Tax Laws for U.S. Green Card Holders

If you have a U.S. Green Card, you are considered a U.S. resident for tax purposes. Accordingly, you are a lawful permanent resident and are subject to U.S. tax, even on worldwide income.

A Green Card Holder Must Pay U.S. Tax on Foreign Income

As a green card holder, you are considered to be a U.S. resident for income tax purposes. This means that you must pay U.S. taxes on income earned abroad from whatever source derived. This is true even if you do not live in the United States. Your international tax responsibilities are not altered by the fact that you have been absent from the United States for an extended period of time. Your obligation to pay U.S. taxes as a green card holder remains until you have surrendered your green card or the green card has been deemed revoked or abandoned by a final judicial or administrative action. Your status as a U.S. resident for income tax purposes will remain the same until you receive an official notice from the U.S. Citizenship and Immigration Services (http://www.uscis.gov/) regarding that issue.

What if I Live in a Country Other than the United States?

If you are a green card holder, yet you live and earn money in another country, you still have an obligation to pay U.S. tax on foreign income. As a U.S. resident, your worldwide income is subject to U.S. taxation. Depending on the country of your residence, you may benefit from an income tax treaty between that country and the U.S. In the case of an income tax treaty, your resident status for income tax purposes is sometimes determined pursuant to “tie breaker rules” that consider the location of your permanent home or the center of your “vital interests.”

However, if there is no income tax treaty between your resident country and the U.S., you may be liable for income taxation in both countries. To prevent double taxation, you generally will be able to get an income tax credit against either your U.S. taxes or the income taxes owed in the other country. http://www.irs.gov/pub/irs-pdf/p4588.pdf.

Do I Have to Pay Taxes if I Surrender My Green Card?

If you surrender your green card during the taxable year, your U.S. residency for tax purposes is deemed to terminate on the last day of the calendar year and you will be liable for U.S. income tax during that year. However, you may be able to convince the IRS that your residency should actually be the date you surrendered the green card if you can establish that your true tax home is a foreign country or you have a closer connection with that country than with the United States. If it is determined that you were a resident alien for a portion of the year, but a nonresident alien as of the end of the year, you will be required to filed a Form 1040NR http://www.irs.gov/uac/Form-1040NR,-U.S.-Nonresident-Alien-Income-Tax-Return , even if you have no U.S. source income. You should also attach a copy of the Form 1040 reflecting your U.S. income for the portion of the year that you are determined to be a U.S. resident.

A Knowledgeable Tax Attorney Can Help Green Card Holders with U.S. International Tax Issues

The Tax Lawyer - William D. Hartsock has been successfully helping clients comply with U.S. International Tax Laws and deal with issues related to worldwide taxation since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858) 481-4844.

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