What Is a Green Card? Eligibility, Rights and U.S. Tax Rules

A U.S. green card gives a foreign national lawful permanent residence, allowing them to live and work in the United States indefinitely without repeatedly renewing a temporary U.S. visa. It is not the same as U.S. citizenship, however, and it brings responsibilities that begin as soon as you become a permanent resident—including U.S. tax obligations.

At Bright!Tax, we help people navigate those tax changes from the moment they receive their green card. Your first year can be particularly complicated: you may become a U.S. tax resident partway through the year, need to report income earned in another country or discover that foreign accounts and investments require additional forms.

What is a green card?

A green card, officially called a Permanent Resident Card or Form I-551, proves that you are a lawful permanent resident of the United States. It is issued by U.S. Citizenship and Immigration Services (USCIS), an agency within the Department of Homeland Security.

Lawful permanent residents, often referred to as LPRs, can live and work permanently in the U.S. However, permanent residence is not the same as citizenship.

Green card holder	U.S. citizen
Can live and work permanently in the U.S.	Can live and work permanently in the U.S.
Can sponsor certain family members	Can sponsor a wider range of family members
Cannot vote in federal elections	Can vote in federal elections
Cannot obtain a U.S. passport	Can obtain a U.S. passport
Can lose status through abandonment or removal	Citizenship is not lost through extended travel abroad
Usually reports worldwide income to the IRS	Reports worldwide income to the IRS
May qualify to apply for citizenship	Already holds citizenship

Your immigration status does not usually expire when the card does. Most green cards are valid for 10 years and must be renewed, but an expired card does not automatically end your lawful permanent residence.

Conditional green cards are different. They are valid for two years, and you must apply to remove the conditions before the card expires.

What can you do with a green card?

Lawful permanent residents can:

• Live permanently in the United States
• Work for most U.S. employers without separate employment authorization
• Start or own a business
• Buy property
• Attend U.S. schools and universities
• Apply for Social Security and Medicare after meeting the relevant eligibility requirements
• Travel outside the United States and return, provided they continue to maintain U.S. residence
• Sponsor certain relatives for permanent residence
• Apply for U.S. citizenship once eligible

Some jobs remain restricted to U.S. citizens, particularly positions involving specific security clearances or statutory citizenship requirements.

Green card holders also cannot vote in federal, state or local elections restricted to citizens. Registering to vote or voting when you are not eligible can have serious immigration consequences.

What responsibilities come with a green card?

Permanent residence comes with more than the right to stay in the United States. Green card holders must:

• Obey federal, state and local laws
• File U.S. tax returns and report worldwide income when required
• Carry proof of permanent residence if they are 18 or older
• Report a change of address to USCIS within 10 days
• Register with Selective Service if required
• Maintain the United States as their permanent home
• Renew or replace their physical green card when necessary

You can lose permanent resident status by formally abandoning it, remaining abroad in circumstances that indicate abandonment, committing certain removable offences or obtaining the status through fraud.

Who qualifies for a green card?

USCIS recognises several routes to lawful permanent residence. The requirements depend on the category under which you apply.

Route	Who it can cover
Family	Certain relatives of U.S. citizens and green card holders
Employment	Skilled workers, professionals, investors and people with exceptional ability or other qualifying achievements
Diversity Visa Program	Eligible applicants from countries with historically low U.S. immigration rates
Refugee or asylum status	Qualifying refugees and asylees
Special immigrant categories	Certain religious workers, international organisation employees and other designated groups
Humanitarian categories	Certain victims of trafficking, crime or abuse
Other statutory routes	Applicants covered by specific immigration laws or programmes

Family-based green cards

U.S. citizens can petition for:

• A spouse
• Unmarried children under 21
• Parents, if the sponsoring citizen is at least 21
• Unmarried adult children
• Married children
• Brothers and sisters, if the sponsoring citizen is at least 21

Spouses, unmarried children under 21 and parents of U.S. citizens are classed as immediate relatives. Visas are always available for this group, although applications still take time to process.

