Most equity and tax guidance quietly assumes you're a U.S. citizen. If you hold a green card or a visa, some of it applies differently, and a few rules exist that citizens rarely think about. None of this is cause for alarm, but it is a good reason to get specific advice before large decisions.
Green card holders are taxed on worldwide income
Green card holders are generally treated as U.S. tax residents, taxed on income from everywhere, not only from U.S. sources. That includes interest from foreign bank accounts, gains on foreign investments, and income from property abroad. New green card holders are often unaware of this.
Foreign asset reporting
U.S. tax residents with foreign accounts or assets may have to report them even when no tax is due. Two common filings:
- FBAR (FinCEN Form 114): required when the combined value of your foreign financial accounts exceeds $10,000 at any point during the year.
- IRS Form 8938: required above higher thresholds that depend on your filing status and where you live.
Penalties for missing these filings can be significant, even when no tax is owed.
Visa holders: it depends
For visa holders, tax residency depends on your visa type and, often, the substantial presence test, which counts the days you've spent in the U.S. over the current year and the two before it. Some visa categories exempt certain days from the count. Your status can change from year to year, which affects how your equity income and other income are taxed.
The exit tax, if you ever leave
If you've held a green card in at least 8 of the last 15 tax years and later give it up, you may be treated as a covered expatriate if you meet certain net worth or tax liability tests. Covered expatriates can owe an exit tax, calculated as if they sold their worldwide assets the day before leaving, on gains above an exclusion amount. For someone holding highly appreciated stock, that can be a large, unexpected bill. It's worth understanding well before any future move.
Equity earned across countries
If you worked in more than one country while your equity was vesting, more than one country may claim the right to tax part of it. Tax treaties and foreign tax credits can prevent double taxation, but the rules are detailed and specific to each country.