Good morning. This is John Richardson speaking with you from Toronto, Canada. Today is Friday, October the 18th, 2024. It is relatively early in the morning here, 8am, and my return guest today will know in US lawyer Virginia Latora Jieker in Dubai where it is the end of the day for her, and Virginia is a forums columnist, as many of you know, in addition to her blog, and she recently wrote a very, very interesting article on green card holders generally, and what happens even when a green card holder is invited by a border representative of the United States government to surrender their green card. Virginia, how are you today? Hi, John. I'm doing great. How are you? I am fine. I am fine. Well, this is such a vast topic that I think we should do as a series of shorter podcasts on this problem because it can be a big problem, but let's start with the basics. Virginia, green card, good thing, bad thing. Would you want one? What does it mean in your life? Oh, my goodness. Well, in my personal life, I certainly don't want a green card. I think there's other ways to manage the situation, but for some people, they really do need to have a green card and they need to understand what the risks are in having it and what it means. They have to consider their loss of autonomy, their US tax implications, how long they're going to have the green card. What is it going to mean when they give up that green card from a tax perspective? So for those people that cannot live without a green card, then they need to pay careful attention to this podcast. And I think future ones that we made do on this. All right. So the green card is a permanent resident visa to write to the permanently in the United States is what it means, right? What it is, right? That's right. But it's a big, big decision. Okay. With huge consequences, huge life consequences. I actually were talking before the podcast. It's not quite marriage, but it is the acquisition of a new status, isn't it? Okay. In life. Absolutely a very big stuff. So people need to be careful with that. Now, okay. So if you get the green card, you have the right to live in the United States, work in the United States, generally traveling and out of the United States, unless you stay too long outside the United States and lose the green card, et cetera, et cetera. But you know, that definitely getting the green card changes your attach residency a little bit, doesn't it? Of course, remember with the green card that once you get that green card and your residency starting date has commenced, which is generally the first day you have physical presence in the US as a green card holder. Once that happens, you become subject to US tax on your worldwide income. So it doesn't matter where the source is from. It doesn't matter if you had income producing assets before you got the green card. Everything is going to be taxed by the United States. Once you have that green card status. So any more in the US doesn't come into the equation. Yeah. So you use the worst status, right? So the green card is just like citizenship, right? That's all we look to. You got the green card, your citizen, you're savvy to all of our rules, full stop, no further questions necessary, agreed? That's right. Okay. All right. So somebody gets the green card and they, you know, they continue on and from the date that they get the green card, my interpretation was from the date they get the green card, from that date on the question of whether there was called a long term resident is sort of calculated, right? That's correct. What's that? What's that all about that long term resident? Is this like a special kind of green card holder or privileged one? No, no, not at all. So this is a tax concept. So we all are familiar with the term lawful permanent resident. That's like an immigration status that you have been granted the green card. Your lawfully permanent resident in the United States can live there and work there. Lawful permanent residents will become long term residents from a tax perspective. Once they have been holding the green card for eight tax years, at least eight tax years out of the past 15 year period. And when we look at that tax year, it's a very important phrase. The tax year, for example, if you have gotten your green card in 2020 in December of 2020, that means you have only held the green card for let's say 30 days in the in the young year 2020. But it counts as a full tax year. So when you are counting to determine if you've got eight tax years holding the green card, you have to take into account these short stub years, the year you arrive, even if it's not a full calendar year, and the year you are saying, well, I'm going to give up my green card, I'm going to relinquish it. If you do that, let's say January 2, that still counts as a full tax year. So it's very easy for people to meet the eight year criteria, even though they think, well, I've only held it for six years. No, they've probably held it for eight because they're looking at tax years. You know, that's very possible. So it could be six years plus 30 seconds before and after right. So yeah, so those are really dangerous things. So you become a long term resident. Now you would think that, you know, if you were in employment or business, a long term employee, you would get a special recognition, maybe a bonus or, you know, a longer vacation or something like that. Is that what happens when green card holder becomes a long term resident that gets special privileges? Well, you get something special, but I wouldn't call it a privilege. Really? What's that all about? You get a special surprise. So you're a long term resident. And now when you give up the green card, you have to worry about the entire US tax expatriation regime. So to put it another way, if you're not a long trip, your green car holder is not a long term resident. You can actually leave the land of the free for free. Is that right? That's right. Oh, no problems, no issues. But if you've become a long term resident, well, you don't leave the land of the free for free. Is that right? Well, you might not leave the land of the free for free. So if the expatriation regime is going to apply to you, you've got to look now just as if you're a US citizen looking at these rules and say, well, what are the tests for becoming what's called a covered expatriate? I don't want to be that because those guys have to pay an exit tax when they go, which is the tax law treating them as if they have sold all of their worldwide assets and they have to pay tax on the gain, then there's special tax rules that apply to such things if they have, for example, an IRA, other special tax rules which are very onerous apply to foreign pensions and other pensions they may have. So once you're a covered expatriate, a whole lot of very difficult tax issues made before you have more complex, for sure, right? Absolutely, where