As a green card holder, you are a tax resident and are taxed on your worldwide income from the date you get your green card, under the same tax laws as US citizens. You must report all income, use all applicable deductions and credits, and meet federal and state tax obligations. Knowing these requirements is key to keeping your status and avoiding penalties. This article will cover the main tax filing requirements for green card holders. Additionally, maintaining relationships with a foreign country can be significant for tax benefits and residency qualifications.

WHAT ARE THE TAX FILING REQUIREMENTS FOR GREEN CARD HOLDERS?

FILING IRS FORM 1040 AS A US RESIDENT
Green card holders must file IRS Form 1040 as US residents. This form is used to report annual income and calculate the amount of federal income tax owed or refund due.

STANDARD FILING THRESHOLDS
The filing thresholds for green card holders depend on their filing status and age. For 2023:

Single: $13,850 (under 65), $15,700 (65 or older)
Married Filing Jointly: $27,700 (both under 65), $29,650 (one spouse 65 or older), $31,500 (both 65 or older)
Head of Household: $20,800 (under 65), $22,650 (65 or older)
Self-Employed: Must file if net earnings are $400 or more

Even if income is below these thresholds, green card holders must file if self-employed and earn $400 or more annually.

HOW DOES FILING STATUS AFFECT TAX FILING REQUIREMENTS FOR GREEN CARD HOLDERS?
For green card holders, selecting the correct filing status is crucial as it directly impacts your tax rates and filing requirements. Here’s a breakdown of the main filing statuses:
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The June 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. reshaped the landscape of sales tax obligations across the United States, ushering in the era of economic nexus. This landmark decision overturned the previous requirement of physical presence for establishing nexus, opening the door for states to enact economic nexus legislation. Alongside this shift, a new focus on the concept of trailing nexus emerged, presenting a continuation of tax obligations even after a business no longer meets the nexus criteria.

In this article, we’ll define economic nexus and trailing nexus, and how the two may dictate your tax obligations regarding the states in which you operate. Here’s what we’ll cover:

Understanding Economic Nexus and Thresholds: Discusses economic nexus thresholds and varying state regulations.
What Is Trailing Nexus? Defines trailing nexus.
Examples of Trailing Nexus Policies: Explores examples of trailing nexus policies by state.
Practical Considerations for Businesses: Discusses tips on how to handle trailing nexus in your state.
Not what you’re looking for? Let’s talk. Reach out to us at info@milesconsultinggroup.com.

1. Understanding Economic Nexus and Thresholds
Economic nexus, as per the nexus definition, refers to the connection between a business and a state based on economic activity rather than physical presence. Each state sets its own threshold for economic nexus, determining when a business is required to collect and remit sales tax. For instance, in Arkansas, the nexus law sets the threshold at $100,000 in sales or 200 separate transactions, whereas in California, it’s $500,000. These thresholds vary significantly from state to state, adding complexity to sales tax compliance for businesses operating across multiple jurisdictions.
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The Internal Revenue Service offers several amnesty programs designed to help delinquent taxpayers come into compliance with their tax obligations. These programs provide opportunities for taxpayers who have not filed tax returns or reported income in previous years to rectify their tax situation without the risk of heafty penalties.

Whether you’re dealing with unreported foreign bank accounts, unpaid back taxes, or the aftermath of renouncing U.S. citizenship, understanding these amnesty programs can be your key to financial peace of mind. Let’s dive into how these IRS initiatives can help you meet your tax obligations and secure a fresh start.

WHAT ARE IRS AMNESTY PROGRAMS?
The tax amnesty programs are initiatives designed to encourage taxpayers to voluntarily disclose unpaid taxes and file delinquent tax returns for previous tax periods. These programs aim to increase tax compliance and boost tax revenues by offering relief from penalties. By participating in an IRS amnesty program, taxpayers can reduce their tax liabilities and avoid criminal prosecution.

These programs allow individuals and businesses to voluntarily disclose unpaid taxes and correct their tax filings without facing the full extent of interest and penalties usually imposed by the IRS. Many amnesty programs offer a waiver of penalties and interest for taxpayers who come forward, significantly reducing the financial burden of resolving filing obligations. The programs can cover a range of tax types, including personal income tax, and business taxes. Additionally, by disclosing unpaid taxes through an amnesty program, taxpayers can avoid criminal prosecution for tax evasion and other related offenses. Taxpayers must meet specific criteria to qualify for amnesty, such as having unpaid tax owing for periods prior to the current fiscal year.
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For the summer Olympics of 2016, I wrote an article on what a State Tax Decathlon could look like. Here are the events:

The Jock Tax Challenge – calculate state taxes for professional athlete
Multistate File and Plan for individual with activities in 10 states
The Business Split – calculate state taxes for multistate business in states with differing sourcing and apportionment
Nexus Confidence – based on given facts, does taxpayer have nexus in the state?
Amicus Drafting – research and draft brief with references to at least 30 cases
Power of the People – draft ballot materials for a state tax initiative
Harmony – draft federal legislation acceptable to all stakeholders
Dust It Off – persuade a state legislature to hold hearing and take action on a report of a state tax commission
Base Broadening – make convincing arguments on why a state tax incentive for business should be repealed
Tax Literacy – design education plan for high school students to understand their state’s tax system and compliance obligations

For more details, see “The State Tax Decathlon,” Tax Notes State, 9/12/16 (with some background on the decathlon too).

