Tax Help for Green Card Holders and New Immigrants

When you receive a green card or move to the United States to live, the U.S. tax system starts treating you very differently. Residents are taxed on income from everywhere in the world, must report many foreign accounts and assets, and face steep penalties when those reports are missed. This page explains the main rules for green card holders and new immigrants in Naperville, Aurora and elsewhere, with examples drawn from the Indian-American community, a particular focus of our practice.

When U.S. tax residency begins

You are a U.S. resident for tax purposes if you pass the green card test (you were a lawful permanent resident at any time in the year) or the substantial presence test (at least 31 days this year and a weighted 183 days over three years). If you meet both, residency starts on the earlier of the first day you were present under the substantial presence test or the first day you held permanent resident status.

If you arrive partway through the year, you may be a nonresident for the first part and a resident for the rest. That is a dual-status year. You file Form 1040 (or 1040-NR if you are a nonresident at year end) with a statement for the other part. In a dual-status year you cannot use the standard deduction or head of household rates, and you generally cannot file jointly. A nonresident who is married to a U.S. citizen or resident can elect to be treated as a resident, which can change the answer. See our residency rules guide.

If a tax treaty tie-breaker treats you as a resident of your home country, you may be taxed as a nonresident and must disclose the position on Form 8833. A green card holder should talk to an immigration attorney first, because claiming nonresident status can have immigration consequences.

What changes after the start date

Income you earned and received before your residency start date from sources outside the U.S. is generally outside U.S. tax. After that date, your salary, bank interest, dividends, rent, business profits and capital gains from anywhere are included. The U.S. does not reset the cost basis of property you already own when you become a resident, so a house or shares bought years ago abroad keep their original cost for U.S. gain calculations. Speak with a professional before you sell large foreign assets close to your arrival date, because the timing can change both the U.S. and foreign tax result.

Where a foreign country also taxes the income, the foreign tax credit and any treaty may reduce double tax. See foreign tax credit for India income, rental income from India and selling property in India.

Foreign accounts, assets and gifts

• FBAR. A U.S. person with a financial interest in, or signature authority over, foreign accounts whose combined value exceeds $10,000 at any time in the year files an FBAR electronically with FinCEN. It is due April 15, with an automatic extension to October 15. Signature authority over a parent's account can trigger reporting even if the money is not yours.
• Form 8938. For people living in the U.S., the thresholds are more than $50,000 at year-end or $75,000 at any time for single filers, and $100,000 and $150,000 for married couples filing jointly. It is attached to the tax return.
• Form 3520. Required if you receive more than $100,000 in a year from a nonresident individual or foreign estate, including gifts and inheritances. Gifts from foreign corporations or partnerships have a lower threshold: $20,116 for 2025 and $20,573 for 2026. The penalty for missing it can reach 25 percent of the gift (5 percent per month), unless you show reasonable cause.
• Other forms. Owning foreign mutual funds can require Form 8621, and owning a foreign company can require forms such as Form 5471. See foreign reporting penalties and our guide to gifts and inheritance from India.

Moving your own savings to the U.S. is not income, but keep proof of the source, such as bank statements and gift letters.

Taxpayer numbers, family and Illinois

Apply for a Social Security number as soon as you are eligible. A family member without one but with a filing need can use an ITIN; see ITINs for spouses and dependents. The Child Tax Credit requires a Social Security number for the parent and child. In general, children or parents who live in India and are not U.S. citizens or residents cannot be claimed as dependents.

Illinois uses its own residency test. If you moved into Illinois during the year, you generally file Form IL-1040 with Schedule NR as a part-year resident, and Illinois taxes income at a flat 4.95 percent for 2025.

Giving up a green card

If you have held a green card in eight of the last 15 years and then give it up, special exit tax rules and a Form 8854 filing can apply. Surrendering status does not by itself end U.S. tax filing duties for the year. Plan before you decide, not after.

How we can help

We prepare first-year residency analyses, dual-status returns, FBAR and Form 8938 reports, and Form 3520 filings, and we help coordinate U.S. and Indian tax. See international tax or our Naperville page. This page is general information.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.