Warning to Green Card Holders/Permanent Residents - top US tax questions answered

Once you possess a Green Card, you are now taxed on your worldwide income just like any US citizen would be. Additionally, other reporting requirements may exist. For instance if you have overseas bank accounts in excess of $10,000 you likely have an FBAR or what is also know as a FinCEN Form 114 requirement or you could face up to a 50% penalty on account value. Additionally, there exists a litany of foreign reporting forms, like Form 8938, Form 5471 for example that Green Card holders have an obligation to file at a rate much higher than the public at large. Failure to file the forms starts a $10,000 per year and can get as high as $50,000 per year. Again, these are risks that can all be managed. They just take some thought and effort.

What is the income tax rate for US Green Card holders?

The income tax scheme for US Green Card holders is the same as it is for an American citizens. Taxation is exactly the same. There are no increased or decreased tax rates for Green Card holders. But as we show, their issues tend to be more complicated and the income tax tends to be more onerous because of the types of overseas and foreign investments Green Card holders often possess.

What are the tax filing requirements for US Green Card holders?

US Green Card holders have the same filing requirements as US citizens. Green Card holders overseas, like US citizens abroad, have an extended time to file taxes, usually June 15th which can be extended to October 15th, and then there is a permissive extension until December 15th.

What is a US Green Card holder responsible for when filing?

For all tax filings, taxpayers are ultimately responsible for everything they sign even if they can’t understand what they are signing.

Additionally, even if they could fully understand English, that is slight guarantee that they know what they are signing as the IRS tax code is so expansive it is unknowable any one person.

Are there any tax benefits to being a US Green Card holder?

Only if you think that being taxed as a US citizen is a benefit.

Can you deduct the cost of your obtaining your Green Card on your tax return?
Some may advise against deducting the legal fees relating to the acquisition of your Green Card, but it is not an entirely unreasonable position.

What are the tax consequences of allowing a US Green Card to expire?

The Green Card is evidence of your Permanent Residence status, but it is not the thing that actually grants Permanent Residence status.  Just because your Green Card expired does not mean you are a no longer subject to US taxation. Yes, this is true even if you are overseas and not eligible for re-entry. It is possible for the IRS to tax you even though the federal government won’t let you back into the United States

Your obligation to file and pay U.S. taxes as a long term green card holder persists until there is a judicial or administrative order, or alternatively, until you file Form I-407. A lapsed green card on its own does not terminate your IRS tax obligations.

What are the tax consequences when surrendering a US Green Card?

Have you had a Green Card for 8 or fewer years of the last 15? If so, then great. You can surrender a Green Card without triggering any exit or departure tax. If however you have been in the US for more than 8 of the last 15 years, and your assets exceed $2 million you may want to engage with our firm to legally lower this exit tax.

What is the departure, expatriation, or exit tax for US Green Card holders?

For those who have been in the US long enough and have the assets to trigger an exit tax, IRS Form 8854 is used.

If I leave the United States without surrendering my Green Card, and without paying or filing the exit tax return, what can the IRS really do to me?

Enforcing the US tax code against people who are not in the US and do not have property in the US or any reason to return to the US is incredibly difficult, but not impossible. Some countries have joint agreements to cooperate with the IRS.

Many people have gone this route, and truth be told, have gotten away with it. The problem is if another opportunity arises that makes US presence necessary. For instance, many ex-Green Card Holders will return to the US on a investor visa if their children go to school in the US or start a family within a US.  Leaving a loose end like an improper exit tax, or none at all, could very much complicate or completely frustrate a return to the United States.

If I try to enter the US with a green card or a passport from another country, will I have a problem if I am in tax non-compliance?

You very well could have a problem.

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[roythousand]

Being a permanent resident of the U.S. is like voluntarily going into a tax trap!

[keyquestions]

I like the way you made this video. Succinct, easy to follow and laid out well enough for anyone to understand, unlike the endless ramblings that are so common in what seems like 99.999% of YT videos out here. Thank you for being a professional through and through.

[rasheenwarmington]

I was with him up until he said you have to pay taxes even if your green card expires and you dont live in the country.

[terrencewilliams]

do you happen to know how often someone who files 8854 is "selected" for review/audit? thanks

[brain]

Paying taxes to US IRS from income you had abroad and paid taxes abroad already? No thank you!

[nickwestwood]

If you have a Green card and are from England are you taxed twice? on your income assets?

[amaramethbey]

What happens to the U.S. citizens if the corporation falls?

[visalakshikrishnan]

I have 2 questions.
After how many days of becoming permanent resident one has to file the tax. In the same year or next year?
What is the worldwide taxable income or investment or bank balance above which one has to file us tax?
What if we are filing tax in our home country?

[haych]

I'm doing my research about US tax laws prior to the possibility of accepting a green card. What are the obligations of a 'US person' who holds superannuation accounts in Australia? Reading a few other websites about the topic and it sounds complicated.

[Ryoma_lawang]

Why compare with citizen’s tax return?

[Noone-vnbl]

Is there any initiative to remove these ridiculous limitations? US immigration laws and taxes are the worst yet nobody really know about it.

[krissifaith]

What about hsa account? If you invest into it and then leave for home country?

[destinybeckwithu.s.a.]

I am not working here in the US no bank account do still pay taxes?

[Makapida]

Do you have to pay taxes as a green card holder but not living (and not having moved yet to the US) in the US, and already paying income taxes in the residence country?

[mrmrblueo]

if i arrived in the us on green card in dec 2020 - do i need to file a tax form if only spent one day in the usa for that year - no income in us - but worked aboard during that year

[hajahwashington]

Can a green card holder get his or her retirement at 65

[sweetpea]

He's just disseminating information so green card holders are more aware of certain risks involved with having a green card.

[cocobass]

This is why I have no taste to remain in America - a citizen or green card holder is a financial asset to the government FIRST, and then a human second. It's all about the money 🤬

[indianfoolDC]

Hi I had a question. I have been following you for a while. I wanted to ask a question about Green Card Holder? Can you Apply for foreign tax credit as a green card holder. Will this be a red flag when you are applying to get your citizenship??

[jasonschultz]

Thanks for the great video. I have so many questions now regarding my situation. I am a US citizen, my wife is not. She will get her green card soon and then we will move to the states. She works online for a non-US company and gets paid in her non-US account. Will she be able to use form 2555 while living in the states but being paid abroad? She has previous investments, bank savings, and two properties as well. Will she be held liable for any previous incomes, profits, properties, etc?