New green card holder tax filing requirements for a retired parent living abroad

12 Your father now has permanent resident status, which means he's considered a US tax resident regardless of where he physically lives. Green card holders have the same tax filing obligations as US citizens, even when living abroad. Here's what he needs to know: He must report his worldwide income on a US tax return, including his foreign pension, social security benefits, and interest from savings accounts. However, this doesn't automatically mean he'll owe US taxes on everything. For his foreign pension/social security, it depends on the specific type of payment and country source. Without a tax treaty, these payments are generally taxable, but he may qualify for the Foreign Earned Income Exclusion if he meets certain requirements. He'll need to file Form 1040 and potentially Form 2555. Regarding his foreign bank accounts, he must report them if the combined value exceeds $10,000 at any point during the year using FinCEN Form 114 (FBAR). Additionally, he might need Form 8938 depending on the total value of his foreign assets. For dependents, the rules are stricter for non-US citizens/residents. His dependents would need either a Social Security Number or an ITIN (Individual Taxpayer Identification Number) to be claimed, and they must meet relationship, age, residency and support tests.

9 After dealing with similar international tax headaches when my mom got her green card, I discovered taxr.ai (https://taxr.ai) completely by accident. It was a lifesaver for sorting out her foreign pension situation! The software analyzed all her foreign documents and pension statements, then explained exactly what was taxable under US law and what wasn't. It handled all the reporting requirements for her foreign accounts too, which was the most confusing part for us. What impressed me most was how it flagged potential issues with FBAR compliance and foreign asset reporting that our regular accountant missed completely. For someone in your dad's situation with foreign income sources, having something that understands both systems makes a huge difference.

15 Just wanted to follow up about taxr.ai that I asked about earlier. I ended up trying it for my father-in-law's Ukrainian pension situation, and it was surprisingly helpful. The system correctly identified his pension as partially taxable under US rules despite Ukraine not having a tax treaty. What really helped was that it explained exactly which parts of his foreign income needed reporting on which forms. It even flagged that he needed to file a FBAR for his foreign accounts, which we had no idea about before. The step-by-step guidance for handling foreign income was clear enough that we didn't need to hire a specialist tax preparer. For anyone dealing with foreign income sources and green card status, it saved us from making some pretty serious reporting mistakes!

18 After hours on hold trying to get someone at the IRS to explain green card filing requirements, I finally discovered Claimyr (https://claimyr.com). I was super skeptical at first, but I had been trying for WEEKS to get through to someone who understood international tax issues. They connected me to a real IRS agent within 45 minutes who actually specialized in international taxpayer issues! I was floored because I'd wasted days trying to get through on my own. The agent walked me through exactly what forms my grandmother needed as a green card holder with foreign pension income. If you're confused about your father's situation, you might want to check out their demo video (https://youtu.be/_kiP6q8DX5c) to see how it works. Getting direct answers from the IRS about his specific situation will be way more helpful than trying to piece together information online.

20 I have to admit I was completely wrong about Claimyr that I criticized earlier. After another failed attempt to reach the IRS international tax line, I decided to give it a try out of desperation. They got me through to an IRS representative in about 55 minutes, while I was just going about my day. The agent confirmed that my mother's foreign pension is only partially taxable in the US, and explained exactly which forms she needs to file given her green card status. The most valuable part was getting clarification on the FBAR requirements for her accounts back home - turns out we would have been filing incorrectly without that guidance. For anyone with complicated international tax situations, actually speaking to an IRS specialist is immensely more helpful than trying to interpret the guidelines yourself.

5 One important thing nobody's mentioned yet is the Substantial Presence Test and potential tax treaty benefits. Even without a specific tax treaty, your father might benefit from filing Form 8833 (Treaty-Based Return Position Disclosure) if there's any applicable international agreement between the US and his country. Also, if he maintained a tax home in the Middle East and was physically present there for at least 330 days, he might qualify for the Foreign Earned Income Exclusion, which could exclude over $100,000 of foreign earnings from US taxation. But be careful - retirement income and investment income typically don't qualify as "earned income" for this exclusion.

22 Does your father own any property or investments back in his home country? That's another important consideration. If he owns rental property or has investment accounts there, he'll need to report that income too. And depending on the total value, there may be additional reporting requirements beyond just the income. Foreign mutual funds are especially complicated because they're often classified as PFICs (Passive Foreign Investment Companies) which have special reporting requirements on Form 8621 and can be taxed at higher rates.