**Please note: The purpose of this series is to provide general information on immigration tax issues commonly raised by our Canadian clients. Berardi Immigration Law does not practice U.S. tax law. Any information herein is for general informational purposes only and not for the purpose of providing legal or tax advice. To ensure compliance with U.S. tax regulations, you should speak with your tax or financial adviser to assist you in all financial implications for your time spent in the U.S.**
Dear Berardi Immigration Law,
I’ve had my green card for three years now. This past year, I’ve been living and working in Canada for a temporary job assignment. I have a valid re-entry permit, so essentially the government has given me permission to live outside the U.S. Since my income is earned in Canada, can I file my U.S. tax return as a non-resident?
Sincerely, Green Card Holder Living Abroad
There is a common rumor circulating that the number of days you spend in the U.S. determines whether or not you are considered to be a tax resident, but this is only true for people who are in the country as nonimmigrant visitors or workers. (Read Part 1 of this series for more information). All green card holders should ALWAYS file a U.S. tax return as a Resident (Form 1040) and file any other applicable state, city or local taxes. Permanent residents should NOT file a non-resident tax return (Form 1040NR) – even if you did not step foot in the U.S. all year or if all of your salary and wages were earned outside the U.S.
Note that this does not necessarily mean that you will have to pay full U.S. income taxes; a number of countries have a tax treaty with the U.S., and permanent residents may take advantage of the foreign earned income exclusion rules. This is a complex matter, and you should consult with an accountant who is aware of cross-border tax issues.
As a green card holder, you should keep copies of all tax returns you have filed as a resident. If you fail to file your U.S. taxes or file as a non-resident, you risk losing your green card and compromise your chances for naturalization.
Berardi Immigration Law Attorneys are available to analyze your case and provide immigration strategy advice. Call today to schedule a consultation!
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