Green Card Holder Taxation

Am I a resident alien or nonresident alien for income tax purposes?

You are a resident alien for federal tax purposes if you meet either the Green Card Test or the Substantial Presence Test. If you fail to meet either test, you may be a nonresident alien or a dual status alien. Nonresident aliens may still have to file a US tax return and be subject to US income tax on their US sourced income.

I am a green card holder. How do I file taxes in the US?

If you are a resident alien (green card holder), the guidelines for filing your income, estate, and gift tax returns and paying estimated tax are generally the same as if you were a US citizen. In addition, as a resident alien, you are generally taxed the same ways as a United States citizen. What important to note is that your worldwide income is subject to U.S. income tax, regardless of where you reside. This means you have to report not only all income earned in the US but also earned in your home country or any other country.

Fortunately, resident aliens can generally use the sames filing statuses, exemptions, deductions and credits that are available to US citizens.

US Expat Tax Help specializes in assisting expatriates from all over the world who are required to file a US income tax return with all their US and state income tax filing obligations. Tax rules are complicated and difficult to undertstand even for US citizens, so please contact us for help with your tax preparation and planning.

Green Card Test

You meet the green card test if you are a “Lawful Permanent Resident” of the United States at any time during the calendar year. You are considered a Lawful Permanent Resident if you have been granted the privilege of residing permanently in the US. Normally, you will have been issued a green card (alien registration form, Form I-551).

You will remain a US resident under the green card test and will continue to have a US filing obligation unless:

  • You voluntarily renounce and abandon this status in writing to the USCIS, or
  • Your immigrant status is administratively terminated by the USCIS, or 
  • Your immigrant status is judicially terminated by a U.S. federal court

What if I am a green card holder only for part of the year?

If you receive your green card during the year and do not meet the substantial presence test, the date on which your residency begins is the first day you are in the U.S. as a Lawful Permanent Resident. You can choose to be treated as resident alien for the whole calendar year, but contact an international tax expert to determine if this is the best solution for you.

Substantial Presence Test

You meet the substantial presence test and are considered a US resident for tax purposes if you are physical present in the US on at least:

  1. 31 days during the current year, and
  2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
  • All the days you were present in the current year, and
  • 1/3 of the days you were present in the first year before the current year, and
  • 1/6 of the days you were present in the second year before the current year.

Which days count as being physically present in the United States?

Each day, even if only for part of the day, for which you are physically present in the country, you are considered present in the US. There are exceptions to this rule. They include:

  • Days you commute to work in the United States from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico.
  • Days you are in the United States for less than 24 hours, when you are in transit between two places outside the United States.
  • Days you are in the United States as a crew member of a foreign vessel.
  • Days you are unable to leave the United States because of a medical condition that develops while you are in the United States.
  • Days you are an exempt individual.

Who is considered an exempt individual?

An exempt individual does not mean that you are exempt from US tax but you are exempt from counting those days for the physical presence test. The following individuals are exempt from counting days:

  • An individual temporarily present in the United States as a foreign government-related individual
  • A teacher or trainee temporarily present in the United States under a "J " or "Q " visa, who substantially complies with the requirements of the visa
  • A student temporarily present in the United States under an "F, " "J, " "M, " or "Q " visa, who substantially complies with the requirements of the visa
  • A professional athlete temporarily in the United States to compete in a charitable sports event