For the summer Olympics of 2020, I wrote about “The State Tax Pentathlon,” Tax Notes State, 8/16/21 (the 2020 Olympics were postponed to 2021 due to Covid). One of the tax events: Speed Answering — Like the horse riding and jumping event where athletes do not know the horse they will be assigned, contestants must answer questions from the taxpayer and practitioner phone lines of any 12 randomly selected state tax agencies. Points are awarded for accuracy, clarity, and politeness.

I’m not writing about the 2024 Olympics due to time constraints, BUT, what would you suggest to update my decathlon list form 2016?

Professor Annette Nellen Requests Your Ideas For The 2024 Olympics

The Nebraska sales tax exemption for manufacturers applies to businesses that are involved in fabricating, assembling, processing, refinishing, or refining activities. In addition to performing any of these necessary activities, 50% or more of the manufacturer’s revenue must be generated from the sale of products resulting from these activities. Any machinery and equipment the manufacturer intends to claim must also be used 50% or more of the time performing a “manufacturing” task. However, the machinery and equipment does not have to come into direct physical contact with the tangible personal property being produced for sale in order to be considered manufacturing machinery or equipment. If the machinery and equipment meet all these requirements, then the Nebraska sales tax exemption for manufacturers will apply.

In Nebraska, manufacturing means an “action, or series of actions, performed upon tangible personal property, either by hand or machine, which results in that tangible personal property being reduced or transformed into a different state, quality, form, property, or thing.” Manufacturing requires a physical change to the tangible personal property within the process and does not simply require an increase in the value of a product without a physical change to the item in question. See both Neb. Rev. Stat. Sec. 77-2701.47 and Neb. Admin. R. & Regs. Sec. 1-107.

When Does Manufacturing Begin and End in Nebraska?

The Nebraska sales tax exemption for manufacturers covers items that are used within the manufacturing process and excludes items that are used before manufacturing commences or post manufacturing. Based on the definition provided by the Nebraska Department of Revenue, manufacturing begins with “the storage of raw materials” and manufacturing ends “after finished goods are transported to a warehouse for storage.” For example, machinery and equipment involved in the receiving of raw materials or the removal of finished goods from storage for customer delivery are not considered part of the manufacturing process and fall outside the purview of this exemption.
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According to the California Legislative Analyst Office, California is raising billions of dollars with state tax increases while limiting the use of NOLs.

The May Revision proposes to temporarily increase corporation tax revenues by limiting the use of business tax credits and net operating loss deductions. We think the proposal to limit use of tax credits is worth serious consideration. On the other hand, the proposal to limit net operating loss deductions raises concerns. In response, we suggest the Legislature consider alternative ways to raise revenue should it wish to pursue revenue solutions.

Background
Business Tax Credits Aim to Encourage Certain Economic Activity. Tax credits allow businesses to reduce their tax bill when they do certain activities—such as hiring certain workers and conducting research—that state policies aim to encourage. Business tax credits essentially are spending programs carried out through the state’s tax system. Examples include the research and development credit, the California Competes credit, and the film and television credit. The research and development credit is the state’s single largest business credit, reducing revenue by around $2 billion each year.

Net Operating Loss Deductions Smooth Business Profits and Losses Over Time. Many businesses experience losses in some years. These businesses are allowed to carry forward these net operating losses (NOL) and deduct them from their taxable income in future years. NOL deductions allow businesses to smooth profits and losses over time for tax purposes. NOL deductions can be carried forward for up to 20 years.

NOL Deductions Provide More Equitable Treatment of Taxpayers. The smoothing of profits and losses via NOL deductions results in businesses with similar profits over time paying similar taxes. Without this smoothing, businesses that have large swings in profits and losses from year to year pay more taxes than businesses with similar but more stable profits. Some businesses are more prone to large swings because they are in riskier or more innovative industries. For example, profits of businesses in the technology, motion picture, transportation, and real estate sectors tend to fluctuate more than other sectors. NOL deductions allow for a more equitable treatment of these types of businesses.
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The California Secretary of State just released the list of statewide ballot measures that politicians put on your ballot – and there are really CRUCIAL FIGHTS facing Californians to save Prop 13 and stop dangerous tax policies in this November 2024 election.

