Ep 59: What Is English For "Expired Green Card"?
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What are the implications of having an expired green card?. Tax obligations continue to exist for green card holders even after their status has lapsed.
We discuss the importance of understanding both IRS and USCIS regulations, the process of officially surrendering a green card, and the challenges associated with renewing it while living outside the U.S.
Takeaways
Your green card may have expired, but you remain a green card holder until officially surrendered.
You could be subject to exit taxes if you surrender your green card after being a resident for a certain period.
If you lose your green card, you must replace it before surrendering it.
You cannot renew an expired green card while outside the U.S.
An expired green card does not equate to a surrendered green card; there is an official process to follow.
Chapters
00:00 Understanding Expired Green Cards and Tax Obligations
04:03 The Process of Surrendering a Green Card
07:47 Renewal Challenges and Immigration Considerations
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Jane Mepham, CFP (00:05)
When does IRS expect you to file U.S. taxes, but USCIS, immigration, won't let you into the country? In today's shorty
we're discussing expired green cards and what that means to your finances and taxes.
Manasa Nadig, EA (00:24)
Yeah. So you're a green card holder living your best life outside the US and your green card has expired. So you think that you are no longer a green card holder and you may also think bye bye US tax and financial reporting obligations. So let's start there. What happens when your green card expires? Nothing.
Really? Your green card may have expired, but as far as the
goes, you continue to remain a green card holder until you officially surrender the green card.
Jane Mepham, CFP (01:02)
And I'll say IRS takes the same stance, what this means. actually, let's actually just talk about the obligations of a green card holder, regardless of where you're living. And in this case, I'm gonna go back, Manasa, to what you said. You're living your best life outside the US, okay?
you are still a US tax resident and everything that goes along with it. What this means is IRS or US is taxing you or is doing what's called worldwide taxation. So any assets
have in your home country, the country you're living in, other countries, they expect you to not only be filing taxes, but actually paying on that.
So of course there's the whole idea of double taxation, but that's probably the least of your concerns right now. We know there's going to be, depending on what you're investing in, you may have to deal with PFIC considerations. We talked about this, I think just the last couple episodes when you invest in overseas mutual
and how that's taxed. You are
subject to US estate and gift tax considerations. And I've seen this a lot actually, where folks will call and say, my dad wants to send me 100K. And they'll say, do I need to pay taxes? And the first question I'll ask is, have they ever been a part of the US tax system?
Once in a while, I'll get the answer, ⁓ they went to school in the US, or they were a green card holder, but they've been gone for five years and they haven't been filing taxes, so I think we're good. No, we're not. IRS still expects you to follow the US considerations. Now, if you're outside the US, it obviously means you're living in another country, and I'm gonna assume you were a citizen of that.
Obviously we cannot advise you on that, but you want to understand what the tax and financial obligations are for that country on all your worldwide assets. And another thing we want to call out, and we've done a couple episodes on this, you could end up being what's called a covered expatriate.
you were on that green card for eight years of the last 15 years,
and you surrender it and we'll talk about that or it's expired, you could still be subject to being a covered expatriate where you may end up having to pay exit taxes. You're obligated to pay estate and gift taxes on all your assets on when you give them away. So Manasa, what do you want to say about the surrender part of that?
Manasa Nadig, EA (03:45)
Yeah. So even though surrendering your green card is really a voluntary process, which means that you've decided to do this, there are steps that need to be taken in order to officially have surrendered the green card. And that means all of your information is now updated with the USCIS and the IRS.
So there is a form
407, which is the record
abandonment of lawful permanent residence status. So this form needs to be completed in its entirety. And it comes with all of the instructions and really kind of walks you through the form. And you mail this completed form to the USCIS. Or
can go to a US consulate
with, I guess, an appointment and surrender your green card, or give this form to somebody at the U.S. Consulate. Or you can
give all of this information to a U.S. Customs and Border Patrol control officer, a CPB officer at a port of entry. So that's the form in itself. But most important,
Jane Mepham, CFP (05:01)
⁓
sorry, just a minute, So you just said something really interesting. You said you can surrender the form at the port of entry. So that means you're trying to get back into the US. You give them the form. Can I just assume they're going to turn you back, right?
