Hi—if you’re a U.S. green card holder or in the process of applying for one, you’ll need to know about this. The IRS recently validated something that can have dire consequences: they’re revoking the tax resident status of tens of thousands of green card holders who don’t meet certain guidelines. And while this itself doesn’t necessarily imply that your green card is taken away, it can cause legal complications and derail your immigration process—fast.
Let’s work this out step by step.
A green card isn’t enough
So you possess a green card, officially called a Permanent Resident Card. That implies you can reside and work in the U.S. permanently, right? Yes… with one exception. The IRS has other criteria for classifying you as a resident for tax purposes. If you don’t meet those criteria, your tax status can be taken away from you, even if your immigration status is still intact.
And without resident tax status? You risk penalties, missed chances to become a U.S. citizen, and problems with your green card later on.
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Here’s how you could lose it
From the IRS, you’re not a tax resident if any of the following three events happen:
1. You voluntarily relinquish your residency.
This happens when someone files Form I-407 with USCIS and officially gives up their green card, or when the government decides that you’ve essentially abandoned your residency, like by staying outside the U.S. too long without explanation.
2. You fail the “Substantial Presence Test.”
This one is tricky. If you were not physically present in the U.S. for at least 31 days this year, and your total number of days present in the U.S. during the three most recent years doesn’t meet the level test, you are no longer a tax resident. The formula works thus:
- 100% of days this year
- Plus 1/3 of days in the prior year
- Plus 1/6 of days two years ago
If that comes out to less than 183 days, the IRS won’t treat you as a resident anymore.
3. You claim non-resident status under a tax treaty.
Some people employ international tax agreements, such as those between the U.S. and Spain or Mexico, to reduce taxes. But if you assert non-residency under one of those agreements, you might forfeit your tax residence in the U.S.
Why this matters
Even if USCIS hasn’t cancelled your green card yet, losing the tax resident status can have other ramifications. It can bar you from naturalizing. It can trigger audits, penalties, or even legal issues if you fail to report foreign income. And in the most severe circumstance? It puts your green card—and your future in the U.S.—in jeopardy.
So here’s the lesson: having a green card is not enough. You need to be careful about your tax obligations. If you’ve been overseas for long periods of time or are exploiting tax treaties, check your status. It’s easier to get this sorted out now than to risk having penalties later.