Here’s what is on the Election Ballot and how you can help:
REFORM CALIFORNIA TOP PRIORITY BALLOT MEASURE FIGHTS IN NOVEMBER:
• No on Prop 5: Partial Repeal of Prop 13 / Guts Voter Approval on Tax Hikes
• No on Props 2 & 4: Forcing Taxpayers into Bonded Debt to Cover Budget Deficit and Finance Boondoggle Projects
• No on Prop 33: Assault on Private Property Rights
• Yes on Prop 36: Make Crime Illegal Again Initiative
• NO on Local Tax Hikes: We are tracking over 150 local tax hikes we will be opposing!

CONTRIBUTE: Support the Fight to Reform California – BALLOT MEASURE FUND

The BIGGEST CHALLENGE: Politicians are once again putting false and misleading titles on ballot measures. The best weapon to combat this and WIN is to distribute our Reform California “Plain English” Voter Guide to target voters.

But Reform California only have 20% of the costs covered so far!

MATCHING FUNDS DEADLINE: Each month there i an opportunity to hit a MATCHING FUNDS goal to unlock the resources needed to fight for California taxpayers! But with the deadline at midnight this Wednesday, July 31, they are still $38,312 away from hitting this goal!
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If you’re a frequent reader of our blogs, you know that we regularly report on the taxability of Software-as-a service (SaaS). Today, we report that Vermont has joined the ranks of states that do require sales tax collection on revenue from SaaS. In a recently updated previous blog (What To Know About The Taxability Of SaaS In 18 Key States – Multi State Tax Solutions | Miles Consulting Group), we discuss where SaaS is taxable in 20 states (and also certain local jurisdictions). As of July 1, 2024, we can now add Vermont to that list of taxable states.

Effective July 1, 2024, a new law in Vermont repeals its sales and use tax exemption on prewritten computer software accessed remotely (i.e., cloud software), thus subjecting items like software as a service to Vermont’s sales and use tax rate of 6%.

The amendment reads that “Tangible Personal Property” means personal property that may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software regardless of the method in which the prewritten computer software is paid for, delivered, or accessed.

If your company is doing business in Vermont and is selling the SaaS product in Vermont too, Miles Consulting Group can assist with any questions that you may have.

Book a consultation, drop us a line, or send us an email at info@milesconsultinggroup.com.

Virginia has introduced a new policy allowing a one-time safe harbor for contractors who have omitted or inaccurately remitted retail sales and use taxes. Starting from July 1, 2024, the Department of Taxation can use a contractor’s erroneously collected retail sales tax payments to offset a use tax assessment related to the transaction.

How To Qualify

To qualify for this safe harbor, the contractor must demonstrate that the property for which sales tax was incorrectly collected and remitted is the same property used in realty and is subject to a use tax assessment.

Next Steps

After receiving this relief, the contractor must either pay sales tax to its vendors or remit the use tax directly to the Department for its purchases of tangible personal property used in its real property contracts. This relief is a one-time opportunity designed to help contractors in response to industry confusion. This new policy is aimed at providing a temporary reprieve for contractors who may have inadvertently erred in their tax remittances, offering them a chance to rectify the situation and ensure compliance with tax regulations moving forward.

For more information, reach out to Thompson Tax today. We are your Trusted Tax Advisors.

“The liberal justices of the California Supreme Court sided with California’s corrupt politicians to strip citizens of the initiative rights that they have had for over 112 years.” – Carl DeMaio
The California Supreme Court sided with Gavin Newsom and California Democrat politicians in removing the California Taxpayer Protection Initiative from the November ballot.

The California Taxpayer Protection Initiative (CTPI) is a citizens initiative that collected the required amount of valid signatures — over 1.4 million — from Californians to be placed on the ballot. The measure would make it harder for state and local politicians to impose costly and unfair tax hikes — the reason that politicians sued to block it from the ballot.

Specificialy, the California Taxpayer Protection Initiative would:

-Restore a two-thirds vote for any tax hike – thus ending the way they imposed the car and gas takes hikes recently
-Impose a stricter definition on what is a “tax” so politicians can’t call them “fees”
-Require the words “tax increase” be included on the official title of any measure that appears on the ballot that contains a tax hike inside of it, and
-Repeal dozens of tax hikes imposed after Jan 1, 2022 – immediately saving taxpayers money Carl DeMaio, a candidate for State Assembly and chairman of the tax-fighting group Reform California — which helped collect signatures to place the initiative on the ballot, says that the decision stripped citizens initiative rights.

“The liberal justices of the California Supreme Court sided with California’s corrupt politicians to strip citizens of the initiative rights that they have had for over 112 years,” said Demaio. “By removing the California Taxpayer Protection Initiative from the November ballot, the Sacramento Swamp has shown how far they will go in their abuse of power to silence their opposition and prevent reform from happening.”
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