Foreign Tax Credit.
Who Is a US Person According to FATCA?
Under the Foreign Account Tax Compliance Act (FATCA), the U.S. person definition is slightly broader and includes:
- US citizens (including those with dual citizenship)
- US residents as defined above
- Certain US entities
- Any person treated as a US person under US tax law
FATCA requires foreign financial institutions to report information about US persons’ accounts to the IRS. Foreign banks will likely ask for your US taxpayer identification number if you’re classified as a US person.
Stop guessing. Download the expert guide now.
What If I’m Behind on Filing as a US Person?
If you’ve been living abroad as a US person but haven’t filed US tax returns, don’t panic. The IRS offers streamlined procedures specifically for expats. These programs allow you to catch up with minimal penalties if you can certify your non-compliance wasn’t willful.
Many clients come to us years behind on filing obligations and are worried about penalties. The reality is that most expats qualify for penalty relief and end up owing little to no taxes once proper protections are applied.
Are You Ready to Get Your US Person Tax Obligations Sorted?
Whether you’re a US citizen abroad, a green cardholder, or someone who recently discovered they meet the substantial presence test, the most important step is complying with your US tax obligations.
Remember: being a US person for tax purposes isn’t about how much you’ll owe – it’s about filing correctly and applying the proper protections to minimize your liability.
No matter how late, messy, or complex your return may be, we can help. You’ll have peace of mind, knowing that your taxes were done right.
If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.
Please note that this information is provided for general guidance only and should not be considered tax advice. Tax laws can be complex and change frequently. Please consult with a qualified tax professional for advice specific to your situation.
