1. Tax Obligation for Green Card holders
Even if you are not a U.S. citizen, you may be required to pay taxes in the United States. Whether or not you must file
a U.S. tax return depends upon whether the U.S. government considers you a "tax resident." A green card holder is considered
to be a resident of the U.S. for U.S. income tax purposes and is therefore subject to U.S. taxes on worldwide income. If there
is no income tax treaty between your country of residence and the U.S., you must pay taxes to both countries. You generally
will get a tax credit against either your U.S. taxes or your foreign income taxes, depending on your particular circumstances,
so you will not be subject to double taxation.
Failure to follow U.S. tax laws will hurt your ability to qualify for U.S. citizenship. It may also be considered a crime
-- and if you are found guilty, your green card can be revoked and you may be deported.
If the country where you are living has an income tax treaty with the U.S., the treaty may contain so-called "tie-breaker
rules" to determine which country will be treated as the country of your residence for income tax purposes. Usually, the location
of the individual's permanent home or the center of the individual's vital interests determines resident status. If you are
a resident of the treaty country under the tie-breaker rule and you elect to apply the treaty, you will be considered to be
a resident of the treaty country for U.S. income tax purposes and will not be required to file a Form 1040. To make this election,
you must file a U.S. Nonresident Alien Income Tax Return (Form 1040NR) in the year of the election and attach a copy of Form
8833 (Treaty-Based Return Position Disclosure).
2. Prior year responsibilities
Your tax responsibilities as a green card holder do not change if you are absent from the U.S. for any period of time.
If you have not filed a U.S. income tax return for one or more years you should try to get up to date, starting with the last
few years. If any income tax is due for any of those years it is a more urgent matter and you should file returns as soon
as you can.
3. Tax withheld in the U.S.
When an entity in the U.S. makes a non-wage payment (like social security or pension payments) to a nonresident alien,
it is required to withhold 30% of the payment and forward it to the IRS. When an entity in the U.S. sends a payment to a green
card holder who lives outside the U.S., it generally should not withhold the 30% tax. If this tax is withheld in error because
you have a foreign address, you should notify the payer of the income with a Form W-9 to stop the withholding and you can
claim a refund of the tax withheld in error.
4. Surrendering your Green Card
If you've surrendered your green card to a U.S. official, this doesn't necessarily mean that your status as a lawful permanent
resident has changed. Your status will not change unless and until you get an official notice from the U.S. Citizenship and
Immigration Service (USCIS) that there has been a final administrative or judicial determination that your green card has
been revoked or abandoned. You can contact the USCIS to check the status of your card.
Generally, if you surrender your green card during the taxable year, your tax status as a resident alien will terminate
on the last day of that calendar year. However, if you can establish that, for the remainder of the calendar year, your tax
home is in a foreign country or you maintain a closer connection to that foreign country than to the United States, your residency
termination date will be the date you surrender your green card. If you are a resident of the United States because you meet
both the substantial presence test for the taxable year and have a green card during the taxable year, your residency termination
date will be the later of the date you surrender your green card or the last day you are physically present in the United
States, provided you can establish one of the exceptions above.
If you are a long-term resident of the United States, defined as an individual who is a U.S. lawful permanent resident
in at least 8 of the prior 15 taxable years prior to the termination of permanent resident status, there are special rules
to comply with. Your residency termination date will not occur until you file a completed Form 8854 with the IRS and notify
the Department of Homeland Security of your termination of residency, notwithstanding that for the remainder of the taxable
year your tax home is in a foreign country or you have a closer connection to a foreign country. Until you file Form 8854
with the IRS and notify the Department of Homeland Security of your termination of residency, your termination of your permanent
resident status for immigration purposes will not relieve you of your obligation to file U.S. tax returns and report your
worldwide income as a resident of the United States. For purposes of U.S. tax rules, the date of your termination of residency
will be the later of the date you notify the Department of Homeland Security or the date Form 8854 is filed with the IRS in
accordance with the instructions for the form.
You will be considered to have given notice of a termination of residency to the Secretary of Homeland Security as of the
date that you complete Form I-407 (Abandonment of Lawful Permanent Resident Status) before a diplomatic or consular officer
of the United States or at a Port of Entry of the United States before a U.S. immigration official.
You must file a Form 8854 for each of the 10 tax years after the date of your abandonment of your long-term resident status
(a) your average annual net income tax liability for the 5 years ending before the date of your termination of
residency is more than a set amount ($124,000 for 2004; $127,000 for 2005; $131,000 for 2006; $136,000 for 2007; $139,000
for 2008; $147,000 for 2009; 2010 & 2011 unchanged),
(b) your net worth is $2 million or more on the date of your
termination of residency, or (c) you fail to certify on Form 8854 that you have complied with all of your U.S. federal tax
obligations for the 5 years preceding the date of your termination of residency. Failure to file a required Form 8854 in any
of the 10 tax years after the date of your termination of residency may result in a $10,000 penalty for each year that the
form is required but not filed.