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.
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.
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.
Most companies recognize that sending an employee overseas for a long-term assignment or permanent relocation can create a broad range of issues for both the employee and employer. Those companies are aware that they will likely need to provide the mobile employee with assistance in addressing such issues as visas, work permits, and travel and relocation expenses. The fact that the employee and employer are likely facing a new tax environment following the move is sometimes unknown or may even be kicked down the road to be dealt with after the other issues have been resolved.