Green card holders living in the UK: your US tax obligations

A green card is a US tax residency as well as an immigration status. Living in the UK, letting the card expire, or not going back for years does not end it. Only formal abandonment does.

You are a US tax resident

Under section 7701(b) a lawful permanent resident is a resident alien for tax purposes. That means every year:

• Form 1040 on worldwide income, including UK salary, UK rental income, UK investment income and UK pensions, with the Foreign Tax Credit or the Foreign Earned Income Exclusion relieving double tax;
• FBAR when the combined highest balances of non-US accounts exceed US$10,000;
• Form 8938 when the abroad thresholds are met;
• information returns for UK companies, LLPs and trusts you are involved in.

How tax residency ends

Filing Form I-407 with USCIS, or a final administrative or judicial order that your status has been abandoned or rescinded. Expiry of the plastic card changes nothing for tax. Many people discover years of unfiled returns at the point they want to regularise their immigration position.

The treaty and the tie-breaker

The saving clause lets the US tax residents as if the treaty did not exist, so most treaty reductions do not help a green card holder. Pensions (Articles 17 and 18) are the main exception. The residence tie-breaker in Article 4 can in principle make a green card holder a UK treaty resident, with a Form 8833 disclosure, but doing so is treated as expatriation for a long-term resident and can trigger the exit tax. Do not take that position without advice.

The exit tax when you give up the card

If you have held the card in at least 8 of the last 15 tax years you are a long-term resident, and abandoning it is an expatriation under section 877A. You are a covered expatriate if your net worth is US$2 million or more, your average tax liability exceeds the indexed threshold, or you cannot certify five years of compliance. See US exit tax.

Catching up

Green card holders who meet the 330-day non-residency test can use the Streamlined Foreign Offshore Procedures: three years of returns, six years of FBARs, Form 14653. If accepted there is no penalty; tax and interest are due. The 5% penalty belongs to the Domestic route for people living in the US.

Frequently asked questions

I have not filed for ten years. What now?

Streamlined is usually the route if the failure was non-wilful and you lived outside the US. We compute each of the three years before you decide; for UK residents the tax is often small because UK tax is credited.

My card expired years ago. Am I still a US taxpayer?

Yes, until formal abandonment. The expired card is an immigration issue; the tax status continues.

Does the Totalization Agreement apply to me?

Yes. If you work in the UK and pay National Insurance, you are generally outside US Social Security on that work. Self-employed people need an HMRC certificate of coverage to avoid US self-employment tax.

My spouse is British. Do we file jointly?

A non-resident alien spouse has no US obligation. Electing to file jointly brings their worldwide income into the US net and needs an ITIN; it can lower the tax in some cases and raise it in others. It is a decision to model, not a default.