US Tax Filing Requirements for Green Card Holders Living Abroad

The Direct Answer

Green card holders are US tax residents for federal income tax purposes, full stop. This obligation does not change if you move abroad, take a job in another country, or spend most of the year outside the US. You must file Form 1040 each year and report all income from anywhere in the world. The good news: several tools can reduce or eliminate double taxation.

The Worldwide Income Obligation

The IRS taxes green card holders on the same basis as US citizens - on worldwide income regardless of where it is earned or where you live. This includes:

• Wages and salaries from a foreign employer
• Business income from a foreign operation
• Rental income from property abroad
• Dividends and interest from foreign bank accounts
• Pension and retirement income from foreign plans

The standard filing threshold for 2024 is $14,600 for single filers and $29,200 for married filing jointly. If your worldwide income exceeds these amounts, a return is required.

FBAR: Reporting Foreign Bank Accounts

If you have foreign financial accounts with an aggregate value exceeding $10,000 at any point during the year, you must file the FBAR (FinCEN Form 114) separately from your tax return. The FBAR is filed electronically through the BSA E-Filing System and is due April 15, with an automatic extension to October 15.

Penalties for non-filing can reach $10,000 per account per year for non-willful violations, and significantly more for willful violations.

FATCA: Form 8938

Under the Foreign Account Tax Compliance Act (FATCA), you may also need to file Form 8938 with your tax return if the value of your foreign financial assets exceeds these thresholds:

FBAR and FATCA overlap but are not the same. If you are required to file one, you may still need to file the other.

The Foreign Earned Income Exclusion (Form 2555)

Green card holders living abroad can use Form 2555 to exclude up to $126,500 of earned income from US federal tax in 2024. Earned income includes wages, salaries, and self-employment income - it does not include investment income, pensions, or dividends.

To qualify, you must meet one of two tests:

• Bona Fide Residence Test: You were a bona fide resident of a foreign country for an entire calendar year
• Physical Presence Test: You were physically present in a foreign country for at least 330 full days during any consecutive 12-month period

If your foreign earned income exceeds the exclusion amount, the excess is still subject to US tax at the rates that would apply to income starting at $126,500.

The Foreign Tax Credit (Form 1116)

If you pay income taxes to a foreign government, you can claim a credit against your US tax liability using Form 1116. This is often more beneficial than the Foreign Earned Income Exclusion when:

• Your foreign income exceeds $126,500
• The foreign tax rate is higher than the US rate
• Your income includes dividends or interest (not eligible for Form 2555)

You generally cannot use both Form 2555 and Form 1116 for the same income. Choose the approach that results in a lower US tax bill.

Abandoning Your Green Card: The Exit Tax

If you voluntarily give up your green card (by filing Form I-407 or having it revoked), and you have held it for at least 8 of the last 15 years, you may be subject to the exit tax under IRC Section 877A.

The exit tax applies if you meet any of these thresholds:

• Your average net income tax for the prior 5 years exceeded $206,000 (2024 threshold)
• Your net worth on the expatriation date is at least $2 million
• You failed to certify you have been tax-compliant for the prior 5 years (Form 8854)

The exit tax treats you as having sold all your worldwide assets on the day before expatriation at fair market value. Any gain above $877,000 (2024 exclusion amount) is taxed in the year of expatriation.

Filing Deadlines

Green card holders abroad get an automatic 2-month extension to June 15 to file (though any tax owed is still due April 15). You can request a further extension to October 15 by filing Form 4868.

Get Your Personalized Form List

Your specific obligations as a green card holder abroad - FBAR, FATCA, Form 2555, Form 1116, or exit tax - depend on your income level, asset holdings, and how long you have had your green card. Start the free 5-minute diagnostic to get a clear picture of what you need to file.