What Every US Green Card Holder (Past and Present) Needs to Know About Their US Tax Obligation

If you attended one of our renunciation webinars or read our many blogs, you’ll notice we often group ‘US citizens living abroad’ and ‘US green card holders’ in the same category when discussing US tax obligations. That’s because, with certain exceptions, US green card holders are taxed the same way as US citizens living abroad by the IRS.

As of 2019, an estimated 13.9 million US green card holders were living across the globe. Having a green card (or a Permanent Resident Card) allows non-US citizens to live and work in the United States and begin the process of becoming naturalized citizens. 

The typical US green card holder we help properly terminate their status normally falls into the following categories:

1) The green card holder who just moved back to their home country after living/working in the US and now wants to terminate their status;

2) The green card holder who moved back home, let the card expire, and thought it disappeared as an issue forever (and often forgets they’re still subject to US tax until properly terminated);

3) The green card holder who received the card and never worked or lived in the US; and

4) The green card holder who came back to their home country, surrendered their green card at the border and hasn’t thought about it since (and the card may not be terminated properly for US tax purposes).

Regardless of which category you fall in, if you are a current or previous green card holder, and it was not properly terminated, you can be subject to US tax. Just because the green card expired, was taken at the border, or was thrown in a drawer and forgotten about for years (or even decades), doesn’t mean your US tax obligations disappear surrounding your green card status. 

One of the most common questions that comes up in dealing with clients holding green cards is “I had to surrender my US green card at the border for immigration purposes (or it was taken), doesn’t that mean the problem is solved?” Most often than not, the answer is no. Just because a green card is surrendered or taken for immigration purposes at the border, doesn’t mean it’s been terminated for tax purposes. The best way to think about your green card is to think of it like your passport to the country you live in. Even though the passport is expired or gets taken at the border, doesn’t mean you’re no longer a citizen. That same concept applies to green card holders. 

US green card holders can be responsible for filing US taxes for every year they hold their status. If you want to stop the annual reporting and filing obligations, and not be subject to US tax, you need to properly terminate your green card for tax purposes. The key word in that phrase is “properly”. If a green card is not terminated correctly, one can be subject to tens of thousands of dollars in failure-to-file penalties, as well as an exit tax and covered expatriate status. Our firm makes sure that these negative pitfalls are avoided in helping more green card holders properly terminate than just about any firm in the world.  

If you would like more information on properly renouncing your US green card (or US citizenship), we strongly recommend you attend one of our webinars on the topic. There are live sessions tailored to US citizens living in all corners of the world – Canada, the Caribbean, Australia, New Zealand, Asia, the UK, Europe, South and Central America, the Middle East, and more. Recordings of the sessions can be made available as well if one of the upcoming live webinars does not fit your schedule. 

Our team of US lawyers represents between 600 and 900 US citizens and green card holders who decide to renounce their US status correctly every year on six continents – more than any other firm in the world. We’ve helped thousands of US expats and green card holders successfully terminate their citizenship status – but it MUST be done the right way. The US has many pitfalls and landmines (exit tax, inheritance tax, disbarment from the US for life, loss of benefits, etc.) that one must successfully navigate the right way.

We know that you will have many questions about how these changes will affect you and your family. Our attendees are invited to submit questions ahead of time that we strive to answer during our session. Sign up today via the below link. 

Click here to view our upcoming Renunciation Webinars and register

If you would like to get the process started on addressing your US issues immediately (with legal fees in mind), please schedule a one-hour call or video conference consultation with me by:

• Signing up on our virtual calendar or
• Contacting Jeanine Wilk at jwilk@moodystax.com or 403-693-5124