Other relatives fall into family-preference categories subject to annual limits. Their waiting time depends partly on the applicant’s priority date and the monthly Visa Bulletin.

Green card holders can petition for their spouses and unmarried children, but not their parents, married children or siblings.

Family sponsorship usually begins with Form I-130, officially called the Petition for Alien Relative. Filing the petition establishes the qualifying relationship, but it does not by itself grant the relative permanent residence.

A foreign fiancé or fiancée who enters the U.S. on a K-1 visa must marry the sponsoring U.S. citizen within 90 days before applying to adjust status.

Employment-based green cards

Employment-based permanent residence is divided into five preference categories:

Category	Broad purpose
EB-1	Priority workers, including people with extraordinary ability, outstanding professors or researchers and certain multinational executives
EB-2	Professionals with advanced degrees and people with exceptional ability
EB-3	Skilled workers, professionals and certain other workers
EB-4	Qualifying special immigrants
EB-5	Investors who meet the investment and job-creation requirements

Some applications require an employer sponsor and permanent labour certification through the Department of Labor’s PERM process. Others, including qualifying extraordinary-ability and national-interest-waiver cases, allow a self-petition without a sponsoring employer.

Holding an employment-based non-immigrant visa does not automatically lead to permanent residence. Someone working in the United States on an H-1B visa, for example, normally needs to complete a separate employment-based green card process.

Diversity Visa Lottery

The Diversity Visa Lottery makes up to 55,000 immigrant visas available each year, although the number issued through the programme can be lower because of statutory reductions.

Applicants must usually have completed the equivalent of a U.S. high-school education or have two years of qualifying work experience completed within the previous five years.

Selection does not guarantee a green card. A selected applicant must still meet the programme requirements, complete the application process and obtain a visa before the programme year ends.

Refugees and asylees

Refugees must apply for permanent residence after being physically present in the United States for at least one year.

Asylees can apply after one year of physical presence. Unlike refugees, they are not legally required to adjust status, although many choose to do so.

For example, Mateo was granted asylum after arriving in the United States from Venezuela. Once he had completed one year of physical presence, he became eligible to apply for a green card based on his asylee status.

How do you apply for a green card?

The application route depends on whether you are applying from inside or outside the United States.

If you are…	Usual process
In the United States and eligible to apply there	Adjustment of status through USCIS
Outside the United States	Consular processing through the Department of State
In the United States but ineligible to adjust status	Consular processing may be required

The process usually involves:

1. Establishing an eligible immigration category.
2. Filing the relevant immigrant petition, if one is required.
3. Waiting for a visa to become available if the category is subject to annual limits.
4. Filing Form I-485, the Application to Register Permanent Residence or Adjust Status, or Form DS-260 for consular processing.
5. Completing the required medical examination.
6. Providing biometrics and supporting documents.
7. Attending an interview if required.
8. Receiving a decision from USCIS or the relevant U.S. consulate.

Family cases commonly begin with Form I-130, while employment cases commonly use Form I-140. The precise forms, evidence and fees depend on the category.

An applicant filing Form I-485 may also be able to request an Employment Authorization Document (EAD) using Form I-765. An EAD can provide temporary permission to work while the green card application is pending; it is not itself permanent residence.

Immigration rules can be unforgiving, particularly where a person has overstayed a visa, worked without authorisation or has a complicated travel or criminal history. An immigration attorney can advise on eligibility and immigration consequences. Bright!Tax handles the separate tax issues created by becoming or ceasing to be a U.S. resident.

What should you do after receiving your green card?

Several practical and tax-related changes begin once permanent residence is granted.

Action	Why it matters
Check the card carefully	Errors in your name, date of birth or immigration category should be corrected
Note the expiration date	Most cards must be renewed every 10 years
Update relevant records	Employers, Social Security and other agencies may need your new status
Understand your tax residency start date	You may need to file a U.S. return and report worldwide income
Review foreign accounts and investments	FBAR, FATCA or other international forms may apply
Keep travel records	Extended absences can affect permanent residence and future citizenship
Report address changes	USCIS normally requires notification within 10 days

At Bright!Tax, we often work with new green card holders who have never previously filed as U.S. tax residents. Sorting out the first return properly can prevent foreign income, pensions, companies or investment accounts from becoming much larger problems later.

