In one of the IRS’s more generous rules, it allows U.S. expats to treat their non-resident alien (i.e. non-American) spouse as a U.S. person for tax purposes (assuming that a number of conditions are met and a correct application for this particular treatment is properly filed). I define this allowance as being generous due to the fact that the U.S. expat can willingly choose this status for the spouse when it proves to be beneficial for tax purposes.
However, many of people who have chosen to utilize the above tax treatment have found that the election raises a tricky question- if the NRA spouse elects to be treated as a U.S. taxpayer, does that spouse also have an obligation to file an FBAR (114) form declaring his or her non-U.S. financial accounts like every other U.S. citizen?
In short, the answer is no- an NRA spouse that elects to be treated as a U.S. taxpayer does not need to file an FBAR form.
For those of you the want more detail, please enjoy the following technical discussion-
An NRA that elects to be treated as a US taxpayer under 26 CFR 1.6013-6 is only subject to tax rules listed in title 26 of the US code (i.e. the IRC). Since the rules for FBAR filing are in title 31 of the US Code, no FBAR filing requirements exist for an NRA that makes the election. Furthermore, the IRM 22.214.171.124.1 (07-01-2008) states that the FBAR instructions should be used and those instructions clearly state that an FBAR is only required for a US resident or citizen. Consequently, an NRA spouse that elects to be treated as a U.S. taxpayer does not need to file an FBAR.
If you have additional questions or wish to speak with Ari about other tax matters, please feel free to contact him via the options listed on the “Contact Us” page.