Green Cards: Your Guide to Taxes, Application Process & More

For many immigrants aspiring to come to the US, getting a green card is a major goal. 

Green card holders — also called permanent residents — have the right to live and work in the US indefinitely. Moreover, green cards allow you to petition for your spouse and children to join you in the US. And for those who choose to pursue naturalization, receiving a green card is often a first step to becoming a US citizen.

It’s not always easy to get detailed information about green cards. The US Citizenship & Immigration Services (USCIS) website can be technical and dense, which may leave you even more confused. As a dedicated tax firm for US immigrants and Americans abroad, we’re well familiar with green cards — so we’ve put together a brief, easy-to-understand guide below.

Read on to learn the answers to questions like “Who is eligible for a green card,” “How do I get a green card,” “Do people with green cards pay taxes” and more.

Getting & maintaining a green card

Eligibility criteria

The first question people have about green cards is often, “How can I get a green card?” There are a number of different ways to qualify for one — here are a few of the most common:

• Employment
  • Immigrant workers
  • Physicians
  • Immigrant investors
• Family
  • Immediate relative of a US citizen
  • Other relative of a US citizen or permanent resident
  • Fiancé/fiancée of a US citizen & their child or children
  • Widower of US citizen
• “Humanitarian” categories
  • Refugees
  • Asylees
  • Victims of certain crimes living in the US with a visa

Employment

Green cards are available to immigrant workers, particularly highly skilled ones. Typically, they must have a job offer from a US employer — however, those with “extraordinary ability” may be able to self-sponsor. 

Also eligible are physicians and immigrant investors. Physicians must agree to serve in underserved areas for at least five years. Immigrant investors must invest at least $1,050,000 — or $800,000 in infrastructure projects or certain areas — into commercial enterprises. The business venture must also create at least 10 full-time jobs in the US.

Family

Family members of US citizens and permanent residents may apply for green cards. Immediate relatives of US citizens (spouses, minor children, and parents) have the highest priority, while the rest are subject to the family preference system.

Under the family preference system, there are different levels of priority based on the petitioner’s immigration status and the relationship between the petitioner and their family member:

• First preference (F1): Unmarried children (at least 21 years old) of US citizens
• Second preference (F2A): Spouses & unmarried children (under 21 years old) of permanent residents
• Second preference (F2B): Unmarried children (at least  21 years old) of lawful permanent residents
• Third preference (F3): Married sons & daughters of US citizens
• Fourth preference (F4): Brothers & sisters of US citizens (at least 21 years old)

Humanitarian

This term refers to several different categories of green cards granted for humanitarian reasons, such as: 

• Refugee/asylee status: For those who face prosecution in their home country due to their identity (e.g. race, religion, ethnic group, political beliefs)
• Human trafficking & crime victims: For those who have been subject to human trafficking & certain crimes living in the US under a T or U visa
• Victims of abuse: Generally for victims of domestic abuse by US citizens or permanent residents

Other

There are many other categories under which you may apply for a green card, such as:

• Diversity immigrant visa holders
• Religious workers
• Afghan/Iraqi translators who have worked for the US government
• Juveniles in need of protection

Application process

The green card application process generally involves: 

• Determining eligibility: Confirming that you are eligible for a green card under the USCIS eligibility categories
• Submitting a petition: Typically, you need someone to submit the petition on your behalf (such as an employer or sponsoring relative). Which petition you submit depends on what category you fall under. A few common examples include:
  • Form I-130: Petition for Alien Relative
  • Form I-140: Immigrant Petition for Alien Worker
    • Note: Before an employer can file a petition for an employee, they must obtain a Permanent Labor Certification
  • Form I-526: Immigrant Petition by Alien Entrepreneur
  • Form I-730: Refugee/Asylee Relative Petition
  • Form I-360: Petition for Amerasian, Widow(er), or Special Immigrant

After this, the process depends on whether you are currently living in or outside of the US. Those applying from within the US will:

• Request an adjustment of status: After having their immigrant petition approved, you’ll file Form I-485: Application to Register Permanent Residence or Adjust Status
• Attend an Application Support Center (ASC) appointment: If your Form I-485 submission was successful, you will receive a notice in the mail for an ASC appointment. There, they’ll take your picture and fingerprints and ask for your signature confirming that your application information is accurate.
  • Note: The notice you receive will assign a time, date, and location for your appointment. It’s critical to attend this appointment — or if you can’t, notify USCIS in advance. If not, they may reject your application.
• Attend an interview (if applicable): In some cases, USCIS officials will request you come in for an interview or to give an oath.
• Provide additional evidence (if applicable): The USCIS may sometimes request additional documentation if anything in your application was missing or out of date. They will provide you with a deadline to respond by.
• Receive a decision: After submitting your application, you can check its status online or call the USCIS Contact Center. If approved, you will receive a notice of approval and then later, your green card.

If you’re applying for a green card from outside the US, you will:

• Receive notice from the National Visa Center (NVC): If your immigrant petition was successful, the NVC will notify you then later, assign you a visa immigration number. They will also request supporting documentation and fees.
• Attend the consular visa appointment: When a visa is available or your priority date arrives, your designated consular office will schedule an interview with you.
• Receive your visa & enter the US: Before getting your green card, you’ll receive an immigrant visa that allows you to enter the country. Upon your arrival, you’ll submit the visa packet the consular office gave you to Customs and Border Patrol (CBP) at your port of entry. 
• Receive your green card: If CBP allows you to pass through, you will officially be a permanent resident and will receive your green card in the mail shortly after.

