Green card holders pay US tax worldwide

QUESTION: What United States income tax obligations does an American permanent resident - green card holder - have if he or she lives in Hong Kong full-time? ANSWER: Once an individual obtains a green card, they are subject to US tax on worldwide income.

The actual place of residence of the individual is irrelevant.

Under US law, a green card holder is deemed to be a resident alien and is taxed on income in the same manner as a US citizen.

This not only means US taxation of employment and business income, it also means that all investment income, including capital gains, is subject to taxation at rates as high as 39.6 per cent (28 per cent for capital gains).

Even the gain on the sale of a flat in Hong Kong, including your principal private residence, is subject to tax, although the tax on the sale of your home can be deferred in some cases.