GTN Mobility Tax Blog

When they are working outside the United States, most US citizens and permanent residents (i.e., green card holders) will be required to file income tax returns in both their Host country and in the United States. Filing two sets of returns can be a headache for the taxpayer, but it does not necessarily mean that they will be taxed twice on the income earned while working abroad.

An employee is likely to see an offer of an international assignment as a vote of confidence from an employer and an opportunity for career advancement. However, there are a number of questions the mobile employee should ask of his or her employer prior to accepting the international assignment, especially when it comes to questions related to regulatory requirements (e.g., immigration, tax compliance) and compensation and benefits issues in both the employee’s Home and Host countries.

It may seem counterintuitive to a US citizen or permanent resident (i.e., a green card holder) who has just taken a new international job, that most will still be required to file US federal income tax returns after relocating. In addition to filing income tax returns, mobile employees may also have other filing obligations including estate or gift tax returns, estimated tax payments, and foreign bank account reports.

Employers are increasingly turning to mobile employees to fulfill their international staffing needs, but many companies fail to understand the complexity, costs, and compliance obligations that result from cross-border employment. The following are common mobility tax mistakes we encounter the most that are made by employers with mobile employees and tips for avoiding them.

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If you have employees working outside the United States who are US citizens or permanent residents (i.e., a green card holder), these individuals will need to continue filing US tax returns to declare all of the income they earn in both the United States and their Host country. This requirement does not change if they are employed or paid from a non-US employer. Additionally, most of the tax rules that apply to taxpayers living in the United States will also apply to US persons operating overseas. The result may be that an overseas employee will be subject to tax in both the US and other jurisdictions.