Green Card Holder Living Abroad: Your US Tax Obligations Don't Stop at the Border

A green card holder abroad is still a US tax resident: the IRS taxes lawful permanent residents on worldwide income for every year the status exists, wherever they live. Moving to London does not end green card holder US tax obligations. Only a formal end to the status does, and the way it ends has tax consequences of its own.

This is the part of US tax law that catches people who did everything else right. They got the green card, moved abroad for a job or family, and assumed that leaving the country left the IRS behind. It did not. This guide covers why, what a green card holder abroad files each year, how to avoid being taxed twice, and the three ways out.

Why does a green card holder abroad still owe US tax returns?

A green card holder owes US returns abroad because US tax residence for a lawful permanent resident is tied to immigration status, not to where the person lives. Under the IRS green card test, you are a US tax resident for a calendar year if you were a lawful permanent resident at any time during it.

That makes a green card holder, for income tax purposes, much closer to a US citizen than to a visitor. The IRS says the filing rules for citizens and resident aliens abroad are generally the same as at home: tax on worldwide income from all sources, estimated tax where needed, and reporting of foreign accounts even when they produce no taxable income.

The substantial presence test, the day-counting test that decides residence for most visa holders, does not help here. A green card holder can spend zero days in the United States in a year and still be a US tax resident for all of it.

When does green card status end for US tax purposes?

Green card status ends for US tax purposes only through one of three events the IRS lists: you voluntarily renounce and abandon the status in writing to USCIS, USCIS administratively terminates it, or a federal court judicially terminates it. The written route is usually Form I-407, Record of Abandonment of Lawful Permanent Resident Status.

Two common beliefs do not match that list:

• "My card has expired." The IRS test asks whether you hold lawful permanent resident status, not whether the card in your drawer is in date.
• "I've been away for years, so I must have lost it." USCIS may treat a long absence as abandonment. Its travel guidance uses an absence of more than a year as a general guide. That is an immigration assessment made at the border or in a proceeding, though, and until the status formally ends, the IRS still counts you as resident.

USCIS also lists filing US income tax returns as a resident among the factors it weighs when deciding whether you kept your intention to live permanently in the United States. Tax filings and immigration status affect each other in both directions, which is why the exit decisions below need both kinds of advice.

What does a green card holder abroad file each year?

A green card holder living abroad files the same core set as a US citizen living abroad. The thresholds below are the current published figures, each with its tax year.

Filing	When it applies	Deadline
Form 1040 (worldwide income)	Gross income at or above the filing threshold, e.g. $15,750 for a single filer under 65 for tax year 2025, or over $400 of net self-employment earnings	April 15; automatic extension to June 15 if you live and work abroad
FinCEN Form 114 (FBAR)	Non-US accounts together exceeding $10,000 at any time in the calendar year	April 15; automatic extension to October 15
Form 8938	Living abroad: specified foreign financial assets over $200,000 at year end or $300,000 at any time (unmarried)	With the return
Form 2555 or Form 1116	To claim the foreign earned income exclusion or the foreign tax credit	With the return
Form 8621	Holdings in non-US funds that are passive foreign investment companies	With the return

Sources for the figures: the IRS filing thresholds (for tax year 2025, the threshold for married filing separately is just $5), the IRS FBAR page, and the IRS FATCA summary, which gives double the Form 8938 thresholds for joint filers living abroad. Our post on the FBAR versus Form 8938 explains why the same account often appears on both.

Most people also have filings in their new home country. A green card holder who is UK resident files UK Self Assessment on the same income. The US return has to be prepared with the UK figures in view, because the credit on one side depends on the tax paid on the other.

How does a green card holder abroad avoid double tax?

A green card holder abroad usually avoids double tax in one of two ways: the foreign tax credit on Form 1116, or the foreign earned income exclusion on Form 2555. Neither applies automatically. Each has to be claimed on a filed US return.

The foreign earned income exclusion

The foreign earned income exclusion removes foreign earnings from US tax up to a cap, which the IRS set at $132,900 for tax year 2026, up from $130,000 for 2025. A green card holder has two ways to qualify:

• Physical presence test: open to any US resident alien present in foreign countries for at least 330 full days during any period of 12 consecutive months.
• Bona fide residence test: open to a resident alien only if they are a citizen or national of a country that has an income tax treaty with the United States, and a bona fide resident of a foreign country. A British citizen with a green card can use it. A green card holder whose only citizenship is from a non-treaty country cannot.

The foreign tax credit

In a country with tax rates at or above US rates, the foreign tax credit is often the better tool, because it offsets US tax with the tax already paid abroad and can carry excess credits forward. The exclusion does not cover investment income and does not remove US self-employment tax. The US–UK social security agreement generally stops the same earnings being charged to both systems.

Where US tax does arise, it is usually in the same places it does for citizens: non-US funds taxed under the passive foreign investment company rules (see why an ISA is a problem on a US return), a home sale where exchange rate movement creates a dollar gain, and investment income outside the credit calculation.

Illustrative example: a British citizen got a green card while working in Boston for five years, then moved back to London for a new role and put the card in a drawer. The US still treats them as tax resident for every year until they file Form I-407 or the status is otherwise terminated. Each year they owe a Form 1040 showing their UK salary, with the exclusion or the foreign tax credit applied, and an FBAR covering their UK current account, savings and ISA. Their UK salary is fully taxed in the UK, so the US bill on it is likely to be nil. Their ISA funds still need Form 8621.

The three ways out, and the trap in each

A green card holder settled abroad eventually has to choose between keeping the status, surrendering it, or using the treaty to be taxed as a nonresident while keeping it. The table sets out what each involves.

Route	What you file	The trap
Keep the green card and stay compliant	Form 1040, FBAR and any information returns every year	Long absences can still cost the status at the border. USCIS advises a reentry permit (Form I-131, valid up to 2 years) for absences over a year.
Surrender the green card (Form I-407)	Dual-status return for the final year; Form 8854 if you are a long-term resident	A long-term resident can become a covered expatriate and owe the exit tax
Claim UK residence under the treaty tie-breaker	Form 1040-NR with Form 8833	The IRS treats this as expatriation for a long-term resident, and it can undermine the immigration status you are trying to keep

Who counts as a long-term resident?

Under the IRS expatriation tax rules, a long-term resident is a lawful permanent resident in at least 8 of the last 15 tax years. A long-term resident expatriates by ceasing to be a lawful permanent resident, or by starting to be treated as a resident of another country under a treaty without waiving its benefits.

A long-term resident who expatriates is a covered expatriate if any one of three tests is met. The first is net worth of $2 million or more on the expatriation date. The second is average annual net income tax for the previous five years above a figure the IRS sets each year, which is $206,000 for expatriation in 2025. The third is failing to certify five years of US tax compliance on Form 8854. Covered expatriates are treated as selling their worldwide assets the day before they leave, subject to an exclusion amount the IRS gives as $890,000 for 2025.

The third test catches people who are nowhere near wealthy. A green card holder who stopped filing after moving abroad cannot certify compliance, so surrendering the card before catching up can make them a covered expatriate through paperwork alone. Our post on the tax implications of giving up US status explains how the exit tax works, and our expatriation service covers Form 8854 planning.

The treaty tie-breaker route

A green card holder who is also resident in the UK is a dual resident. IRS Publication 519 explains that a dual-resident taxpayer who claims treaty benefits as a resident of the other country is treated as a nonresident alien for figuring US income tax, files Form 1040-NR, and attaches Form 8833. It also warns that for a long-term resident this can trigger the section 877A expatriation tax. How the tie-breaker is applied is covered in our guide to the treaty tie-breaker rule, and the disclosure form in our Form 8833 guide.

What green card holders abroad get wrong

1. Treating the move as the end. Leaving the United States changes nothing for tax purposes. Only a formal end to the status does.
2. Surrendering the card before catching up. Form 8854 asks you to certify five years of compliance. File first, then surrender.
3. Assuming the bona fide residence test is available. For a resident alien, it depends on holding citizenship of a treaty country.
4. Forgetting the FBAR. It is a Treasury report filed with FinCEN, separate from the return, and it applies to US residents as well as citizens.
5. Electing treaty residence to save a small amount of tax. For a long-term resident, the Form 8833 route can be an expatriation event, and it gives USCIS evidence that you no longer live in the United States.
6. Counting years wrongly. The long-term resident clock counts tax years, so someone approaching year eight should plan the timing of any surrender with care.

Green card holder US tax abroad: catching up if you stopped filing

A green card holder abroad who has missed years can usually catch up through the Streamlined Foreign Offshore Procedures, provided the failure was non-willful. For green card holders, the IRS non-residency requirement is having no US abode and being physically outside the United States for at least 330 full days in at least one of the last three years whose return due date has passed.

The package is three years of returns, six years of FBARs and a Form 14653 certification, and eligible taxpayers avoid failure-to-file, failure-to-pay, information return and FBAR penalties. The route closes once the IRS contacts you, so timing matters. Our guide to the Streamlined Procedures walks through the paperwork.

What to do next

1. Confirm your status: are you still a lawful permanent resident, and has anything been filed with USCIS?
2. Count your green card years to see whether you are, or will soon be, a long-term resident.
3. List every non-US account and its highest balance in each of the last six calendar years.
4. Check which years are missing, and whether the Streamlined route is open to you.
5. Decide whether to keep the status, surrender it or rely on the treaty, with immigration and tax advice together.
6. Surrender the status only after your filings are current, so Form 8854 can be certified.

If you came to the United States as a British citizen and are now weighing a move home, our tax guide for Brits moving to the US covers the other end of the journey. Our page on green card holder US tax abroad sets out how we handle the annual returns, the exit planning and the treaty questions together.

US/UK Cross Border Tax is US CPAs and UK tax advisers working as one team, with offices in London, Manchester, New York and San Francisco. That matters here, because the US return, the UK return and the immigration timeline all have to agree. If you are about to sign Form I-407 or file a treaty position, talk to us first.