Many green card applicants choose to work with an experienced immigration lawyer to help them understand the finer points of the law, navigate the application process, and overcome any obstacles. However, it comes at a cost — between $2,000 to $12,000 on average.

The process can also be lengthy, with some groups receiving their green cards faster than others. It takes spouses, parents, and minor children of US citizens about 10-23 months to receive a green card if applying from within the US. Spouses of permanent residents, other relatives of US citizens, and employment-based green card applicants may wait for two years or more.

Maintaining & renewing a green card

While green cards grant you permission to live and work in the US indefinitely, there are some things worth keeping in mind:

Travel

While green cards allow you to travel, any stays abroad must be temporary to maintain your status. Being outside the US for more than a year can result in a CBP officer revoking your permanent residence status. 

Being abroad for more than six months, meanwhile, can interrupt the continuous residency requirement for naturalization.

Abiding by the law

Obtaining a green card under false pretenses, serious criminal convictions (e.g. drug trafficking), and immigration law violations (e.g. working without authorization) are all grounds for green card revocation. If found guilty, a judge may terminate your permanent residence.

Renewal

Most green cards are valid for 10 years. If you received conditional permanent resident status, your green card will last only two years. And a small minority don’t have expiration dates at all. If your green card is expiring within the next six months, you’ll need to renew it (unless you plan to apply for naturalization instead).

You can renew your green card by:

• Filing Form I-90: Application to Replace Permanent Resident Card (Green Card)
• Submitting the required documentation, such as:
  • A copy of your current green card, front and back
  • A copy of your passport
  • Proof of continuous residence (e.g. tax returns, utility bills, housing contracts)
  • Two passport-sized photos
• Paying the associated fees (usually $465 for paper applications, $415 online)
• Receiving your new green card (typically 1.5 to 12 months)

Abandoning your green card

If you no longer want to be a US permanent resident, you can’t just let it expire or leave the country. Doing so won’t release you of your US tax and reporting obligations (more on that soon). To sever ties with the US, you’ll need to formally abandon your green card by filing I-407: Record of Abandonment of Lawful Permanent Resident Status.

Think carefully before taking action, though — abandoning your permanent resident status is irrevocable. If you want to move back to the US, you’ll have to go through the whole green card process again. That said, abandoning your green card once won’t affect the approval of a new one in the future.

Green card tax implications

One of the most common questions green card applicants have is, “do green card holders pay taxes?” The short answer is yes. The US’s tax laws require all citizens and permanent residents who earn above a certain threshold to file taxes.

If you’ve been living in the US for some time now, you may already have filed and paid US taxes (likely as a nonresident alien). Receiving your green card, however, may change your US tax filing obligations. For example, you’ll:

• Become a resident alien: Green card holders are considered resident aliens. While nonresident aliens are only subject to US taxes on US-sourced income, resident aliens are subject to US taxation on their worldwide income.
• Potentially face double taxation: If you have foreign-sourced income that you pay taxes on in a foreign country, you’ll now need to pay US taxes on it as well. Fortunately, there are some ways to avoid this double taxation, like the Foreign Tax Credit (FTC).
• Potentially be taxed as a dual-status alien: In the year that somebody becomes a permanent resident, taxes can get tricky. The IRS may tax you as a nonresident alien for the part of the calendar year before your permanent residence was approved, then a resident alien for the rest of the time.
  • Note: In some cases, you may be able to elect resident alien tax treatment for the entire year.
• Have to file Form 1040: While nonresident aliens file Form 1040-NR, resident aliens file Form 1040 (just like US citizens). Dual-status generally file the form that corresponds to their filing status at the end of the tax year (Form 1040 or 1040-NR) and attach a statement which takes the form corresponding to the other.
  • Note: Your green card tax filing requirements may include additional schedules and forms, depending on your circumstances.
• Face new reporting requirements: As tax residents, resident aliens are subject to additional reporting obligations. A couple of reports green cards often need to file include the:
  • Foreign Bank Account Report: Required if the sum of your foreign financial accounts exceeds $10,000 at any point
  • Form 8938: Required if you hold over $50,000 in foreign assets on the last day of the tax year, or $75,000 at any point during it
    • Note: Thresholds increase for those who are married and filing jointly and/or living outside the US.

Taxes for those with international holdings tend to be complicated and can result in you paying much more in taxes than you need to. However, there are ways to mitigate this — including applying tax treaties, the foreign tax credit, and totalization agreements.

To ensure full compliance and minimize your tax burden, it’s best to work with a tax specialist. 

Navigating taxes with confidence

Getting a green card can be a long and tedious process. However, it allows you to live and work in the US as long as you want (assuming you continue to follow the rules). It can even be a stepping stone to US citizenship. That said, green cards also come with some responsibilities, like becoming a tax resident and paying US taxes on your worldwide income.

Resources

1. Green Card Eligibility Categories
2. Basics of the Employment-Based Green Card Process in the United States
3. Green Card for Family Preference Immigrants
4. Adjustment of Status
5. Consular Processing
6. How Much Does a Green Card Cost?
7. Traveling Outside the U.S. as a Green Card Holder
8. 4 grounds on which your green card can be revoked
9. Green Card Renewal: Process, Documents, and Tips
10. I Owe Back Taxes: Can I Still Apply for U.S. Citizenship?
11. Estate Tax: Definition, Tax Rates and Who Pays