How does receiving a green card affect your taxes?

A green card normally makes you a U.S. resident for federal tax purposes under the green card test.

Once U.S. tax residency begins, you are generally taxed on your worldwide income—not only income earned in the United States. That can include:

• Foreign salary or self-employment income
• Interest and dividends
• Rental income
• Capital gains
• Pension income
• Income from foreign companies, partnerships or trusts

Your tax residency does not necessarily begin on January 1 of the year you receive the card. The residency starting-date rules determine when you became a U.S. resident for tax purposes.

This can produce a dual-status tax year in which you are treated as a nonresident for part of the year and a resident for the remainder. Dual-status returns follow different rules from ordinary resident returns, including restrictions on the standard deduction and filing status.

Laila received her green card and moved from Dubai to Boston in August. Her U.S. tax return did not simply begin with her American salary. We also had to determine her residency starting date, divide the year correctly and review the income she received from the UAE before and after that date.

In some circumstances, married taxpayers can make an election to be treated as U.S. residents for the full year. That can make joint filing possible, but it also brings the couple’s worldwide income within the U.S. tax system. The better choice depends on the figures rather than a universal rule.

Do green card holders have to report foreign accounts and assets?

Becoming a U.S. tax resident can create reporting obligations even when your money remains overseas.

Depending on what you own, you may need to consider:

• FBAR for reportable foreign financial accounts whose combined value exceeds $10,000 at any point during the year
• Form 8938 for specified foreign financial assets above the applicable FATCA threshold
• Form 8621 for certain foreign mutual funds and other passive foreign investment companies
• Form 5471 for certain interests in foreign corporations
• Form 8865 for certain interests in foreign partnerships
• Forms 3520 or 3520-A for certain foreign trusts and large foreign gifts

These forms do not necessarily mean you owe additional tax. They are reporting requirements, but the penalties for missing them can be substantial.

Someone who arrives with an ordinary investment portfolio can encounter unexpectedly complicated rules. Priya, for example, kept the mutual funds she had purchased while living in India. Once she became a U.S. tax resident, those funds potentially fell within the PFIC rules, making early review far more useful than discovering the issue several tax returns later.

Can foreign tax credits prevent double taxation?

Paying tax in another country does not remove the requirement to report the income in the United States. However, the Foreign Tax Credit can often reduce U.S. tax on income that has already been taxed abroad.

Tax treaties can also affect how particular types of income are treated, but they do not create a blanket exemption from U.S. filing.

The timing matters. Foreign and U.S. tax years, payment dates and income classifications do not always align, so a person can have tax obligations in both countries even when relief is ultimately available.

Do green card holders need to file U.S. taxes while living abroad?

Moving away from the United States does not automatically end either your immigration status or your U.S. tax residency.

A green card holder living abroad generally continues to file Form 1040 and report worldwide income unless permanent residence ends for U.S. tax purposes or a valid treaty position changes their status.

Treating yourself as a resident of another country under a tax treaty can have immigration and expatriation consequences. It should not be done casually simply because it appears to reduce a tax bill.

This is one reason Bright!Tax works with green card holders as well as U.S. citizens abroad. The tax rules can continue long after someone has physically left the United States.

Can you travel abroad with a green card?

Green card holders can travel internationally, but long or repeated absences can raise questions about whether the United States remains their permanent home.

Time outside the U.S.	Possible effect
Less than six months	Usually less likely to disrupt residence, although the circumstances still matter
More than six months	Can affect continuous residence for naturalization
One year or more	A green card alone is usually insufficient for re-entry
Extended or repeated trips	Can support a finding that U.S. residence was abandoned

A reentry permit can help show that an absence was intended to be temporary and normally allows a permanent resident to seek admission during its validity without obtaining a returning resident visa. It does not guarantee entry or preserve residence indefinitely.

