Giving up your green card is often a decision made with mixed emotions. As a green card holder in the United States of America, you are legally required to file tax returns annually and pay taxes. For this reason, green card holders outside of the United States will typically abandon their lawful permanent resident status voluntarily for tax or travel reasons. Upon doing so, these individuals may terminate U.S. tax obligations.
In order to surrender a green card, the lawful permanent resident needs to contact the local U.S. embassy or consulate and set up an appointment. The permanent resident will also be required to fill out a form (USCIS Form I-407) provided by the embassy or consular official.
The form requires basic information from the applicant. This includes biographical information; date and place of most recent departure from the United States; address abroad; and the reason for giving up their green card. With that completed, the officer will accept the form and the green card and provide the individual with a stamped copy of the completed form.
If an appointment is not provided, the form may be completed without. In that case, the form should be sent to the embassy or consulate with the original green card. The individual should document and keep copies of the correspondence, including both the completed form and green card, for future reference.
Following those steps, it is encouraged to consult with a U.S. tax adviser about appropriate procedures to show the IRS that you are no longer a permanent resident. This is where copies of your completed form would be required with your next U.S. tax return. The individual will also need to carry a stamped version of the form with them on their future trips to the United States.
Surrendering the green card does not preclude the individual from making a future application. However, it is possible that their eligibility may have changed over time.
It is important to mention that individuals giving up their green card might face a tax cost in the form a U.S. Exit Tax. The question becomes, how long has the individual had the green card. For every year you are treated as a resident of a foreign country under a tax treaty, you are not a lawful permanent resident in the United States. However, holding a green card for even one day during a year counts as the entire year. It is possible to avoid the Exit Tax if the individual gives up their green card before they reach its eighth anniversary. With that said, the individual must still fill out the exit tax paperwork, but the tax itself does not apply until the eighth year of holding the green card.
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