Manasa Nadig, EA (05:03)
Yes.
Yeah.
Right. And the assumption here, probably a port of entry is I would say that you may have a different or ideally you've already made arrangements with a different visa to come into the country. So you're not depending on surrendering your green card
Jane Mepham, CFP (05:32)
Yes.
Manasa Nadig, EA (05:40)
then trying to get into the US. You would have made other arrangements like maybe a visitor visa or whatever.
So that's another way to do it, as officially surrendering that. And one thing that I have to bring up here, which kind of was an interesting thing that happened to a client of mine, was you have to include the physical green card with these forms. the interesting thing that happened with my client was they had lost their physical green card.
So what do you do when you do not have a physical green card to include on the form that you are surrendering your green card? In our
they had to go back and they had to find a replacement for the lost expired green card, which was an expensive affair in itself. then, well, in their case, they decided to renew it.
So that was completely different. I guess it was worth their while to go back and track it. But if you really want to surrender this, then you still have to go back and get a physical card so that it can be surrendered. Jane, lots of things to think about here. Not an easy. Yeah.
Jane Mepham, CFP (06:57)
I I'm trying to imagine that, I'm trying to imagine,
okay, I lost my green card. I want to give it up. So I have to renew, I have to get a replacement.
So I can actually come back and give it to them. But anyway, it's the U S
We know they don't make it easy. So now let's assume you're again, living your best life outside the U S and your green card has expired and you're like, ⁓ shoot, maybe I need to renew this. Okay. We have kind of bad news. You cannot directly renew your green card.
outside the US. But, and I think this is going to be the best advice that we can give you, assuming maybe you didn't realize this, is go to the nearest US consulate and they can walk you through the whole
And it's also one of those cases where Manasa and I keep saying it's best to talk to a professional in this space, so talk to an immigration lawyer.
Now one thing I do want to point out is you can be outside the U S and be gone for more than a year, but before you leave, you need to get special permission to do that. So if you get that special permission done, it's like an entry of these or something like that, or entry permit, then you may be able to stay outside the U S for more than a year. Okay. But still don't let.
the green card expire if you're planning on coming back to the U.S. So I think that's probably the one thing you want to make sure you don't forget.
Manasa Nadig, EA (08:34)
Yeah, yeah, because you know what? Surrendering or renewing your green card is a long and lengthy process
and it's best done when, of course, like we talked about before, you actually possess the physical card and also, you know, you have kept track of the fact that it's expiring. So you get this in motion before the expiry date.
So that's important. Add action items to your calendar, I guess. you know, if a green card's, I can understand, because it's valid for 10 years. So I guess somewhere
the road you might forget. maybe the ninth year or something, if you remind yourself, if you haven't done anything else about your immigration situation by then, that's assuming you're still a green card holder. So yeah, remember, also the biggest point to take away today is,
that an expired green card does not mean a surrendered green card. There is an official process to surrendering it. And until then, in the eyes of the IRS and the USCIS, you're still considered to be a green card holder. So that's the biggest takeaway today. If you like to, you know,
you like the situation where you want to remain a green
holder, then please go back, rewind and listen to this episode again. Anything else you want to say, Jane, before we conclude?
Jane Mepham, CFP (09:58)
⁓
No, think we've talked, we've said enough about the expired green card. So yeah, we can conclude it.
Manasa Nadig, EA (10:05)
Awesome. So thank you so much for listening, dear listener. And thank you for stopping by. Please go to Apple or Spotify and give us a five star rating. We would love it. And that gets our episodes pushed to more people who would be interested. Or you know what you can do? You can forward this episode to someone else who you think might help, you know, benefit from this information. So thank you so much for listening to us. Until next time.
Bye.
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The speakers' views and opinions discussed in this episode should not be considered financial, tax, or legal advice. Consult your advisor for any legal, cross-border tax, and financial advice.