If you have a green card, you are a lawful permanent resident of the U.S. even if you live abroad. This means you are treated as a U.S. resident for U.S. income tax purposes and you are subject to U.S. tax on your worldwide income from whatever source derived.
Accordingly, you must file a U.S. tax return unless
(a) there has been a final administrative or judicial determination that your lawful permanent resident status has been revoked or abandoned,
(b) your gross income from worldwide sources is less than the amounts that require a tax return to be filed, or
(c) your U.S. residence status is affected by an income tax treaty.
When a foreign national receives his or her permanent resident status or green card, they have to pay taxes on their world wide income. A failure to pay these taxes may impact their green card renewal or citizenship.
Even if the Green card holder lives or works outside the United States, the green card holder is required to file United States Taxes each year. Failure to pay taxes during green card will result in his greencard or citizenship being rejected.
You are an Indian citizen holding a greencard.
Say you moved to Singapore from United States with your greencard, and work and pay taxes in Singapore, you are required to also file United States taxes, for the income in Singapore. So you file taxes in United States, in additional to the taxes filed in the foreign country, if you hold a green card.
There are treaties to avoid double taxation, and a Foreign Earned Income Exclusion limit of around $80,000 and a separate Form Form 2555 to claim the exclusion.
But still filing US taxes each year on world wide income on Green card is a mandatory requirement.
If you want to escape from US taxation, the only way is to abandon the Green card and File IRS Tax Form 8854 and Expatriation taxes if required.
Basic Permanent Resident - Green Card Tax Guide - Most Commonly asked Questions
Can I deduct my Green Card Legal Fee or Lawyer fee in my Form 1040 Tax Return?
The Answer is NO, as it is a personal expense, not related to work or business and cannot be deducted as a Tax Deduction in Form 1040.
Do I have to pay United States on my worldwide income if I am a Permanent Resident or Green Card holder
Based on residency test (See Substantial Presence Test Calculator), if you are a Resident or a Permanent or Green Card Tax holder, you have to pay United States taxes on your world wide income, even if you live within or outside the united states.
Filing Form 2555 Foreign Earned Income Exclusion, Form 1116 Foreign Tax Credit, Tax Treaty between United States and your foreign country can avoid double taxation, and reduce the taxable income.
What are my tax obligations if I Surrender my Green Card or my US Permanent Resident status?
First you need to determine, if you are a Short Term (hold Green Card less than 8 years) or Long Term Green Card holder (8 years or more). If you are a short term green card holder, you need not file Form 8854. If you are a long term green card holder, you have to file Form 8854. Failure to file Form 8854, carries huge penalty.
We at www.visataxes.com specialize in filing world wide taxes on Greencard, Permanent resident taxes and claiming Foreign Earned Income Exclusion by Filing Form 2555.
Also please read the IRS Publication 4588 - Basic Tax Guide for US Green Card Holders or Permanent Residents in the United States : Understanding Your U.S. Tax Obligations.
Expatriate Taxes - Abandon Green Card Tax Implications - IRS Form 8854 Instructions - Long Term Resident - Green Card Tax Filing
Green card holders, are like United States residents for Tax Purposes and have to file United States Tax Return, each year, even if they live and work outside the United States.
The article below covers the tax forms that a Green Card Holder should file each year.
Green Card Taxes - Implications of Green Card Taxes - IRS Green Card Tax Living and Working Outside the United States - Declare World Wide Income - Green Card file United States Tax Return Forms.
In this article we will focus on Expatriate Taxes and Tax Implications of Abandoning the Green Card -Form 8854 Instructions.
Green Card tax holders, should first determine the numbers of years, they have the Green Card or Permanent Residency. If they have the green card less than 8 years, they need not file Form 8854.
If the Green Card tax holders, hold the Green Card for 8 years or more, they are considered LTR - Long Term Resident for Tax Purposes.
So Long Term Green Card Tax holders, have to file Form 8854, if they meet the following criteria. The same rules apply for United States Citizens who have expatriated (relinquish United States Citizenship)
a) Average Income Tax Liability for the past 5 years since the day you abandoned your green card average $120,000
b) Your Net worth is $2 million or more
c) You have not complied on your federal tax obligations for the past 5 years
If you meet any of these cases, as a green card holder, you have to file Form 8854 for each of the 10 years along with Form 1040 or Form 1040NR.
If you fail to file Form 8854 as a Green card tax holder, you are subjected to fines of upto $10,000 per year.
We specialize in green card taxes and abandonment of greencard taxes and can help you file the necessary IRS Green Card Tax Forms.
June 15 of each tax year
Where to send the documents or Mailing Address of Form 8854:
Internal Revenue Service
PO Box 331
Drop Point S607-F8854
Bensalem, PA 19020
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The No 1 Tax Preparation Firm for International Student Taxes F1 OPT H1B J1 visa taxes.
File Form 1040NR, Form 1040NR EZ Software, Form 8843, Form 843, Form W7 Instructions.
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