Green Card Holders
Every year almost half a million people obtain Green Cards. When you become a Green Card holder, you are under the same obligations to file US tax returns as US citizens (ie see www.taxesforexpats.com/expat-tax-advice/why-file.html). We help hundreds of clients who are Green Card holders and continue to live outside the US.
Еven if the USCIS no longer considers a Green Card to be valid (for immigration purposes), the tax-related obligations that come with it will continue to apply - until an official written statement from the USCIS confirms that the Green Card has been revoked or relinquished.
Only then will the tax-related obligations come to an end. Noncompliance with tax obligations may give rise to high penalties - the same as for US citizens.
Frequently Asked Questions:
A U.S. person for tax purpose includes any of the following: (see the IRS website):
- A U.S. Citizen, which is anyone with a U.S. passport,
- A green card holder (see: http://www.irs.gov/Individuals/International-Taxpayers/Alien-Residency—Green-Card-Test), or
- A U.S. resident for tax purposes – most commonly defined as someone who spends more than 183 days in the US under the Substantial Presence Test. A U.S. resident for tax purposes is commonly referred to as a resident alien.
Step 1: Apply for the Social Security number. See http://www.taxesforexpats.com/faq.html#33
Unfortunately - yes.
You are considered a US Permanent Resident until you officially renounce your green card - and hence required to file an annual US tax return. Please see https://www.uscis.gov/i-407 for details on how you have to renounce the GC.
Please report foreign income for the entire year. Separately (on the text entry tab) explain how income was allocated before and after the green card was issued or before and after the day when you moved to the U.S, whichever comes first.
Which filing option is best - filing as U.S. resident for entire year or part year?
- Filing for entire year (especially if file jointly with spouse) enables a lower tax rate and higher deductions
- But - filing for part year (from date of GC receipt onwards) is beneficial if you had a lump sum foreign pension or bonus at the beginning of the year that you can exclude from U.S. income by doing part year filing.
The green card application generally requires 3 years of tax returns from the sponsoring US spouse.
What would it cost to do with you?
The cost of filing 3 years of tax returns with little income is $840 (3 years at $350 minus 20% discount)
In general US citizens and GC holders are subject to US federal income tax taxation, whether or not they actually live in the US. For example this is the position taken by the UN:
However - there are two organizations in the world that provide an exemption to this rule for Green Card holders working outside the US: IMF and the World Bank:
- Your work for an international organization and the international organization agreement creating the international organization provides that alien employees are exempt from U.S. income tax. Two international organizations that have such a provision are the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank).