Green Card Holder
As a US permanent resident you are taxed on worldwide income regardless of where you live. Green card holders face elevated compliance requirements and potential exit tax exposure if they relinquish their status.
US Status
Resident alien (green card test, taxed on worldwide income)
Canada Status
Non-resident (most sever ties) or dual-resident if ties remain
Typical Forms Required
- Form 1040 (US Individual Income Tax Return)
- FinCEN 114 / FBAR
- Form 8938 / FATCA
- Form 3520 / 3520-A (if TFSA held)
- Form 8621 (PFIC reporting)
- Form 8833 (treaty tie-breaker, if claiming)
- Form 1116 (Foreign Tax Credit)
- Form 8854 (if expatriating)
- T1 General (if still a Canadian resident or have CA-source income)
Key Risks
Exit tax under IRC 877A if you become a "covered expatriate" upon relinquishing your green card after 8+ years
Dual-residency disputes if Canadian ties are not fully severed
PFIC penalties for holding Canadian mutual funds long-term
Failure to file FBAR and FATCA for Canadian accounts accumulated before emigrating
Unintentional loss of green card through extended absence, triggering abandonment
Step-by-Step Filing Guide
- 1
Confirm your US residency start date under the green card test (first day of permanent residency).
- 2
File Form 1040 annually reporting worldwide income from all sources, including Canadian investments.
- 3
File FBAR by April 15 (auto-extended to October 15) for all foreign accounts exceeding $10,000 in aggregate.
- 4
Complete Form 8938 if your foreign financial assets exceed the applicable thresholds ($50K/$200K depending on filing status and residence).
- 5
Report any TFSA holdings on Forms 3520 and 3520-A; consider collapsing the TFSA.
- 6
Claim Foreign Tax Credits (Form 1116) for Canadian taxes paid on Canadian-source income.
- 7
If considering relinquishing your green card, consult a cross-border tax professional about exit tax exposure under IRC 877A.
- 8
File Form 8854 in the year you formally abandon or relinquish your green card.
Frequently Asked Questions
How long can I live outside the US and keep my green card?
USCIS generally considers absences over 6 months as evidence of abandoning residency. Absences over 1 year without a re-entry permit result in automatic abandonment. For tax purposes, you remain a resident until the card is formally surrendered.
What is the exit tax for green card holders?
If you held a green card for 8 of the last 15 tax years and meet the covered expatriate thresholds (net worth over $2M or average annual net income tax over ~$201K for 2024), you face a mark-to-market exit tax on unrealized gains above an exclusion amount.
Do I still file a Canadian return as a green card holder?
Only if you have Canadian-source income (rental income, pensions, capital gains on taxable Canadian property) or if you remain a factual or deemed resident of Canada due to unsevered ties.
Can I use the treaty tie-breaker as a green card holder?
You can claim treaty residence in Canada on Form 8833, but the US Savings Clause means you are still taxed as a US resident on most income. The tie-breaker mainly helps avoid double taxation and may preserve Canadian benefits.
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