Tax and residency

Worldwide income

Also called Worldwide taxation, Global income.

Worldwide income is the rule that a United States resident for tax purposes, including a green card holder whose residence is still conditional, is taxed on income from every source anywhere in the world and not only on income arising inside the United States.

What it decides

26 CFR 1.1-1(b) states that all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States, and the IRS page Taxation of U.S. residents puts the same rule as worldwide income reported on Form 1040. Conditional status makes no difference: 8 U.S.C. 1186b(a)(1) gives the investor status as an alien lawfully admitted for permanent residence on a conditional basis, and 26 U.S.C. 7701(b)(6) asks only whether that status was accorded and has not been revoked or abandoned. Foreign rent, dividends, business profits and capital gains therefore all come onto the return from the residency starting date. Foreign tax already paid is credited under 26 U.S.C. 901(b)(3) within the section 904 limit, and the same 7701(b) test drags in foreign account reporting under 31 CFR 1010.350(b)(2). The liability runs for every year the green card is held.

Governed by 26 CFR 1.1-1(b); 26 U.S.C. 7701(b)(1)(A)(i) and 7701(b)(6); 8 U.S.C. 1186b(a)(1) for the conditional basis; foreign tax credit at 26 U.S.C. 901(b)(3) subject to the section 904 limit; foreign account reporting at 31 CFR 1010.350(b)(2) under 31 U.S.C. 5314; IRS page Taxation of U.S. residents, last updated 25 June 2026, which states the worldwide income rule in plain words but does not address conditional residence.

Where this is explained properly

Pages here that go into worldwide income rather than mentioning it.

Related terms

Nonresident alien and resident alienResident alien and nonresident alien are the two United States income tax statuses a non-citizen can hold: a resident alien is taxed on worldwide income and files Form 1040, while a nonresident alien files Form 1040-NR and is taxed only on income effectively connected with a United States business and on United States source passive income.
Residency starting dateThe residency starting date is the day a foreign national becomes a United States resident for income tax purposes, so that worldwide income is taxed from that day on: the first day of presence as a lawful permanent resident under the green card test, the first day of presence in the year under the substantial presence test, or the earlier of the two where both tests are met.
Substantial presence testThe substantial presence test is the day count at 26 U.S.C. 7701(b)(3) that makes a foreign national a United States resident for income tax purposes: at least 31 days of presence in the current year, and 183 days across three years counting the current year in full, one third of the first preceding year and one sixth of the second. No green card is needed to meet it.
FBARThe FBAR is FinCEN Form 114, the annual report of foreign financial accounts that every US person, which a green card makes you, must file when those accounts together exceeded $10,000 at any moment in the calendar year. It goes to FinCEN through the BSA E-Filing System, not to the IRS with the tax return.
FATCA and Form 8938Form 8938 is the FATCA report of specified foreign financial assets, attached to the income tax return under 26 U.S.C. 6038D, and it is additional to the FBAR rather than a substitute for it. The same Act makes foreign banks report their US account holders to the IRS, which is how the two sides get matched.

Checked against primary sources on 10 August 2026. Back to the glossary