Green Card Holders and U.S. Taxes: What You Need to Know
Expert Guidance from Expatriate Tax Returns
If you’re a U.S. green card holder, you’re considered a U.S. tax resident — which means you must report your worldwide income to the IRS every year, no matter where you live or earn it.
This surprises many green card holders, especially those working overseas or managing foreign investments while living in the U.S. Whether you’re temporarily abroad or receiving income from multiple countries, understanding your obligations is essential to stay compliant and protect your immigration status.
Who This Guide Is For
You’ll benefit from this guide if:
- You’re a green card holder living or working abroad temporarily.
- You live in the U.S. but earn income from a foreign job, business, or investment.
- You want to avoid double taxation on income already taxed overseas.
Why a Green Card Means Worldwide Taxation
Once you receive your green card, the IRS treats you the same as a U.S. citizen for tax purposes. That means you must:
- Report all U.S. and foreign income.
- File an annual U.S. tax return (Form 1040).
- Disclose foreign bank accounts and assets if you meet the filing thresholds.
- Pay taxes on global income unless exclusions or credits apply.
Even if your green card expires or you leave the U.S., you’re still considered a tax resident until you formally surrender your green card (Form I-407).
IRS Enforcement and Immigration Risks in 2025
In 2025, compliance matters more than ever. The U.S. government now:
- Cross-references IRS and USCIS records.
- Reviews tax history during green card renewals and naturalization.
- Can deny applications or initiate removal for tax non-compliance.
Bottom line: Not filing or filing incorrectly could jeopardize your immigration status.
What Income Green Card Holders Must Report
You must report all income earned after receiving your green card, including:
- Wages, salary, or self-employment income (U.S. or foreign)
- Foreign business income
- Investment gains and dividends
- Rental income from property abroad
- Foreign pensions or social security benefits
- Cryptocurrency gains
Not taxable:
- Income earned before becoming a green card holder
- Income earned after officially surrendering your green card
Common Scenarios for Green Card Holders
1. Living Abroad Temporarily
Even if you’re outside the U.S., you still must file Form 1040 annually.
You may qualify for:
- Foreign Earned Income Exclusion (FEIE) – up to $130,000 for 2025
- Foreign Tax Credit (FTC) – dollar-for-dollar credit for foreign taxes paid
You must also report:
- Foreign bank accounts (FBAR)
- Foreign assets (Form 8938)
- Business or investment income abroad
👉 Never file Form 1040NR — it signals to the IRS that you’ve abandoned your U.S. residency.
2. Living in the U.S. with Foreign Income
If you live in the U.S. and earn income overseas, you must still report it all.
Typical examples include:
- Rental income from property abroad
- Dividends or interest from foreign investments
- Wages or freelance payments from foreign employers
- Pensions or inheritances from another country
The Foreign Tax Credit can help reduce or eliminate double taxation.
Tools to Prevent Double Taxation
Foreign Tax Credit (FTC)
- Ideal for high-tax countries like Canada, Germany, or the U.K.
- Credit for foreign income taxes paid (Form 1116).
Example:
Maria, a green card holder in Germany, pays $40,000 in German taxes on $100,000 income. She can claim that amount as a credit against her U.S. taxes.
Foreign Earned Income Exclusion (FEIE)
- Exclude up to $130,000 of foreign earned income for 2025 (Form 2555).
- Must meet the Physical Presence or Bona Fide Residence Test.
- Does not apply to passive income (investments or rentals).
Example:
Ahmad earns $150,000 in the UAE (no local tax). He can exclude $130,000 and pay U.S. tax on just $20,000.
Key IRS Forms and Deadlines
| Requirement | Form | Deadline | Who It’s For |
|---|---|---|---|
| U.S. Tax Return | Form 1040 | April 15 (June 15 for expats) | All green card holders |
| Foreign Bank Accounts | FBAR (FinCEN 114) | April 15 (Oct 15 extension) | $10,000+ in foreign accounts |
| Foreign Assets | Form 8938 | Same as tax return | $200K+ for foreign residents |
| Claiming FTC | Form 1116 | With return | Paid foreign taxes |
| Claiming FEIE | Form 2555 | With return | Excluding foreign income |
State Tax Considerations
Certain states—especially California and New York—may still treat you as a resident even if you move abroad.
Watch for:
- Maintaining a U.S. home or address
- Keeping a driver’s license or voter registration
- Frequent visits back to the state
Green Card Compliance Tips
Do:
- File your U.S. taxes every year — even if you owe nothing.
- Disclose all foreign income and accounts properly.
- Maintain U.S. financial ties if living abroad temporarily.
- Work with a trusted expat tax professional.
Avoid:
- Filing as a non-resident (Form 1040NR).
- Skipping FBAR or FATCA reports
- Ignoring state tax obligations.
- Letting your green card lapse without filing Form I-407.
Planning to Surrender Your Green Card?
If you plan to give up your green card, you’ll still need to:
- File a final tax return.
- Possibly pay an exit tax (if you’re a “covered expatriate”).
- Understand future U.S. tax treatment for any ongoing income (like rental property).
Common Mistakes to Avoid
- Assuming foreign income isn’t taxable.
- Skipping U.S. tax filings while abroad.
- Failing to report foreign bank accounts.
- Filing the wrong form (1040NR).
- Claiming treaty benefits without documentation.
Stay Compliant with Expatriate Tax Returns
Whether you’re abroad temporarily or earning income from multiple countries, Expatriate Tax Returns is here to simplify your compliance process.
Our experienced CPAs and IRS Enrolled Agents help green card holders:
- File all required forms accurately (1040, FBAR, Form 8938)
- Apply the right credits and exclusions (FEIE, FTC)
- Reduce or eliminate double taxation
- Stay compliant and protect your immigration status
We specialize in helping expats and green card holders file with confidence, accuracy, and peace of mind.
