Keeping or Abandoning Your US Green Card After Moving Abroad

Having a US Green Card gives you the right to work and live in the US, but what happens if you decide to leave the US for a long period of time or even permanently? The answer may not be so clear, which is why the goal of this article is to inform you about what happens when you decide to renounce your Green Card.

Staying Abroad Without Losing Your Green Card

As a Green Card Holder, you can remain outside the US for up to one year without risking your residency status. If you plan to remain outside the US for over a year, you must apply for a Re-entry Permit using Form I-131. The Permit will allow you to maintain your residency for two years, but you will still be required to file US taxes and keep your US address.

Beyond two years, you must apply for a returning resident visa (SB-1). Once you receive this visa, your Green Card status will be restored, but you must prove that your long-term stay outside of the US was unintentional.

Why Consider Giving Up Your Green Card?

Renouncing your Green Card often means closing a big chapter of your life and making a big change, such as relocating to another country. A decision like this will likely mean that keeping your Green Card is no longer beneficial. It may seem as easy as letting your visa expire, but as the US has a citizenship-based tax system, this is not exactly the right mindset.

Even if your Green Card expires, it does not mean you are free from US tax obligations. Unless you go through the process of renouncing your Green Card, you will be held to the same standards as a US citizen regarding taxes. Let’s check out what you need to know about renouncing your Green Card.

How to Properly Relinquish Your Green Card

If you’re ready to renounce your Green Card, you will first want to familiarize yourself with Form I-407, the Record of Abandonment of Lawful Permanent Resident Status. Form I-407 must be submitted to an official entity such as a US consulate, US embassy, or a USCIS office to declare a formal relinquishment. Alongside Form I-407, you must also surrender your physical Green Card while presenting your passport or another form of identification.

Once Form I-407 is stamped and you receive a copy, it will confirm that you have abandoned your Green Card status. You must do this before proceeding to any next steps, or you will still be considered a tax resident and, therefore, obligated to file US taxes.

Filing Requirements After Renouncing

You'll need to file a Dual Status Tax Return, including a Statement required to establish your residency termination date. In addition, if you were a Long Term Resident (LTR), which essentially means you have had your Green Card for 8 of the last 15 tax years**,** then make sure to include Form 8854, as it is the “Initial and Annual Expatriation Form 8854”; form 8854 will determine if you need to file exit taxes.

Understanding Exit Taxes

Not every former Green Card Holder or US citizen must file exit taxes. You will only need to file exit taxes if you are considered a “covered expatriate” if you are one of the following listed by the IRS:

• Your average annual net income tax liability for the 5 tax years ending before the expatriation date is more than $190,000.
• Your net worth was $2 million or more on the date of your expatriation.
• You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation.

You will likely have to pay exit taxes if you fit the above criteria. This is done by treating all your worldwide assets like they were sold at fair market value the day before expatriation. Luckily, you can deduct $821,000 as a tax-free exclusion.

Additional Must-Know

Alongside your final tax return, you will need to ensure you file a final Foreign Bank Account Report (FBAR) if your foreign bank accounts collectively exceed $10,000 at any point in a year. Your FBAR applies to any resident or citizen of the US, and until you have properly renounced your Green Card, you will still have this obligation.

Will you Keep Your Green Card?

Whether you renounce or extend your status as a Green Card Holder, you must prepare for Re-entry Permits or exit taxes. If you are concerned about how to start this process, you can reach out to a US tax professional or your US embassy to see what the best course of action could be.