Green card holders who live and work in the US are legally required to pay taxes like any other citizen. However, they may find it confusing to navigate the complex tax system independently. The green card tax requirements rules can differ from those for temporary visitors or citizens living abroad. Green card holders who decide to move overseas often believe they are no longer required to file a US expatriate tax return. However, this is not always the case. According to the Internal Revenue Service (IRS), green card holders must file a tax return annually regardless of where they reside. It means that even if you have permanently moved overseas, you must still report any income earned in the United States. In addition, green card holders may be required to pay taxes on any foreign income earned while residing abroad. The rules regarding foreign income can be complex and may vary depending on your circumstances.

Importance of seeking professional tax advice

To ensure compliance with all applicable tax laws and regulations, it’s essential for green card holders moving overseas to seek professional tax advice from an experienced accountant or tax attorney. With proper guidance and planning, expatriate taxes can be managed effectively, allowing individuals to make informed decisions about their financial future. Failure to comply with these regulations could result in severe consequences, including fines and penalties.

Internal Revenue Service

The Internal Revenue Service (IRS) views green card holders as residents for tax purposes, requiring them to report all income earned worldwide on their tax returns. In addition to reporting all income earned, green card holders may be subject to additional reporting requirements depending on their financial situation. For example, those who have foreign bank accounts with a total value exceeding $10,000 at any point during the year must file an FBAR (Foreign Bank Account Report) annually with the Treasury Department. Green card holders must stay informed about these requirements and seek professional help.

Substantial Presence Test

One of the essential things to remember is the substantial presence test, which determines whether a green cardholder spent enough time in the US to be taxed as a resident. If you meet this test, you must report your income from inside and outside the US on your tax return.

Tax treaties

Green card holders should know about tax treaties between their home country and the United States. These treaties can impact how much taxes you owe or if certain types of income are exempt from taxation. It’s essential to understand these treaties before filing your tax return.

Finally, green card holders must avoid any mistakes or omissions when reporting their income or deductions. Failing to do so can lead to penalties and legal issues. Seeking professional help from an accountant or tax advisor can ensure that your taxes are filed correctly and on time, minimizing any potential problems with the IRS.

Green card tax requirements and Expats

1. The IRS regards you as a US taxpayer invariant if your green card has expired.
2. If you are a green card holder for a longer period, you will become a covered expatriate if you give up your green card or the US government takes it away from you.
3. Being a covered expatriate implies meeting the same expatriate tax system as somebody who relinquishes US citizenship
4. Meticulous planning and implementation can assist you avoid potential covered expatriation designation.
5. All green card holders or permanent residents are regarded as US tax residents. It means you will be subject to taxation on worldwide income, including income earned outside the United States. Also, a green card holder in his home country is not exempted from US expat tax filing needs.
6. Foreign citizens with green cards must file a US tax form 1040 annually.
7. Like US citizens, green card holders can claim exemptions, credits, and deductions.
8. The due date for filing a green card tax return is April 15. The permanent residents can avail of an automatic extension till June 15 if they live outside the United States. Also, if they file form 4868 before June 15, they are eligible for an additional extension period till October 15.
9. Green card holders can evade double taxation problems by using specific conditions of the Internal Revenue Code section 911.

• Permanent residents can claim foreign tax credits on green card tax returns for the taxes paid abroad.
• Green card holders can exclude a certain amount on US expat tax returns if they fulfill bonafide or physical presence tests.
• Foreign residents with a green card can exclude a few foreign housing expenses such as utilities, rent, etc.

10. Green card holders with foreign financial accounts may be asked to file FBAR and FATCA, introduced in 2011.
11. Foreign residents with green cards may encounter intense impacts if they fail to file a US expat tax return. Such a failure can jeopardize the chance of getting US citizenship, and a green card may be withdrawn.

Where can green card holders get help with Tax filing?

Foreign nationals who are green card holders have unique tax filing requirements that can be difficult to navigate independently. These individuals are considered US residents for tax purposes and non-residents for immigration purposes, complicating the tax filing process. Therefore, it is highly recommended that they seek the assistance of an expatriate tax professional with experience in providing international tax services. An experienced expatriate tax professional such as “KK Associates” understands the complex US tax code concerning green card holders and can guide how to navigate these issues. We can assist with preparing accurate and timely returns to avoid penalties or fines from the IRS. In addition to guiding current-year taxes, we can help foreign nationals with past-due taxes or other issues related to their green card status.

Overall, seeking assistance from us, “KK Associates,” is a wise investment for any foreign national looking to ensure compliance with US tax laws while maintaining their legal residency status. Call us now +91 20 25511024 or +91 9823149491.