Green Card holders abroad
A Green Card keeps you 'in the US tax net' for the IRS — even when you live permanently in the UK. Long-term Green Card holders who eventually give up status may also face exit tax.
Eight years of Green Card status changes the rules. Plan around it, not after it.
A Green Card creates US tax obligations identical to a US citizen — you file every year, on worldwide income, with FBAR and FATCA on top. The added wrinkle for long-term Green Card holders living abroad is the exit tax: once you cross 8 years of Green Card status (counted in any 15-year window), surrendering the card triggers a mark-to-market 'sale' of your worldwide assets unless you fall under specific exceptions. The decision to give up status, and the timing of it, have material tax consequences — and most people don't realise the clock is running.
- Annual 1040 + FBAR + FATCA on the same footing as citizens
- Long-term-resident threshold tracked from your card-issued date
- Pre-surrender planning if exit-tax exposure is real
- Form 8854 prepared correctly when it's time to relinquish
- 8 yrsGreen Card status that triggers exit-tax exposure
- $2mnet-worth covered-expatriate threshold
- $190kaverage-tax covered-expatriate threshold (2024)
- 5 yrsof compliance required to avoid covered status
What we look at first.
- Ongoing Form 1040 filing while Green Card is valid
- Exit tax risk once you become a long-term resident (8+ years)
- Form 8854 when the card is relinquished
The forms we’ll likely prepare.
- Form 1040, FEIE/FTC
- FBAR and Form 8938
- Form 8854 if expatriating
Four steps from intake to filed return.
- 01
Status review
Confirm Green Card start date, count years against the long-term threshold, and identify any years that don't count (treaty residency claims, non-resident years).
- 02
Exposure read
Net-worth and tax-history check against covered-expatriate thresholds. Surface any 5-year compliance gaps.
- 03
Plan or file
If surrender is on the horizon, build the runway — gifting, basis step-ups, account restructuring. If not, file the annual return as if every year matters, because for the eventual exit calculation, it does.
- 04
Annual maintenance
Track ongoing US tax exposure, FBAR / 8938 obligations, and document any treaty-residency positions that pause the long-term clock.
Held a Green Card for nine years living in London. I assumed surrendering it would be a passport-office matter. TaxStone caught the exit-tax exposure early enough to plan around it.
Common mistakes we see — and fix.
These are the four positions that most often get filed wrong before clients come to us. Sometimes it’s a prior preparer’s call we’d disagree with; sometimes it’s a default election that compounded for years. Either way, we work backwards through them before drafting your return.
- Letting Green Card lapse passively without filing Form 8854 — still triggers exit tax
- Assuming a treaty-residency position pauses the long-term clock automatically (it doesn't unless properly elected)
- Missing the 5-year compliance certification at exit — turns you into a covered expatriate
- Renouncing in a high-net-worth year instead of waiting for asset rebalancing
Three snapshots from our practice.
Anonymised, paraphrased, but representative — three of the shapes the work tends to take for green card holders abroad.
Pre-surrender reviewHeld the card 11 years, planning to return permanently to the UK. We modelled exit-tax exposure, sequenced gifting + basis step-ups, and surrendered under the covered-expatriate thresholds.
Annual filingCard holder in Edinburgh for 4 years, US filings up to date. Annual 1040 + FBAR + Form 8938, FTC carry-forward tracker, plus a 5-year compliance calendar so a future surrender is clean.
Inheritance + retirementGC holder retiring back to the UK with a US 401(k), UK SIPP, and a US-situs estate inheritance. Treaty positions on both pensions, US estate exposure planning, and a ten-year drawdown schedule.
See if green card holders abroad describes your situation.
We'll confirm what you need to file — and just as importantly, what you don't.