Green Card Holders Living in Canada

Green Card holders living in Canada have ongoing U.S. tax obligations, even if they have lived outside the United States for many years. The IRS generally requires Green Card holders to report their worldwide income and file annual U.S. tax returns.

Many people assume that because they live and work exclusively in Canada, they only need to file Canadian income tax returns.

​While U.S. citizens residing in Canada generally expect to continue filing U.S. tax returns, the filing requirement can also come as a surprise to Canadian residents who have obtained a U.S. Green Card but continue living in Canada. In many cases, individuals receive a Green Card with the intention of moving to the United States, but their plans change. Others accept employment opportunities in Canada, remain with their Canadian employer, or decide that relocating is no longer the right choice.

​What many people do not realize is that simply keeping a U.S. Green Card may create ongoing U.S. tax filing obligations, even if they never actually live or work in the United States.

Why Does a Green Card Matter for U.S. Tax Purposes?

Unlike most countries, the United States taxes individuals based not only on where they live, but also on citizenship and immigration status.

​Generally, a lawful permanent resident (Green Card holder) is considered a U.S. tax resident for as long as the Green Card remains valid. This means that a Canadian resident who holds a Green Card may be required to file annual U.S. income tax returns even while living permanently in Canada.

​For many people, this comes as a genuine surprise. They may have never worked in the United States, may earn all of their income in Canada, and may already be filing Canadian tax returns every year. Nevertheless, the U.S. filing obligation can still exist.

Does This Mean I Have to Pay Tax Twice?

Not necessarily. In many situations, Canadian residents who earn employment income pay income tax at rates that are equal to or higher than comparable U.S. federal income tax rates.

​As a result, Canadian income taxes can often be claimed as Foreign Tax Credits on the U.S. tax return. These credits frequently reduce or eliminate any additional U.S. income tax.

​However, even where no additional U.S. tax is payable, the obligation to file a U.S. tax return generally remains.

What Income Must Be Reported?

A Green Card holder who is considered a U.S. tax resident generally reports worldwide income on the U.S. tax return.

​This typically includes:

​employment income earned in Canada;

• self-employment income;

• rental income;

• pension income;

• investment income;

• capital gains; and

• other taxable income earned anywhere in the world.

The income reported on the Canadian tax return is generally reported again on the U.S. return after converting the amounts into U.S. dollars using the applicable exchange rates.

When Does Filing Become More Complicated?

Although many Green Card holders have relatively straightforward filing obligations, additional planning may be required if you:

• own shares of a Canadian corporation;

• operate a business in Canada;

• own Canadian mutual funds or ETFs that may be treated as Passive Foreign Investment Companies (PFICs);

• have signing authority over Canadian financial accounts;

• own significant foreign financial assets;

• participate in Canadian registered plans such as TFSAs, RESPs, or FHSAs;

• own rental properties; or

• have interests in foreign corporations, trusts, or partnerships.

These situations often require additional U.S. information returns and may affect the availability of foreign tax credits or result in tax treatment that differs from Canadian rules.

What If I Never Intend to Move to the United States?

Many individuals continue renewing or maintaining their Green Card simply to preserve the option of living in the United States in the future.

​However, from a tax perspective, maintaining lawful permanent resident status may continue to create annual U.S. filing obligations. In some cases, individuals may also wish to consider whether formally abandoning a Green Card is appropriate. Because doing so can have significant immigration and tax consequences—including, in certain circumstances, U.S. expatriation tax considerations—it is important to obtain professional advice before making that decision.

The Bottom Line

Holding a U.S. Green Card is more than an immigration benefit—it may also establish U.S. tax residency.

​If you live in Canada and hold a Green Card, you should not assume that your Canadian tax return satisfies all of your tax obligations. Understanding your U.S. filing requirements early can help you remain compliant, avoid unnecessary penalties, and identify available foreign tax credits and treaty benefits.

​If you are unsure whether your Green Card creates a U.S. tax filing obligation, obtaining professional advice before filing—or before deciding to surrender your Green Card—can help you understand your options and avoid costly mistakes.