Filing Taxes While Waiting for a Green Card: What You Need to Know

Filing taxes while waiting for a green card can be complicated, particularly when determining IRS obligations. Your tax status depends on factors such as time spent in the U.S. and residency criteria. Filing incorrectly may lead to penalties or immigration complications.

Understanding these tax rules is essential to ensure compliance and avoid errors. Choosing the right identification number, selecting the best filing status, and reporting income accurately all impact tax liability and potential refunds.

Determining Tax Residency

The IRS determines tax residency using the green card test and the substantial presence test. Since you are waiting for a green card, the substantial presence test is the primary factor.

This test calculates the number of days you have been in the U.S. over a three-year period using a weighted formula: all days in the current year count fully, one-third of the days from the previous year count, and one-sixth of the days from two years ago count. If the total is 183 days or more, you are considered a U.S. tax resident.

Certain exemptions apply, such as for students on F-1 visas and some foreign government employees. If you do not meet the substantial presence test, you are classified as a nonresident alien and must only pay U.S. taxes on income earned within the country. Residents, however, must report worldwide income.

If you are married to a U.S. citizen or resident, you may elect to be treated as a resident for tax purposes, which can affect tax rates and deductions. Tax treaties between the U.S. and certain countries may also provide relief from double taxation by allowing exemptions or credits.

ITIN vs. SSN

When filing taxes, the IRS requires either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).

An SSN is issued to U.S. citizens and certain authorized noncitizens. If you do not qualify, you must apply for an ITIN, which is used solely for tax purposes and does not grant work authorization or Social Security benefits.

To apply for an ITIN, submit Form W-7 with a completed tax return and supporting documents proving identity and foreign status, such as a passport or national ID. Processing takes several weeks, so applying early is advisable. If you do not obtain an ITIN before the filing deadline, you may need an extension, which could delay refunds.

If you later receive an SSN, inform the IRS to update your records. Once an SSN is issued, the ITIN becomes invalid, and prior tax history should be linked to the new SSN.

Joint vs. Separate Filing

For married couples where one spouse is a U.S. citizen or resident and the other is waiting for a green card, choosing between joint or separate filing affects tax liability and deductions.

Filing jointly allows both spouses to be treated as U.S. residents, potentially lowering tax rates and granting access to credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit. However, it requires reporting worldwide income, which may increase taxable income if the nonresident spouse has foreign earnings.

Filing separately may be preferable if the nonresident spouse has significant foreign income and does not want it taxed in the U.S. It can also benefit those with high medical expenses or student loan payments affected by adjusted gross income. However, separate filers often face higher tax rates and lose access to valuable credits.

Reporting Worldwide Income

If you qualify as a U.S. tax resident, you must report all global earnings, including wages, self-employment income, rental earnings, dividends, interest, and capital gains, even if the money remains in an overseas account.

The Foreign Earned Income Exclusion (FEIE) may allow you to exclude up to $126,500 in foreign wages for 2024 if you meet the bona fide residence or physical presence test, both of which require extended stays abroad.

Foreign tax credits help prevent double taxation. If income is taxed by both the U.S. and another country, you can claim a credit for foreign taxes paid, reducing U.S. tax liability. However, the credit cannot exceed the U.S. tax owed on that income, and unused credits may be carried forward for up to 10 years or back one year.

Filing Deadlines and Extensions

The standard federal tax filing deadline is April 15, unless it falls on a weekend or holiday, in which case it moves to the next business day. Nonresident aliens generally have until June 15 if they did not earn wages subject to U.S. withholding.

If you cannot file on time, requesting an extension using Form 4868 grants an additional six months, moving the deadline to October 15. However, this extension applies only to filing the return, not to paying taxes owed. Interest and late payment penalties begin accruing after the original due date. To minimize penalties, estimate your tax liability and submit a payment with the extension request.

Possible Penalties for Non-Filing

Failing to file or pay taxes can result in financial penalties and immigration complications. The IRS imposes a failure-to-file penalty of 5% of the unpaid tax per month, up to 25%. If taxes remain unpaid, an additional failure-to-pay penalty of 0.5% per month applies, also capped at 25%. Interest accrues daily based on the federal short-term rate plus 3%.

Unresolved tax issues may affect immigration applications. USCIS considers tax compliance when evaluating green card petitions, particularly for employment- or family-based applications. A history of non-filing or unpaid taxes could raise concerns about financial responsibility. If you fall behind, the IRS offers installment agreements and hardship options to resolve liabilities and avoid enforcement actions.