New to the US? Resident Alien Tax Requirements in 2025 

According to the IRS, resident aliens must follow the same tax laws as U.S. citizens and report worldwide income, which often results in more favorable tax outcomes than expected. Suppose you’re a foreign national who recently moved to the US and qualified as a resident alien. In that case, you’ll access the same deductions, credits, and tax benefits available to American citizens, frequently resulting in lower effective tax rates than in your home country. 

If you’re a foreign national who has recently moved to the United States and qualified as a resident alien, your U.S. tax obligations are comprehensive but manageable. You’ll report worldwide income on Form 1040, but you’ll benefit from the full range of American tax advantages, including standard deductions, tax credits, and retirement account access. Most new resident aliens discover their U.S. tax liability is more reasonable than expected when properly utilizing foreign tax credits and domestic benefits. 

Your Resident Alien Tax Status Explained 

How You Qualified as a Resident Alien 

You’re considered a resident alien if you meet either the green card test or the substantial presence test: 

1. Green Card Test: You’re a lawful permanent resident at any time during the calendar year. 
2. Substantial Presence Test: If you have been in the U.S. for less than 31 days during a calendar year, you do not qualify under the Substantial Presence test. But if you have been in the U.S. for 31 days or more during a calendar year, the test is applied as follows.  
   • You’re physically present in the U.S. for at least 183 days during a three-year period using this weighted formula: 
     • All days in the current year, plus 
     • 1/3 of the days in the previous year, plus 
     • 1/6 of the days in the year before that 

Key Benefit: Once you qualify as a resident alien, you’re treated exactly like a U.S. citizen for tax purposes — including access to all deductions, credits, and benefits. 

What This Means for Your Taxes 

Same Rights as Citizens: 

• Full standard deduction ($15,000 single, $30,000 married filing jointly in 2025) 
• Access to all tax credits 
• Ability to contribute to retirement accounts 
• Same progressive tax rates (10% to 37%) 
• All filing status options are available 

Your Worldwide Income Reporting Obligations 

What You Must Report 

As a resident alien, you must report income from all sources worldwide: 

• Employment income: Wages from any country, including your home country 
• Investment income: Interest, dividends, and capital gains from global sources 
• Business income: Self-employment or business income anywhere 
• Rental income: Properties in any country 
• Pension income: Retirement distributions from any nation 
• Other income: Any income, regardless of source or currency 

Form 1040 Filing Requirements 

You’ll file Form 1040, the same form used by all Americans: 

• Due date: April 15, annually 
• Extensions: Form 4868 extends the deadline to October 15 
• Filing thresholds: Same as U.S. citizens (varies by age and filing status) 
• Payment requirements: Pay any taxes owed by April 15, even if filing an extension 

Avoiding Double Taxation 

Foreign Tax Credit: Your Best Protection 

The Foreign Tax Credit prevents double taxation by providing dollar-for-dollar credits for foreign taxes paid on the same income. 

How It Works: 

• $1 of foreign tax paid = $1 reduction in U.S. taxes 
• Can eliminate your entire U.S. tax liability 
• Particularly valuable for residents of high-tax countries 
• Unused credits can be carried forward for 10 years 

Example: Kumar, a resident alien from India, earned $80,000 and paid $18,000 in Indian taxes. His U.S. tax liability is $15,000. He uses the Foreign Tax Credit to eliminate his entire U.S. tax bill and carries forward $3,000 in unused credits. 

Non-US Sourced Income is not taxable before and after residency 

Any non-US-sourced income earned both before and after residency is not taxable. The US uses a calendar year tax year, which starts on January 1 and ends on December 31.  

• For example, if you move to the US on July 1^st, only US-sourced income from July 1 to December 31 is taxable for this year.  
• If you move out of the US on April 15th, any non-US-sourced income from January 1 to April 15^th of that year is taxable. 
• All US-sourced income is always taxable regardless of your residency status. But as a resident, your tax rates are usually lower. 
• Remember that you may also have state income tax requirements if you live in one of the states with an income tax. 

Tax Treaty Benefits

The U.S. has tax treaties with over 60 countries that may provide:

• Reduced withholding rates on investment income
• Exemptions for certain types of income
• Special rules for pensions and social security
• Protection from double taxation

Foreign Asset Reporting Requirements

FBAR (Foreign Bank Account Report)

If your foreign financial accounts exceeded $10,000 in aggregate at any time during the year, you must file an FBAR.

Key Facts:

• Filed separately through FinCEN (not with your tax return)
• Due April 15 with automatic extension to October 15
• Purely informational — no additional taxes owed
• Penalties for non-filing can be severe

Form 8938 (FATCA Reporting)

Form 8938 requires reporting of foreign financial assets if they exceed these thresholds:

For Resident Aliens Living in the US:

• Single: $50,000 at year-end or $75,000 anytime during the year
• Married filing jointly: $100,000 at year-end or $150,000 anytime during the year

What to Report:

• Foreign bank accounts
• Foreign stocks and bonds
• Foreign mutual funds
• Interest in foreign partnerships or corporations
• Foreign life insurance with cash value

Common Scenarios for New Resident Aliens

H-1B to Green Card Transition

Situation: Work visa holder becoming a permanent resident

Tax Strategy:

• May have a dual-status year during transition
• Optimize foreign tax credits for home country taxes
• Begin maximizing U.S. retirement account contributions

Example: Priya transitioned from an H-1B to a green card in July 2025. She files a dual-status return: nonresident alien for January-June, resident alien for July-December.

