Knowledge Center Tax Advice for Specific Needs

Welcome to the U.S.: Your First-Year Tax Guide as a New Resident Alien

Welcome to the United States! If you just received your green card or qualified as a resident alien through the substantial presence test, you’re joining approximately 1.17 million people who became lawful permanent residents in fiscal year 2023 alone. While this milestone opens exciting opportunities, it also means you now have U.S. tax obligations that likely differ significantly from what you’re used to.

According to the IRS, resident aliens are eligible for the same deductions, credits, and tax benefits as U.S. citizens. While you must report worldwide income, the U.S. tax system includes powerful protections that often result in lower effective tax rates than many new arrivals expect. Most new resident aliens find that their first-year filing is more straightforward than they initially feared.

This guide walks you through exactly what happens in your first tax year as a resident alien, what you need to do now, and how to set yourself up for long-term success with U.S. tax compliance.

What Changes the Moment You Become a Resident Alien?

Your tax status shifts immediately once you qualify as a resident alien, whether through receiving a green card or meeting the substantial presence test. This change affects you right away, not just at tax time.

You’re Now a U.S. Tax Resident

As a resident alien, the IRS treats you identically to a U.S. citizen for tax purposes. This means:

You report worldwide income. Every dollar you earn anywhere in the world goes on your U.S. tax return. Your salary from your home country before moving here? Reportable. Interest from foreign bank accounts? Reportable. Rental income from property abroad? Reportable.

You gain full access to tax benefits. Unlike nonresident aliens, who face restricted deductions, you can claim:

The full standard deduction ($15,000 for single filers, $30,000 for married filing jointly in 2025)
All tax credits (Child Tax Credit, Earned Income Credit, education credits)
Retirement account contributions (401(k), IRA)
Itemized deductions if they exceed your standard deduction

You file Form 1040. You’ll use the same tax form as U.S. citizens, not Form 1040-NR that nonresident aliens use.

Confirm Your U.S. Tax Status for Your First Year.

Resident alien, nonresident, or dual-status. Know exactly where you stand.

When Did Your Residency Start?

Your residency start date determines which income you must report and which tax year this affects:

Green card holders: Your residency begins the day you receive your green card, even if it’s December 31. If you got your card mid-year, you’ll likely have a dual-status tax year.

Substantial presence test: If you qualified by being physically present in the U.S. for enough days, your residency typically begins on the first day of the year you met the test. However, you may have an earlier start date if you were here for part of the previous year.

Understanding your exact start date matters because it determines:

Which months of income you report as a resident alien
Whether you need to file a dual-status return
How you prorate certain deductions and credits

Do I Report Income from Before I Moved to the U.S.?

This can be confusing for almost every new resident alien, so let’s clarify: you report worldwide income only from your residency start date forward.

The Calendar Year Rule

The U.S. tax year runs January 1 through December 31. Here’s how your pre-move income works:

Income earned before your residency date: Generally not reportable on your U.S. return. If you earned a salary in your home country before receiving your green card or meeting the substantial presence test, those earnings typically aren’t taxed by the U.S.

Income earned after your residency date: Fully reportable, regardless of source. Once you’re a resident alien, every dollar you earn anywhere counts.

Example: Raj received his green card on July 15, 2025. He earned $40,000 working in India from January to July, and then earned $45,000 working in the U.S. from August to December.

For his 2025 U.S. tax return, he reports:

July 15-31 India income: Reportable (he was a resident alien)
August-December U.S. income: Reportable ($45,000)
January-July 14 India income: Generally not reportable on U.S. return

Raj is likely to file a dual-status return for 2025, with different rules applying to each portion of the year.

U.S.-Source Income Is Always Taxable

One exception to remember: any income from U.S. sources is taxable regardless of your residency status. If you worked in the U.S. before becoming a resident alien, that income was still taxable (you should have filed Form 1040-NR as a nonresident).

How Do I Avoid Paying Taxes Twice on the Same Income?

This is the #1 concern for new resident aliens, and here’s the good news: the U.S. tax system includes powerful protections against double taxation.

The Foreign Tax Credit Saves the Day

The Foreign Tax Credit (FTC) gives you a dollar-for-dollar credit for income taxes you paid to foreign governments.

How it works: If you paid $8,000 in taxes to Germany on income you earned there, you get an $8,000 credit against your U.S. tax liability on that same income.

Who benefits most: Resident aliens living in high-tax countries (Canada, most of Europe, Australia, Japan) often find that the FTC eliminates their entire U.S. tax bill.

