by Richard Dunn, TaxAmerican.com

Email: info@taxamerican.com

The Obama Administration faces big budget deficits for the foreseeable future, so the Internal Revenue Service (IRS) is getting tough. It is placing great emphasis on enforcement and is exchanging information with immigration officials. Green card holders beware!

Once you get a green card, you automatically become a U.S. tax resident and you must declare your entire income to the U.S. government. It doesn't matter if a portion or all of that income was earned outside the U.S.; a tax resident must report it all. But this does not necessarily mean that the U.S. government will tax all of your worldwide income. There are exemptions and credits available for taxes paid outside the U.S., where there is a treaty in place between the foreign country and the U.S.

As a green card holder, you must file your U.S. tax return each year by June 15th. Failure to follow U.S. tax laws will hurt your ability to qualify for U.S. citizenship. It may also be considered a crime. Tax problems usually result in immigration problems. The U.S. Citizenship and Immigration Service (USCIS) report all new green card approvals to the IRS and both agencies maintain staff in foreign countries. The IRS will try to locate tax cheats, and random checks are possible. The USCIS considers filing a tax return as important evidence of one’s intention to maintain a permanent U.S. residence, and inspectors at ports of entry occasionally ask about tax returns.

Your tax responsibilities as a green card holder do not change if you are absent from the U.S. for a long period of time. Your income tax filing requirement and possible obligation to pay U.S. taxes continue until you either surrender your green card or there has been a final administrative or judicial determination that your green card has been revoked or abandoned.

If you’ve surrendered your green card, this doesn’t necessarily mean that your status as a lawful permanent resident has changed. Your status will not change unless and until you get an official notice from the USCIS that there has been a final administrative or judicial determination that your green card has been revoked or abandoned.

If you were a long-term resident of the United States, defined as an individual who is a U.S. lawful permanent resident in at least 8 of the prior 15 taxable years prior to the termination of permanent resident status, there are special rules to comply with. Until you file a specific form with the IRS with your income history and net worth, and notify the Department of Homeland Security of your termination of residency, your termination of your permanent resident status will not relieve you of your obligation to file U.S. tax returns.

These are complex matters and you should consult a tax advisor that is familiar with U.S. tax laws. If you have not filed a U.S. income tax return for one or more years you should file them as soon as you can, starting with the last few years.

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