U.S. Person for Tax Purposes: What Every American Expat Needs to Know

According to the IRS, being classified as a “U.S. person for tax purposes” determines your filing requirements, not necessarily what you’ll owe in taxes. In fact, 62% of American expats owe $0 in U.S. taxes after applying available tax protections.

What is a U.S. person definition? A U.S. person for tax purposes includes U.S. citizens, U.S. residents (green card holders or those meeting the substantial presence test), U.S. partnerships, U.S. corporations, and U.S. estates or trusts. This classification determines your U.S. tax obligations, regardless of your location worldwide.

Many expats miss the key point: U.S. 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 U.S. tax bill entirely.

What Does “U.S. Person for Tax Purposes” Really Mean?

When you ask, “What is a U.S. person?” the answer goes beyond just citizenship. The IRS definition includes several categories of individuals and entities.

For Individuals:

U.S. citizens (regardless of where you live)
U.S. residents, including:
- Green card holders (lawful permanent residents)
- Foreign nationals who meet the substantial presence test

For Entities:

U.S. partnerships
U.S. corporations
Estates and trusts created or organized in the U.S.

Important

The U.S. person definition is significant because U.S. persons are required to 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 U.S. Person?

Are You a U.S. Citizen?

If you’re a U.S. citizen, you’re automatically a U.S. person for tax purposes. This includes:

Natural-born U.S. citizens
Naturalized U.S. citizens
U.S. citizens born abroad to U.S. citizen parents

Your status continues even if you live permanently abroad, hold dual citizenship, or haven’t lived in the U.S. for decades.

Do You Meet the Substantial Presence Test?

Foreign nationals become U.S. persons if they’re green card holders or meet the substantial presence test. This test calculates your U.S. presence over a three-year period.

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 U.S. resident for tax purposes.

Example: Maria, a Spanish consultant, spent:

100 days in the U.S. 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 U.S. person for tax purposes.

Check If You’re a U.S. Person for Tax Purposes

Not sure how the IRS classifies you? Share a few details and we’ll confirm your status and explain exactly what you must file as an expat.

What Are My Tax Obligations as a U.S. Person?

Being a U.S. person for tax purposes means you must:

File annual U.S. 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 U.S. persons living abroad owe little to no U.S. taxes after applying these two main protections.

Foreign Earned Income Exclusion (FEIE)

For the 2025 tax year (filed in 2026), you can exclude up to $130,000 of foreign earned income from U.S. taxation if you meet either:

Physical presence test (330 days outside the U.S. in a 12-month period)
Bona fide residence test (genuine resident of a foreign country)

Example: James works as a software developer in Berlin, earning $85,000 per year. He meets the physical presence test and claims the FEIE on Form 2555. His U.S. tax calculation:

Gross income: $85,000
FEIE exclusion: $85,000
Taxable U.S. income: $0

James owes no U.S. federal income tax.

Foreign Tax Credit (FTC)

This provides a dollar-for-dollar credit for foreign taxes paid on income subject to U.S. tax. This credit often eliminates your entire U.S. tax liability if you live in a high-tax country.

Example: Sophie, who lives in France, earns $100,000. She pays $28,000 in French income tax. Her U.S. tax calculation:

U.S. tax on $100,000: $18,289
Foreign Tax Credit (Form 1116): $18,289
Remaining U.S. tax: $0

Sophie owes no additional U.S. tax because her French taxes exceed her U.S. tax liability.

Take Note: 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 U.S. Person According to FATCA?

Under the Foreign Account Tax Compliance Act (FATCA), the U.S. person definition is slightly broader and includes:

U.S. citizens (including those with dual citizenship)
U.S. residents as defined above
Certain U.S. entities
Any person treated as a U.S. person under U.S. tax law

FATCA requires foreign financial institutions to report information about U.S. persons’ accounts to the IRS. Foreign banks will likely ask for your U.S. taxpayer identification number if you’re classified as a U.S. person. If your foreign assets exceed certain thresholds, you must file Form 8938 with your tax return.

Frequently Asked Questions About U.S. Person Status

What Other U.S. Person Classifications Exist Beyond Citizens and Residents?

Beyond individual U.S. citizens and residents, the IRS recognizes several other U.S. person categories. U.S. partnerships, U.S. corporations, and estates or trusts created under U.S. law all qualify as U.S. persons for tax purposes. This matters because each entity type faces different reporting requirements and tax obligations.

For individuals, the classification extends to anyone born in the U.S. (even if they left as an infant), naturalized citizens, and lawful permanent residents (green card holders). Some expats discover their U.S. person status decades after leaving the country.

Does Dual Citizenship Affect My U.S. Person Status?

Your U.S. citizenship always makes you a U.S. person for tax purposes, regardless of other citizenships you hold. Having a second passport doesn’t exempt you from U.S. tax filing requirements.

Many dual citizens assume their other citizenship somehow overrides their U.S. tax obligations. It doesn’t. If you’re a U.S. citizen and a Canadian citizen, you’re still a U.S. person who must file annual U.S. tax returns. However, tax treaties and credits typically prevent double taxation on the same income.

Can I Lose My U.S. Person Status Without Renouncing Citizenship?

As a U.S. citizen, only a formal renunciation through the U.S. Department of State ends your U.S. person status. Simply living abroad for decades or obtaining another citizenship doesn’t change this.

Green card holders can lose U.S. person status by formally abandoning their permanent resident status or meeting the criteria for expatriation under tax law. The rules are complex, and many people remain U.S. persons longer than they realize.

What’s the Difference Between a U.S. Person and a U.S. Resident for Tax Purposes?

All U.S. persons are required to file U.S. tax returns if they meet the income thresholds, but a “U.S. resident” is a specific subset within the broader definition of a U.S. person. You can be a U.S. person without being a U.S. resident (U.S. citizens living abroad), and you can be a U.S. resident without being a U.S. citizen (green card holders).

The distinction matters for treaty benefits and certain tax elections. For example, a U.S. citizen living in France is a U.S. person but not a U.S. resident for purposes of the U.S.-France tax treaty.

Are There Exceptions to the U.S. Person Definition for People Born Abroad?

Children born abroad to U.S. citizen parents generally acquire U.S. citizenship at birth, making them U.S. citizens from birth. However, specific rules govern citizenship transmission based on the parents’ residency history and the child’s date of birth.

Some individuals born abroad to one U.S. citizen parent may not have acquired citizenship if that parent didn’t meet the physical presence requirements in the U.S. before the child’s birth. These cases require careful analysis of citizenship laws in effect at the time of birth.

Do I Need to Report Foreign Accounts if I’m a U.S. Person?

Yes. All U.S. persons with foreign financial accounts exceeding $10,000 in aggregate at any point during the year must file FBAR (FinCEN Form 114) by April 15, with an automatic extension to October 15.

Additionally, U.S. persons with specified foreign financial assets exceeding certain thresholds must file FATCA Form 8938 with their tax return. These thresholds vary based on your filing status and whether you live in the U.S. or abroad.

Are You Ready to Get Your U.S. Person Tax Obligations Sorted?

Whether you’re a U.S. citizen abroad, a green card holder, or someone who recently discovered they meet the substantial presence test, the most important step is complying with your U.S. tax obligations.

Being a U.S. 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.

Unsure What You Need to File as a U.S. Person?

We’ll map your entire compliance picture, from Form 1040 to FBAR and FATCA, and handle every step so you avoid penalties.

Please note that this information is provided for general guidance only and should not be considered tax advice. Tax laws can be complex and are subject to frequent changes. Please consult with a qualified tax professional for advice specific to your situation.

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