Example: Yuki lives in Tokyo and earned $90,000, paying $22,000 in Japanese taxes. Her U.S. tax on that income would be $16,000. The Foreign Tax Credit of $22,000 eliminates her entire U.S. liability, with $6,000 in unused credits carried forward to future years.

You claim the FTC using Form 1116, which your tax preparer will file with your Form 1040.

Tax Treaties Provide Additional Protection

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 (pensions, social security)
Special rules for students, teachers, and researchers
Tie-breaker rules if both countries claim you as a tax resident

If you’re eligible for treaty benefits, you may need to file Form 8833 to claim them. Review your home country’s treaty with the U.S. to determine the protections that apply to your situation.

What About My Foreign Bank Accounts and Assets?

This requirement catches many new resident aliens completely off guard: the U.S. requires you to report foreign financial accounts and assets, even though you’re not taxed on simply holding them.

FBAR: Foreign Bank Account Reporting

If your foreign financial accounts exceeded $10,000 in aggregate value at any point during the year, you must file an FBAR (Foreign Bank Account Report).

What counts:

Foreign bank accounts (checking, savings)
Foreign investment accounts
Foreign retirement accounts (in most cases)
Accounts where you have signature authority, even if you don’t own them

Key facts:

Filed separately through FinCEN (not with your tax return)
Due April 15, with automatic extension to October 15
Purely informational—you’re not taxed on having the accounts
Severe penalties for non-filing: up to $12,500 per year for unintentional failures

Example: Maria has €8,000 in a Spanish bank account and €4,000 in a Spanish investment account. The combined value of €12,000 (approximately $13,000) exceeds the $10,000 threshold. She must file FBAR even though she only earned $200 in interest on these accounts.

FATCA: Form 8938 Reporting

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

For resident aliens living in the U.S.:

Single filers: $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 and investment accounts
Foreign stocks and bonds held directly (not through a U.S. broker)
Foreign partnerships or business interests
Foreign life insurance with cash value

Form 8938 is filed with your regular tax return. Many resident aliens need to file both FBAR and Form 8938, reporting the same accounts on both forms.

Learn more about the differences in our FBAR vs FATCA guide.

What Forms Will I Need to File?

Your first year as a resident alien typically requires several forms. Here’s your complete checklist:

Core Tax Forms

Form 1040: Your main tax return, where you report all worldwide income and claim deductions and credits.
Form 1116: To claim the Foreign Tax Credit if you paid foreign income taxes.
Schedule B: Required if you have more than $1,500 in interest or dividends, or if you have foreign accounts.
Form 8833: To claim tax treaty benefits (if applicable to your situation).

Foreign Reporting Forms

FBAR (FinCEN Form 114): Filed separately through FinCEN if your foreign accounts exceeded $10,000.
Form 8938: Filed with your tax return if your foreign assets exceed the thresholds.

Possible Additional Forms

Form 2555: If you’re a green card holder living abroad and claiming the Foreign Earned Income Exclusion.
Form 5471: If you own 10% or more of a foreign corporation.
Form 8865: If you own interests in foreign partnerships.
Form 3520: If you received gifts or inheritances from foreign persons exceeding $100,000.

When Do I Need to File?

Your filing deadline is April 15 of the year following the tax year. For your 2025 income, you’ll file by April 15, 2026.

Extensions Available

Automatic 2-month extension: Unlike most U.S. taxpayers, resident aliens living abroad get an automatic extension to June 15 (no form required).
Additional extension to October 15: File Form 4868 by April 15 (or June 15 if abroad) to request this extension.

Extensions apply only to filing, not to payment. Any taxes owed must be paid by April 15 to avoid interest charges.

State Tax Considerations

Don’t forget about state taxes. Most states with income tax will require you to file a state return if you live there or earn income there.

Resident of a state: You’ll typically owe tax on your worldwide income to that state, just like federal.
No state income tax: Nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) don’t have income tax, making them attractive for new arrivals.
Multi-state situations: If you moved between states during the year, you may need to file part-year resident returns for each state.

Learn more about state tax obligations for new arrivals.

Can I Contribute to Retirement Accounts?

Yes, and this is one of the significant benefits of being a resident alien. You can now contribute to tax-advantaged retirement accounts exactly like U.S. citizens.

