Green Card US Tax Residency Relationship | International Tax Lawyers Miami
The definition of a US tax resident consists of various categories. Among them are US Permanent Residents or “green card” holders. This article explores Green Card US tax residency relationship.
General Rule: Green Card Holders are US Tax Residents
A lawful permanent resident of the United States is a US tax resident. IRC §7701(b)(1)(A)(i). IRC §7701(b)(6) defines the lawful permanent resident as: (1) the individual who has been “lawfully accorded the privilege of residing permanently in the United States as an immigrant in according with the immigrations laws” at any time during the calendar year, and (2) “such status has not been revoked (and has not been administratively or judicially determined to have been abandoned).”
Green Card US Tax Residency: Physical Presence in the United States Does Not Matter
As you can see from the definition above, the green card test does not depend on where the US permanent resident actually resides. In other words, even if a green card holder spent very little time (just enough to maintain his green card) in the United States, he is still a US tax resident.
Green Card US Tax Residency: Entry into the United States is Critical
Contrary to the actual physical presence after becoming a US tax resident, the entry into the United States with a green card is a highly important event. As the regulations explain, a green card holder is not a “resident alien” for US tax purposes until he actually enters the United States while holding his green card. “The residency starting date for an alien who meets the lawful permanent resident test (green card test), described in paragraph (b)(1) of § 301.7701(b)-1, is the first day during the calendar year in which the individual is physically present in the United States as a lawful permanent resident.” §301.7701(b)-4(a).
This means that, if an alien receives a green card but never enters the United States, he will never be a “resident alien” for US tax purposes. Of course, presumably, the green card will eventually lose its validity for failure to maintain it.
However, once the alien enters the United States with his green card, he becomes a resident alien for US tax purposes exactly on that day. His US tax residency will last until the green card is revoked or he is considered to have abandoned his US permanent residency either judicially or administratively.
Green Card US Tax Residency: US International Tax Implications
Since obtaining a green card is pretty much equivalent to becoming a US tax resident, we must explore the implications of becoming a US tax resident especially from the US international tax perspective. In a previous article, I already explored in detail the differences between US tax obligations of a resident alien (for US tax purposes) versus nonresident alien. Here, I will highlight the most important of these obligations from the US international tax perspective.
The first obvious US tax consequence of getting a green card and becoming a US tax resident is worldwide income taxation. The United States government taxes its tax residents on their worldwide income, irrespective of where they earn this income. It also does not matter whether the green card holder’s foreign income is subject to taxation in a foreign country, whether it has been repatriated to the United States, whether it comes from pre-US funds, et cetera. The obligation to report foreign income on US tax returns is absolute (of course there may be some treaty-based specific exceptions).
Second, a US tax resident may have to report deemed income based on the various anti-deferral tax regimes, such as Subpart F rules, GILTI, et cetera.
Finally, a US tax resident must also comply with all of his US information returns obligations, such as FBAR (officially FinCEN Form 114, the Report of Foreign Bank and Financial Accounts), Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, Form 8938, Form 926, et cetera
Contact Sherayzen Law Office to Understand Your US International Tax Obligations as a Green Card Holder
If you have a green card and you wish to understand your US international tax obligations, you should contact the international tax law firm of Sherayzen Law Office. We have extensive experience in advising green card holders concerning their US tax obligations, including compliance with US international information returns. If you have not compliant with your US tax obligations, then we can help bring your US tax affairs into full compliance with US tax laws.
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