Family-Based Immigration

Situation: Spouse of a U.S. citizen obtaining permanent residency

Tax Strategy:

• Consider joint filing for the election even before the green card
• Maximize Child Tax Credit for qualifying children
• Plan the timing of the residency start date

Investment Immigration (EB-5)

Situation: Investor obtaining residency through the EB-5 program

Tax Strategy:

• Significant foreign assets likely require FBAR and Form 8938 reporting
• Complex international tax planning is needed
• Consider trust structures for asset protection

First-Year Considerations

Dual-Status Tax Year

If you became a resident alien during the year (not January 1), you may have a dual-status tax year:

• Nonresident portion: Income before the residency start date
• Resident portion: Income after becoming a resident alien
• Different rules: Each portion follows different tax rules
• Special filing: Requires careful calculation and documentation

State Tax Obligations

Don’t forget about state taxes:

• Each state has different rules for determining residency
• Some states have no income tax (Florida, Texas, etc)
• Others have high rates (California, New York, etc.)
• Consider state tax implications when choosing where to live. States with no income tax often have high property tax rates, making renting or owning a home more expensive. 

Social Security and Medicare

As a resident alien, you’re subject to:

• Social Security tax: 6.2% on wages up to $174,900 (2025)
• Medicare tax: 1.45% on all wages
• Additional Medicare tax: 0.9% on high earners
• Future benefits: May qualify for Social Security and Medicare benefits

Maximizing Your Tax Benefits

Retirement Account Contributions

Take advantage of tax-advantaged retirement accounts:

• 401(k): Up to $23,500 in 2025 ($31,000 if 50 or older)
• IRA: Up to $7,000 in 2025 ($8,000 if 50 or older)
• Employer matching: Free money — contribute enough to get full match

Tax Credits Available

You’re eligible for all U.S. tax credits:

• Child Tax Credit: Up to $2,000 per qualifying child
• Earned Income Tax Credit: For lower-income earners
• Education credits: American Opportunity and Lifetime Learning
• Child and Dependent Care Credit: For childcare expenses

Deduction Strategies

Choose between standard and itemized deductions:

• Standard deduction: $15,000 (single) or $30,000 (married) in 2025
• Itemized deductions: State taxes, mortgage interest, charitable contributions
• Strategy: Use whichever provides greater benefit

Key Deadlines and Requirements

Annual Timeline:

• April 15: Tax return and payment due
• April 15: FBAR due (automatic extension to October 15)
• January 31: Receive W-2s and 1099s
• Quarterly: Estimated tax payments if needed

Record Keeping:

• Maintain documentation of the residency start date
• Keep records of all worldwide income
• Save foreign tax payment receipts for credits
• Document foreign account balances for reporting

Avoiding Common Mistakes

Don’t Ignore Foreign Income

Report all worldwide income, even if not taxable or already taxed elsewhere. Failure to report can result in penalties.

Don’t Miss Foreign Reporting Deadlines

FBAR and Form 8938 have severe penalties for late filing. These are separate from your tax return.

Don’t Forget State Taxes

Each state has different rules. Research your state’s requirements and file accordingly.

Don’t Overlook Tax Credits

Many new resident aliens overpay by not claiming available credits and deductions.

Getting Professional Help

Adapting to the U.S. tax system as a foreign national involves complex rules, multiple forms, and ongoing compliance requirements. The intersection of international tax law, asset reporting, and benefit optimization requires specialized expertise.

Greenback is an American company founded in 2009 by US expats for US expats. We have always focused exclusively on helping Americans and foreign nationals with their international tax situations. Many of our CPAs and Enrolled Agents work with people transitioning to U.S. tax compliance for the first time—whether they’re foreign nationals, Americans moving abroad, or anyone dealing with cross-border tax issues.

What sets us apart is that we’ve helped over 23,000 people through every international tax situation while maintaining a 4.9-star average on TrustPilot. We’re proud of our high repeat client rates and the consistency required to prepare accurate tax returns for clients in 190+ countries. Whether you’re filing your first U.S. return or have been navigating international taxes for years, we’re here for the long haul.

Next Steps for New Resident Aliens

If you’re ready to establish compliant U.S. tax practices:

1. Confirm Your Status: Verify your resident alien qualification and effective date
2. Gather Global Documents: Collect worldwide income and foreign tax records
3. Assess Reporting Needs: Determine FBAR and Form 8938 requirements
4. Optimize Your Strategy: Plan foreign tax credits and domestic benefits
5. Get Expert Help: International tax situations benefit from professional guidance

No matter how complex your resident alien tax situation may be, you’ll have peace of mind knowing that your taxes were done right. Establishing proper U.S. tax compliance from the start sets you up for success — and we’re here to help whether you’re filing your first return or your fiftieth.

If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions about resident alien obligations or working with Greenback, contact our Customer Champions — we help Resident aliens, Americans abroad, and everyone in between with their U.S. tax needs. 

This article provides general information about resident alien tax obligations for foreign nationals. Tax laws can be complex and change frequently. For advice specific to your situation, consult with a qualified tax professional.