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Green Card Holders Living Abroad Tax Obligation

With respect to the tax code, a US green card holder is treated very similar to a US citizen even if that taxpayer lives abroad. This means you are subjected to US tax on your worldwide income from whatever source derived. Hence, even if you are not a US citizen and does not live in the US, you are required to file a US tax return and disclose your assets (FBAR and FATCA videos) from countries outside the US unless one of the following exceptions apply:

  1. there has been a final administrative or judicial determination that your lawful permanent resident status has been revoked or abandoned;

  2. your gross income from worldwide sources is less than the amounts that require a tax return to be filed; or

  3. your US residence status is affected by an income tax treaty.

Final administrative or judicial determination. Even if you surrendered your green card, this does not mean that you are no longer a permanent resident. Until you received an official notice from the US Citizenship and Immigration Service (USCIS) that there has been a final determination, you are still required to file your annual tax return. A common situation is when the green card has expired or the taxpayer has been living abroad for a long time. Unfortunately, living abroad and having an expired green card will not change your filing requirement, and you must continue to file every year.

Once there has been a final determination, the default date is the last day of the calendar year. However, if you can establish that, for the remainder of the calendar year, your “tax home” (for more information on tax home, click here) is in a foreign country or that you maintain a closer connection to that foreign country, then your termination date will be the date you surrender your green card.

Gross income is less than the amounts that require a tax return to be filed. The 2018 amount requiring a tax return to be filed is income above $1,050 of unearned income or $12,000 of earned income.  For taxpayers making above these amounts, a tax return is required. In most cases, the Foreign Earned Income Exclusion (FEIE) or foreign tax credit can be used to reduce any US tax owed. However, the taxpayer must file a tax return for the exemption and credit to apply.

US residence status is affected by an income tax treaty. First, you must find out if there is a tax treaty between the US and your residence country. If there is no treaty, you will be subjected to both the US and the residence country tax regime. Luckily and if applicable, a foreign tax credit will help to relieve some of the taxes owed.

If there is a tax treaty between your country of residence and the US and you meet the “tie-breaker” rules,” you can make an election to excuse you from the tax filing requirement. To make the election, you must file a US Nonresident Alien Income Tax return (1040NR) in the year of the election and attach Form 8833 (Treaty-based return position disclosure). Treaty analysis should be handled by an international tax professional.

Failure to file an income tax return and disclose assets from countries outside the US will result to penalties and interest along with immigration issue when you apply for your citizenship. Remember you must show that you are in good tax status with your taxes.

Special rules for long-term green card holders of the US. For those individuals who are US lawful permanent residents for at least 8 of the prior 15 taxable years prior to the termination of permanent resident status, the IRS require that a completed Form 8854 be submitted. The taxpayers must also notify the Department of Homeland Security of their residency termination. Form 8854 places penalty on those renouncing their residency status in what is known as expatriation.


These materials have been prepared by Le Tax Law, PLLC for informational purposes only. They are not intended to be and should not be considered legal advice.

Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel. Prior legal successes do not ensure future results.

The information contained in this website is provided only as general information which may or may not reflect the most current legal developments. This information is not intended to constitute legal advice or to substitute for obtaining legal advice from competent, independent, legal counsel in the relevant jurisdiction.

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