How immigrants should pay taxes in the US, and what to do with foreign assets

US tax residents are required to pay taxes on all their worldwide income. Non-residents pay US tax only on income earned in the United States. IRS explains who pays what taxes.

Photo: iStock.com/Iryna Drozd

To determine if you are a tax resident, please review the section "Determining the tax status of a foreigner".

Green card and taxes

An immigrant who receives a green card is a lawful permanent resident and is considered a U.S. tax resident.

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If you received your green card abroad, your start date is the first day you are physically present in the United States after receiving your green card. For more information on dates and deadlines, click here.

Generally, when you initially receive a green card, your tax residency start date is the first day of the calendar year in which you moved to the United States as a lawful permanent resident.

Taxation of a US tax resident

Whether you are a U.S. tax resident or a U.S. citizen, the rules for filing income, estate and gift tax returns and paying estimated taxes are generally the same whether you are in the United States or abroad. Your worldwide income is subject to US income tax, regardless of where you live.

Don't forget about gift and inheritance taxation. According to US law, gift tax is imposed not on the recipient of gifts, but on the giver. The same applies to inheritance tax (estate tax) - it is levied on the testator, not the heir.

For detailed information on the tax responsibilities of US tax residents, please see here.

For detailed information on the tax responsibilities of US tax residents and US citizens who work or live abroad or have income earned in a foreign country, see here и here.

If you earn income in Guam, the Commonwealth of the Northern Mariana Islands (CNMI), American Samoa, the US Virgin Islands, or Puerto Rico, you will likely have to file a tax return with the tax department of one of those territories. It is possible that an individual will have to file two annual tax returns, one with the territory's tax department and one with the IRS. See more information here.

Foreign assets

Federal law requires U.S. tax residents and United States citizens to report all worldwide income, including income from foreign trusts and foreign bank and securities accounts.

In most cases, such taxpayers will need to complete and attach Schedule B to your tax return. Part III Schedule B requests information about the existence of foreign accounts, such as bank accounts and securities accounts, and generally requires a person to report the country in which each of these accounts is located.

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Additionally, some taxpayers may have to complete and attach to their tax return. Form 8938, Statement of Foreign Financial Assets. Generally, U.S. tax residents, U.S. persons, and certain non-residents are required to report certain foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. Detailed information can be viewed here.

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