USCIS and border officials can consider:

• The length and purpose of the trip
• Family and property ties in the United States
• U.S. employment or business connections
• Tax filings as a U.S. resident
• Whether the person maintained a U.S. home
• The overall pattern of travel

Filing a U.S. return as a nonresident can also be treated as evidence that you intended to abandon permanent residence.

How do you renew or replace a green card?

Most permanent residents use Form I-90 to renew a 10-year green card or replace one that has been lost, stolen, damaged or issued with incorrect information.

When USCIS accepts a properly filed Form I-90 renewal application, the receipt notice extends the validity of the expiring card for 36 months. The expired card and notice can be presented together as evidence of continued status during that period.

Situation	Form or action
Renewing a 10-year card	Form I-90
Replacing a lost, stolen or damaged card	Form I-90
Correcting certain card errors	Form I-90
Removing marriage-based conditions	Form I-751
Removing EB-5 investor conditions	Form I-829
Applying for citizenship	Form N-400

Do not use Form I-90 to renew a two-year conditional green card. Conditional residents must apply to remove the conditions instead.

How do you remove conditions from a green card?

A person who receives residence through a marriage that was less than two years old when permanent residence was granted normally receives a two-year conditional green card.

The couple ordinarily files Form I-751 during the 90-day period before the card expires. The petition must show that the marriage was genuine rather than entered into solely to obtain immigration status.

Evidence can include:

• Joint leases or property records
• Shared bank accounts and insurance
• Joint tax returns
• Children’s birth certificates
• Travel records, photographs and correspondence
• Other evidence of a shared life

A joint filing is not always possible. USCIS permits waivers in qualifying circumstances, including divorce after a good-faith marriage, battery or extreme cruelty, or extreme hardship.

Hana’s marriage ended before her conditional card expired. Divorce did not automatically end her permanent residence, but she needed to file Form I-751 with a waiver and provide evidence that the marriage had been genuine.

Conditional EB-5 investors use Form I-829 rather than Form I-751.

Can you lose or give up a green card?

Permanent residence can end through:

• Formal abandonment
• A final removal order
• Rescission of status
• A finding that residence was abandoned
• Certain treaty-based tax positions
• Naturalization as a U.S. citizen

A person who wants to relinquish permanent residence usually files Form I-407. However, giving up the physical card does not necessarily settle every U.S. tax obligation.

Long-term residents—people who held green card status in at least eight of the previous 15 tax years—can fall within the expatriation rules when that status ends. They may need to file Form 8854, and covered expatriates can face additional tax consequences.

Before surrendering a green card, it is worth reviewing:

• How many tax years count toward long-term resident status
• Whether all required U.S. returns have been filed
• Whether Form 8854 will be required
• Whether the net-worth or tax-liability tests apply
• The treatment of pensions, investments and deferred compensation
• The effect of any tax-treaty position previously claimed

This is another point at which Bright!Tax can help: ending permanent residence can be as consequential for tax purposes as receiving it.

When can a green card holder apply for citizenship?

Many permanent residents can apply for naturalization after five years. A person married to and living with a U.S. citizen can qualify after three years if all the relevant conditions are met.

Applicants must also satisfy requirements concerning:

• Continuous residence
• Physical presence in the United States
• Residence within the relevant state or USCIS district
• Good moral character
• English-language ability, unless an exception applies
• Knowledge of U.S. history and government
• Attachment to the principles of the U.S. Constitution

Trips lasting more than six months can disrupt continuous residence unless the applicant proves otherwise. An absence of one year or more normally breaks continuous residence unless a specific preservation rule applies.

Get your taxes right from the start

Receiving a green card can change what income the United States taxes, which return you file and what you must report about accounts or assets in other countries. Those questions are much easier to handle in your first filing than several years later.

Bright!Tax helps new green card holders establish their U.S. tax position, file their first resident or dual-status return and understand their international reporting obligations. We also support permanent residents living abroad and people considering surrendering their status.

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