There are several reasons why lawful permanent residents (LPRs) might choose to abandon their green cards. One common reason is relocation due to employment opportunities in another country, where a green card holder no longer needs to maintain permanent residence in the United States. Additionally, changes in personal circumstances, such as family commitments or lifestyle preferences, might prompt someone to move somewhere else and give up their green card, which is officially known as a Permanent Resident Card or Form I-551.
Tax considerations also play a significant role. U.S. green card holders are subject to U.S. tax obligations on their worldwide income and may also face U.S. estate, gift and generation-skipping transfer (GST) taxes, as green card holders are also frequently determined to be domiciled in the United States. In addition, once an LPR becomes a “long-term resident” (LTR) under the U.S. Internal Revenue Code’s expatriation tax provisions (generally, by having had the green card for any portion of eight years within a 15-year period), the abandonment of the green card can subject the LPR to a mark-to-market capital gains tax on global assets. So surrendering the green card in a timely fashion and with the benefit of effective pre-surrender tax planning can greatly simplify a former LPR’s tax situation and minimize unanticipated tax consequences.
Read the full Alert on the Duane Morris LLP website.