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Does having a green card in the U.S.A. mean I have to pay taxes?

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Does having a green card in the U.S.A. mean I have to pay taxes?

A green card holder is someone who immigrated to the US and now has a permanent resident status. Green card holders in the US have a pretty unique tax situation. The U.S. government requires all US residents to pay tax once they meet the income threshold set by the IRS. If you are a green card holder, you are not a US citizen. But you are a resident, so you need to pay federal income tax. You can do this with the help of Form 1040, which is the standard form that every resident uses to file their tax returns every year. Every green card holder will be taxed on the income they make both inside and outside the US. But the IRS lets you claim certain tax credits only available to US residents, so you can lower your tax bill.
Key takeaways:
  • Green card holders are US residents, and hence need to pay tax
  • Being taxed as a U.S. resident means you can take advantage of the available tax breaks

Table of contents

What's the difference between US citizens and residents?...Read more

How do I pay tax as a green card holder?...Read more

Can you lower taxes as a green card holder?...Read more

My green card has expired, do I still pay taxes?...Read more

What's the difference between US citizens and residents?

If you’re researching tax law, you might have come across the term "resident alien" and might be asking yourself, “Are green card holders resident aliens?” The answer is yes. A resident alien is someone the IRS classifies as a legal permanent resident of the US. This makes them subject to the same tax laws as citizens. Green card holders are resident aliens, but not all resident aliens are green card holders. Some immigrants are only considered residents for tax purposes, but they don’t actually live in the US. throughout the entire year. And if you happened to get your green card while you were still outside the U.S., you will be taxed from the day you actually arrive into the country.
 Infographic entitled Paying Taxes As A Green Card Holder showing 5 things every green card holder in the U.S.A. show know when paying income tax.

How do I pay tax as a green card holder?

Tax filing as a green card holder is pretty similar to US citizens. The only caveat is that you will be paying tax on both income earned from inside and outside the US. This includes income from foreign investments, assets and pensions. You are also eligible to apply for a tax filing extension, just like other taxpayers. You can avoid being taxed, or can be taxed at a lower rate on foreign income, if you are a dual resident of a country that is part of a tax treaty with the US. The same goes for if you happen to have “ongoing and indefinite” ties to that country, whether it is in terms of a job, family or a permanent residence. This qualifies you as a “bona fide resident,” and you can claim the Foreign Earned Income Exclusion tax credit, which allows you to keep any foreign income you earn tax-free. So if you work full-time in the US, you’ll get a W-2 from your employer that you can use to file your tax return. But if you also work part-time at your Canadian friend’s web development company, you’ll have to report that income on your annual 1040, too. To do this, you’ll need a Form 1099 from your friend, which will have the income you earned for the work you did for his company. This means you’ll also be treated as a self-employed individual and will have to pay self-employment tax. If you think you’ll owe the IRS more than $1,000 in tax in a year, you will have to pay quarterly taxes with Form 1040-ES. You can use a tax estimate calculator to find out how much you'll owe.

Can you lower taxes as a green card holder?

Like US citizens, green card holders are subject to the same rules about tax write-offs.A 1099 tax calculator can help you find deductions you can claim. So independent contractors, small business owners, freelancers and gig workers can also write off business expenses along with claiming tax credits. This is on top of the standard deduction available to every taxpayer. If you have to pay self-employment tax, you can use an app like FlyFin, an A.I.-powered tax engine that finds every potential deduction when you link your expenses. You can also use expert CPAs, available 24/7 in the app, to prepare and file your tax returns for you.
Infographic entitled Common Tax Credits For Green Card Holders showing the child tax credit, foreign tax credit, earned income credit and opportunity credit.

My green card has expired, do I still pay taxes?

Even if your green card expires, you are still considered a US resident, and you should still file your tax return. If you don’t, it could affect your visa status and get you in trouble with the IRS. This could also affect your chances of becoming a permanent citizen. The only way to get out of paying US taxes is if you plan to give up your green card. But even then you’ll have to notify the relevant authorities and pay an “exit tax” if you’ve lived in the country for eight out of the past fifteen years before you can fully leave the US tax system. Overall, paying taxes as a green card holder is pretty similar to paying them as a U.S. citizen. The IRS still allows you to claim certain tax credits and apply for an extension. Self-employed individuals can also write off business expenses as deductibles to lower their tax bill. Navigating these tax rules can be challenging. You should always reach out to a tax professional for help if you need it.

Tax Write-Offs

Self-employed individuals can use tax write-offs to lower taxes. These itemized deductions should be reported on Schedule C.

How Long Should You keep Tax Returns

American taxpayers need to keep tax records for at least three years. This may change depending on which state you live and the type of business you run.

Tips For E-Filing 1099 Taxes

Filing taxes is a complicated process, but following a few simple but crucial steps can help you be prepared to e-file your 1099 taxes.

Top 5 things to remember about 1099 tax form

Remember these five important things about 1099 taxes, if you're a self-employed individual, freelancer or independent contractor.

Filing Taxes Self Employed

Only FlyFin uses a unique combination of A.I. and CPAs to find every qualifying deduction for freelancers, self-employed individuals and independent contractors.

Deductions For Tax Savings

For freelancers, the most effective way to save on taxes is by taking advantage of tax credits and the many tax deductions they qualify for.

Top Ways To Save Taxes Using Write Offs

Looking to maximize your refund for the 2023 tax filing season? Check out our guide to the top 10 tax write-offs for W-2 employees, independent contractors, self-employed individuals, freelancers and small business owners.

How To Maximize Tax Refund

These tips and tricks can help you maximize your 2023 tax refunds and also help you understand how to minimize your tax liabilities in many more future tax seasons.

Claim Tax Deductions For Small Business

Small business tax deductions are the same as tax write-offs. You can claim a standard or itemized deduction based on your business expenses to decrease your taxes.

Self Employed Tax Filing

Self-employment tax forms like Schedule C and Schedule SE should be included with form 1040 when filing taxes.

How FlyFin Helps Claiming Tax Write Offs

Tax write offs are business expenses that are tax deductible. With FlyFin, you can easily claim itemized deductions and bring down your tax amount.

File Taxes With W2 and 1099

You can file a 1099 and W-2 together if you receive them in the same year. This can also lower your quarterly tax payments or get you a QBI deduction.

Avoid Penalties For 4th Quarter Estimated Taxes

Estimated taxes are required for self-employed individuals on a quarterly basis. If you missed the deadline for the fourth quarter, there is still time to make the payments and avoid penalties.

How To Deduct Stock Losses From Your Taxes

Capital loss deductions allow for taxpayers to write off stock market losses and pay less in taxes. The IRS allows you to deduct up to $3,000 per year.

How To File Back Taxes

Everything you need to know about how to file back taxes and claim tax refunds and credits before it's too late. The IRS lets you file back tax returns for up to six years.

How To File Patreon 1099 Taxes

Patreon creators can use FlyFin’s 1099 calculator to find business expenses they can write off on their tax forms.

Tax Write-Offs

Self-employed individuals can use tax write-offs to lower taxes. These itemized deductions should be reported on Schedule C.

How Long Should You keep Tax Returns

American taxpayers need to keep tax records for at least three years. This may change depending on which state you live and the type of business you run.

Tips For E-Filing 1099 Taxes

Filing taxes is a complicated process, but following a few simple but crucial steps can help you be prepared to e-file your 1099 taxes.

Top 5 things to remember about 1099 tax form

Remember these five important things about 1099 taxes, if you're a self-employed individual, freelancer or independent contractor.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.
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