What are the tax obligations for a green card holder? 5 Answers as of July 11, 2013Hello, my father who is 78 years old and retired got his Green Card last year. What is the status of his money and assets in his home country that he accumulated before getting the Green Card. And if, for example, he sells such an asset or is getting interest on his money that he accumulated before getting the Green Card, does he have to pay taxes on them? Thank you.
Tomas Ayuban | Tomas Ayuban
As a green card holder, your father has an obligation to declare his worldwide income by filing a U.S. Tax return every year. He also has an obligation to file certain disclosure statements every year if he has an interest in any offshore bank accounts and/or foreign corporations/entities. If he has no income and has no interest in any foreign accounts or foreign corporations/entities, then he probably doesn't need to file anything. However, if he does, I suggest you contact a tax attorney or CPA to assist your father in becoming fully compliant with U.S. tax laws.
Answer Applies to: Florida
Dorot Law, PA | Datan Zvi Dorot
The tax implications to a Green Card holder divide into "types" of tax. The most important of which are the income tax, estate tax and gift tax. For income tax purposes, a Green Card holder is taxed on his or her worldwide assets. So in the example of your father, he will have to report and pay income tax on his income from his home country - of course, many exclusions and exceptions, as well as deductions and credits, may be available, depending on the specific situation. From an estate and gift tax perspective, the question is whether your father is a U.S. domiciliary - which is defined as having the "intent to remain in the U.S. permanently." By obtaining a Green Card, your father has proven his intent and therefore will be subject to estate and gift taxation on the transfer of his worldwide assets both during his life and at his death. Again, exclusions, exceptions, credits and deductions may apply based on the specific facts of the case, but in general these are the rules. My best advice is to get advice. Not only are these rules complex, there are many things your father can do to minimize the tax implications in all three areas. Also, if he owns foreign assets, bank accounts, income producing property, companies or is a beneficiary of a foreign trust, additional reporting requirements will be necessary and failure to comply carries severe penalties. I would strongly advise you to find a tax attorney to consult with (rather than a CPA), as the attorney can help you with the planning aspect and most likely will be able to both protect you from violations and save you significant money by structuring your holdings and transfers properly.
Answer Applies to: Florida