For people relocating from Iceland to the United States

Moving to the US From Iceland: Your First US Tax Year

Moving from Iceland to the US changes your tax position in stages. This guide covers when US residency starts, the dual-status first year, the treaty tie-breaker and what happens to accounts you keep in Iceland.

Substantial presenceGreen card testDual-status yearTie-breakerSocial security

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Quick answer

When does someone moving from Iceland start paying US tax on worldwide income?

From the residency starting date: the first day in the US in a year you meet the substantial presence test, or the first day as a permanent resident under the green card test (IRS Pub 519). Before that you are a nonresident, so the first year is usually dual-status. If you are also resident in Iceland, Article 4 (Resident) of the treaty decides which country you are resident in for treaty purposes.

Prepared by Illuminous Accounting · Sources checked November 11, 2026

At a glance

When you become US resident: Green card test or substantial presence test (Code section 7701(b))
First year: Usually dual-status: nonresident, then resident
Treaty tie-breaker: Article 4 (Resident)
Social security agreement: Yes, since March 1, 2019
Accounts in Iceland: FBAR, Form 8938 and PFIC rules can apply once resident

When someone from Iceland becomes a US tax resident

The US decides tax residence with two tests in Code section 7701(b), not by your visa label (IRS Pub 519). Arriving from Iceland, you become a US resident for tax purposes in a year if either applies:

Green card test: you are a lawful permanent resident at any time in the year.
Substantial presence test: at least 31 days in the US this year, and 183 days over three years counting all days this year, one third of last year's and one sixth of the year before.

Count your days with our substantial presence calculator.

The first US return after Iceland

The first US return after leaving Iceland is rarely a normal one.

Situation	What applies
Arrived mid-year and passed a test	Dual-status year: nonresident before the residency starting date, resident after it
Arrived late and passed neither test	Nonresident for the year, unless the first-year choice applies (31 consecutive days and 75% presence, plus the substantial presence test next year)
Married to someone still in Iceland	Special rules let some couples choose to file as residents for the whole year

Source: IRS Pub 519. See also first-year green card tax.

Dual residence with Iceland

The US tests in Pub 519 do not override a treaty's own residence rules (IRS Pub 519). For people moving from Iceland: Article 4 (Resident) of the treaty has the tie-breaker for someone resident in both countries: it looks first at where you have a permanent home available, then at the further tests the article lists, in the order it sets them. A US return that relies on the tie-breaker needs Form 8833 (IRS), and long-term green card holders should check the section 877A consequences first.

Reporting what you keep abroad

Do not close everything in Iceland in a hurry, and do not forget it either. As a US resident you report foreign accounts on the FBAR and Form 8938 when they pass the thresholds, and many investment funds bought in Iceland fall under the PFIC rules (IRS). Details: FBAR and FATCA; Form 8938.

Sources for moving from Iceland

Treaty

The IRS lists the 2007 income tax treaty. General effective date (IRS Table 3): treaty Jan. 1, 2009 (IRS treaty documents for Iceland; treaty text; IRS Table 3).
Residence and tie-breaker: Article 4 (Resident).
Article 17 (Pensions, Social Security, and Annuities), pensions.
Article 22 (Relief from Double Taxation), relief from double taxation.
Article 14 (Income from Employment), employment income.

US law

US residency tests and starting dates: Code section 7701(b) (IRS Pub 519).
Treaty residence for dual residents: Treas. Reg. section 301.7701(b)-7, Form 8833 and section 6114; long-term residents: section 877A (IRS Form 8833).
Social security agreements: SSA list.

The rules of Iceland on leaving the country also apply; check them with a local adviser.

How we help

Send us your arrival date, visa or green card dates and a summary of income and accounts in Iceland. We confirm your US status for the year, prepare the dual-status or resident return with the reporting it needs, and Gurleen Kaur, CPA licensed in British Columbia and Washington State, signs. Quote before any work.

Common questions

Am I a US tax resident in my first year after leaving Iceland?

When you meet the green card test or the substantial presence test (31 days this year and 183 weighted days over three years). Your residency starting date is generally your first day in the US that year, or your first day as a permanent resident.

What if I am resident in both Iceland and the US?

Article 4 (Resident) of the treaty breaks the tie, starting with where you have a permanent home. Claiming treaty residence in Iceland on a US return needs Form 8833.

Do I report my accounts in Iceland after moving to the US?

Once you are a US resident, yes: the FBAR when foreign accounts total more than US$10,000, Form 8938 above higher thresholds, and PFIC rules for many foreign funds.

Is there a US social security agreement with Iceland?

Yes, in force since March 1, 2019.

Sources

Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.

Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.

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