401(k) Plans

If your employer offers a 401(k):

Contribute up to $23,500 in 2025 ($31,000 if age 50 or older)
Contributions reduce your taxable income
Always contribute enough to get full employer matching (free money)

IRA Accounts

You can open and contribute to Individual Retirement Accounts:

Traditional IRA: Contributions may be tax-deductible, grow tax-deferred
Roth IRA: Contributions are not deductible, but grow tax-free
Contribution limit: $7,000 in 2025 ($8,000 if age 50 or older)

The Planning Advantage

Starting retirement contributions in your first year as a resident alien provides two benefits:

Tax reduction: Lower your current year’s taxable income
Long-term wealth: Compound growth in tax-advantaged accounts

Common First-Year Mistakes to Avoid

Mistake #1: Not Filing Because You Don’t Owe Tax

Even if you don’t owe any U.S. tax (thanks to the Foreign Tax Credit or low income), you still must file a return. Failure to file can result in penalties and cause problems with future immigration applications or citizenship.

Mistake #2: Ignoring Foreign Account Reporting

FBAR and Form 8938 have separate deadlines and requirements from your tax return. Missing these filings can result in severe penalties, even if you don’t owe any taxes.

Mistake #3: Not Tracking Your Entry Date

Your residency start date determines your entire tax obligation for your first year. Keep documentation of:

The date you received your green card
Arrival and departure dates if you qualified through physical presence
Days spent in the U.S. if near the substantial presence threshold

Mistake #4: Assuming Treaty Benefits Apply Automatically

Tax treaty benefits generally require you to file specific forms and meet eligibility requirements. Don’t assume you qualify—verify your eligibility and file the necessary documentation.

Mistake #5: Mixing Up Filing Status

Married resident aliens have an important choice: you can file jointly with your spouse even if they’re a nonresident alien, but only if you make a special election. This election treats your spouse as a resident alien for tax purposes, which has both benefits and obligations.

Learn more about Form 1040 filing options for different situations.

What Should I Do Right Now?

Your transition to resident alien status doesn’t have to be overwhelming. Here are your immediate next steps:

In Your First Month

Determine your residency start date. Review when you received your green card or calculate when you met the substantial presence test. This date determines everything else.

Gather your financial records. Collect documentation for:

Worldwide income from your residency date forward
Foreign taxes paid
Foreign account statements
Employment records from all countries

Get a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). You’ll need one of these to file your U.S. tax return. If you don’t have an SSN, apply as soon as possible.

Before Year-End

Open U.S. bank accounts. Establish banking relationships in the U.S. for depositing income and managing finances.
Review your withholding. If you’re working in the U.S., review your Form W-4 to ensure adequate tax withholding. Adjust if needed to avoid owing large amounts at tax time.
Start a tax file. Create a folder (either physical or digital) for storing tax documents. Save all income statements, foreign tax receipts, and account statements throughout the year.
Consider estimated tax payments. If you have income not subject to withholding (self-employment, rental income, investment income), you may need to make quarterly estimated payments to avoid penalties.

By Tax Season

Connect with an expat tax professional. Your first year as a resident alien involves complex forms and calculations. Professional guidance ensures you:

File correctly and on time
Claim all available credits and deductions
Properly report foreign accounts and assets
Avoid costly mistakes

Gather your year-end documents. By January 31, you should receive W-2s from U.S. employers and 1099s for other income. Foreign income statements may arrive later—don’t wait until April to request them.

Getting Professional Help with Your First-Year Filing

Becoming a resident alien marks an important milestone in your U.S. journey. While the tax obligations may seem daunting at first, thousands of people successfully transition each year. The key is knowing what to expect, staying organized, and getting help when you need it.

Remember the essentials:

You report worldwide income from your residency start date forward
Foreign Tax Credits usually eliminate or reduce double taxation
Foreign accounts must be reported even if you don’t owe tax on them
You gain access to all the same deductions and credits as U.S. citizens
Professional help makes your first year significantly easier

No matter how complex your first year as a resident alien may be, you’ll have peace of mind knowing your taxes were done right. Getting started correctly sets you up for long-term success with U.S. tax compliance.

If you’re ready to be matched with a Greenback accountant, click the Get Started button below. For general questions on US expat taxes or working with Greenback, contact our Customer Champions.

Get Peace of Mind About Your First U.S. Tax Filing.

Avoid first-year mistakes and start off compliant and confident.

This article provides general information about tax obligations for resident aliens. Tax laws are complex and subject to frequent changes. For advice tailored to your specific situation, consult a qualified tax professional specializing in international taxation.

Understanding Your New Status

Protecting Yourself from Double Taxation

Foreign Account Reporting

Green Card Holders

Free Guide 15 Tax Tips Every American Expat Needs To Know in 2025

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