Green card financial guide: your first year as a permanent resident

Immigration status and tax status are usually two separate questions. A green card collapses them into one, and it changes the answer to a dozen money questions you had settled on a temporary visa. This is the first-year plan.

Tax residency from day one

Under the IRS green card test you are a US resident for tax purposes if you are a lawful permanent resident at any time in the calendar year, and residency starts on the first day you are present in the US as a permanent resident. From that day you are taxed like a citizen: worldwide income, Form 1040, the same filing statuses, deductions, and credits — and the same reporting duties on everything you own abroad. The status does not switch off when you travel, or even when you move abroad; for tax purposes it ends only if you abandon the card in writing to USCIS, or USCIS or a federal court terminates it.

If you were already in the US on a work visa and adjusted status, you were probably a tax resident under the substantial presence test before the card arrived, so nothing changes at the filing level. If you immigrated from abroad, the arrival year is usually a dual-status year: US-source income only before your residency start date, worldwide income after it. Dual-status returns have their own rules; use a preparer who has done one. Work out your start date with the substantial presence calculator and read resident vs nonresident for tax purposes.

Accounts at home: FBAR and FATCA now apply to you

Every account outside the US that you own or can sign on is now reportable. The FBAR goes to FinCEN, not the IRS; it is due 15 April with an automatic extension to 15 October, and applies once the combined value of your foreign accounts crosses a low fixed threshold at any point in the year. FATCA reporting (Form 8938) is attached to your Form 1040 and has higher thresholds that depend on filing status. Filing one does not excuse the other, and the penalties for missing them are out of all proportion to the effort, whether or not any tax was due. Start with the FBAR guide and the FATCA guide.

Pensions, brokerage accounts, cash-value life insurance, and joint accounts with parents all count. Rental income at home is US-taxable too, with foreign tax credits for tax paid there. And be careful with foreign mutual funds — many get punitive US treatment.

Keeping the card: absences and the reentry permit

Permanent residence assumes you live here. Short trips are fine; long ones raise two separate risks. The first is to the card: a long absence, especially alongside signs that your real home is elsewhere, can be read as abandonment. The second is to naturalisation: USCIS says absences of six months or more may disrupt the continuous residence you need to apply for citizenship.

If you expect to be outside the US for more than a year — a home-country assignment, a family situation, a remote-work stint — USCIS advises applying for a reentry permit on Form I-131 before you leave, so you can return during its validity without a returning resident visa. Stay away more than two years and any permit granted before departure will have expired; the route back is then an SB-1 returning resident visa from a consulate, with a fresh eligibility case and a medical exam. Form N-470 can preserve continuous residence for naturalisation during a qualifying absence.

Everyday finances: credit, mortgages, and health coverage

A green card does not create a credit history; if you are new, the sequence in how to build US credit as an immigrant still applies. What it changes is how lenders may see you. Fair-lending rules under the Equal Credit Opportunity Act let a lender consider immigration status only as far as it bears on their ability to be repaid, and the rule's own example distinguishes a long-time permanent resident from someone here temporarily on a student visa. In practice permanent residents sit on the citizen side of that line: lenders' guidelines for conventional and government-backed mortgages generally treat you like a citizen, subject to the same credit, income, down-payment, and documentation tests.

Employer health coverage is still the default. If you need to buy your own, lawful permanent residents count as lawfully present for the Health Insurance Marketplace and can qualify for premium tax credits on the same income basis as citizens. Medicaid is different: many new permanent residents face a five-year waiting period, with exceptions for refugees and asylees and, in some states, pregnant women and children. Avoid a coverage gap — see health insurance for newcomers.

Retirement and Social Security credits

On a temporary visa every retirement decision carried a what-if-I-leave hedge. Permanent residence removes most of it. Take the full 401(k) match, then choose between pre-tax and Roth contributions on the merits of your tax bracket now versus in retirement — the Roth IRA guide applies to you in full. If you hold old 401(k)s from previous employers, what happens to your 401(k) if you leave covers consolidating them; investing on a visa has the broad picture.

Social Security now matters. Retirement benefits need 40 credits; you can earn up to four a year, so that is roughly ten years of covered work, and credits earned on H-1B or other work visas already count. If you worked in a country with a totalization agreement with the US, years there may help you qualify.

Sponsoring family: the Affidavit of Support is a contract

Many new permanent residents want to bring a spouse, a child, or later a parent. Most family-based immigrants need a sponsor to sign Form I-864, and USCIS is explicit that it is a legally enforceable contract with the US government. Your household income generally has to reach 125 percent of the federal poverty guidelines for your household size (100 percent for active-duty military sponsoring a spouse or child); the figures are updated each year on Form I-864P, so check the current table rather than a number someone quoted you. If your income falls short, a joint sponsor can sign and takes on the same obligation independently.

Two endgames: naturalisation or giving up the card

Most permanent residents can apply for citizenship after five years with the card (three if married to and living with a US citizen throughout), with at least half of that period physically in the US and continuous residence throughout. The application is Form N-400; there is a filing fee, with a reduced fee and a full waiver available on income grounds, and the real costs tend to be peripheral: translations, travel, a lawyer if your history is complicated. Citizenship ends the residency obligation and the risk of losing status through long absences. Budget for it from year three.

Some people instead decide home is home. If you held the card in at least eight of the fifteen tax years ending with the year you give it up, the IRS treats you as a long-term resident under the same expatriation rules as a citizen renouncing. You are a covered expatriate if any one of three things is true: your net worth is above a threshold, your average annual net income tax over the previous five years is above an inflation-adjusted threshold, or you cannot certify on Form 8854 that you were fully tax-compliant for those five years. Covered expatriates are treated as if they sold everything they own at market value the day before expatriating, with tax on gains above an exclusion amount.

Any year in which you held the card for even part of the year generally counts toward the eight, and the compliance test catches more people than the wealth tests. Everyone who gives up a card after long-term residence files Form 8854 with that year's return. If you might go home one day, talk to an adviser before year eight, not after.

Your first-year checklist

1. Note your residency start date and work out whether this is a dual-status year.
2. Inventory every foreign account, pension, and policy; put the FBAR and Form 8938 deadlines in your calendar.
3. Update your W-4 and your employer's records, and keep your address current with USCIS — a legal requirement with a short deadline, not an option.
4. Check your Social Security earnings record; raise 401(k) contributions past the match and decide pre-tax versus Roth.
5. Review health coverage; if you are between plans, check Marketplace eligibility immediately.
6. If you plan a stay abroad of a year or more, apply for a reentry permit before you go.
7. If you intend to sponsor family, run the I-864 income test now and line up a joint sponsor if needed.
8. Start a file of proof of US residence — tax returns, lease or mortgage, licence — and write down the year you got the card. Year eight matters.

Other guides on this site

This page is the overview. Each of these goes deeper on one part of it:

• FBAR explained — who files, what counts as a foreign account, and the deadlines.
• Roth IRA guide — the pre-tax versus Roth decision now that leaving is no longer the default assumption.
• L-1 financial guide — for transferees on the EB-1C track who will land on this page next.