Taxes and green card holders

Competing laws can make for confusing situations. For many people in the Washington, D.C., area, trying to find the balance becomes something of a way of life. This may be particularly true for green card holders who have financial ties that reach around the globe.

On one hand, the current political turmoil over immigration makes for an unsettling environment for foreign nationals working here. Still, they face expansive tax obligations that cannot be ignored. Failure to meet those obligations could cost the loss of a green card. On the other hand, if they decide to abandon their green cards, they may face obligations by virtue of other tax laws. It should be no surprise, then, that many find themselves in disputes with the IRS.

Green card holder questions

At the big picture level, green card holders have a number of key issues they need to be aware of:

  • Long-term absence from the U.S.: If you have a green card, regardless of where you live, you generally have to file a U.S. tax return under IRS rules. On that form, you must report all of your worldwide income. The surrender of your card doesn't dismiss that obligation. Whether you give it up voluntarily or it's revoked, your filing requirement remains until you get formal notice from immigration officials.

  • Long-term residents who surrender their card: Definitions, as the Treasury Department sees them, are most important. You might no longer think of yourself as a long-term resident with tax obligations if you gave up your card and left. However, the IRS still considers you a lawful permanent resident subject to filing a return if you lived in the U.S for eight years in any of the last 15 tax years before ending your residency. If you have questions about whether you meet that requirement, it might be wise to consult an experienced attorney.

  • The expatriation tax: The surrender of your green card might get you off the hook for filing a tax return, but the IRS might still impose the expatriation tax. Again, the rules that regulate this area are very complicated. Even if you don't file a normal tax return, you may have to file another form for up to 10 years after your card surrender. Failure to do so could cost $10,000.

Running afoul of tax laws is never a good idea, but it can happen without skilled help.

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