a friend a minute ago, I said, well, you know, so if you're not a long term resident, you can leave the land of the free for free. And if you are a long term resident, then you cannot leave the land of the free for free. But I think we need to focus a little more on what does it mean to leave to leave the land of the free, right? Does that mean just physically leaving and say, bye, bye, I'm taking the first plane out of here. Does it mean something else? If only it was that simple, John, which unfortunately a lot of green card holders don't understand, they have to properly relinquish the green card, which means they have to complete a form I four zero seven, which is an immigration form saying that they are, you know, relinquishing the green card. And depending on if they, you know, are long term residences we've discussed, they may have to fill out special tax forms. In particular form eight eight five four regarding, you know, this being treated as an expatriation. But all green card holders who are giving up the green card must complete the I four oh seven. If they don't, and they think, Oh, well, I'm fine. My green card has expired. I don't have to do anything else there. Incorrect with that belief. And they will from a tax perspective still be treated as a US tax resident, even though the operation rights any. Yeah, that's a real mouthful. Let's break this down a little bit. So listeners will be very clear on what we're saying. Okay. If you want to sever text, severing tax residency from the US, in other words, get me IRS out of your life. Okay. Is way different from just leaving and not coming back. There are specific ways that you do this. And these are the only ways. The first is filing this I four oh seven correct. That's right. And although we'll mention this, but we're not going to get into this in this podcast is through the use of what's called a tax treaty tie break provision and greed. Correct. All right. But we're not going to talk about the tax treaty provision today. Okay, we'll save that for another podcast. But the key point is that it is not just the act of moving out of the United States that ends this. There are specific procedural steps that need to be taken agreed. Oh, yes, very much. Yeah. These hundreds of thousands or tens of thousands or maybe even millions of people living outside the United States who left the United States years ago and had green cards as a general principal. Have they severed their tax residency with the United States? No, unfortunately they haven't. Yeah, I mean, I think that I think that's an important important mention. There's a lot of confusion in this area, etc. Okay, no doubt about it. But I think it's important for people to know that they have to toggle one or more switches to get out of this thing. All right. So I'm going to give you a hypothetical now. All right, let's say that we've got somebody who has a green card, wealthy person, has had the green card for 15 years, left the United States for a couple of years, you know, maybe maybe to go home to the home country to care for a sick parent or something like that. Clearly been done for two years, flies back into the United States, the border guard, the immigration person says, so how long you've been outside the United States? And the person, of course, answers truth, the land says two years? Really? What were you doing there? Well, you know, I was went to my home country to visit my parents, this sort of thing. So let's imagine the conversation now beepens a little bit. And it says, well, did you, did you keep your apartment? I mean, I say, no, no, I was going to get rid of it because I knew I was going to be gone for a couple of years. Virginia, what is it possible an immigration border person might infer from that? Okay, so this is where things get very difficult for that returning individual. The Customs and Border Patrol agent might believe that the person has abandoned his US permanent residency. And he could challenge, he could challenge the individual about coming back and saying, you know, we think you've abandoned your residency and you shouldn't be allowed in with this green card. We think that, you know, you've given up your permanent residence. So what they may say is, you know, just to keep things real simple, well, you can sign the form I-407 giving up your green card and go on. Yes, in other words, we don't just to keep things simple, clarify the status and clarity for our records. Would you, would you like to sign this I-407, which is, you know, the abandonment of the green card. Now, let's, let's now move into the lawyer in you, Virginia. Okay, the lawyer, if you were standing behind that person listening to this conversation, what would you do at this moment if the person turned to you and said, I recognize you from forms, you're Virginia. What should I do? Oh, my goodness. Well, I would certainly advise that individual not to sign the I-407, all right, because we want to examine his case very carefully and find out, first of all, find out, is he going to be a long-term resident? So when did he get the green card? You know, do we have a tax years? And if we do, we certainly don't want him signing that thing because we need to know if we have to do some tax planning because he will be expatriating if he signs the I-407 at the airport. Okay, even if, even if he goes to an immigration hearing and he loses and they take away the green card, there is a window period, right, where someone's called, let's call, I should call Virginia, they call Virginia and get into this and some possible tax planning to avoid extra tax issues, agreed. I think that's the point. Correct. Okay. So just in case for any listeners, this is not coming through clearly, you have it from Virginia right here and now that you do not sign the I-407, okay? You know, let them push it to a hearing or whatever, okay? But understand that by voluntarily signing that I-407, okay, you have expatriated yourself, yes? Yes. Now, John, we have to make a distinction. So if someone has the green card for three years, there's no way, let's say, they're at the eight tax years. So they're not going to be a long term resident. That person doesn't have the same tax concerns as the people we are focusing on the long term, right? So if someone is not meeting that eight year, eight tax year test, and they want to sign the I-407, that's a very different situation, the attacks. Give their sign up. You know what, I don't like to jump the gun and sign these things because once he gives it up, he may reconsider once he's out of the area. I agree. I think that. And say, oh, you know what, I shouldn't have done it. I do want to remain here. So I never like to make a decision like that with such repercussion when you're under pressure. Yeah. I think that's absolutely right. Okay. So let's do a little bit of, I'm going to attempt to do a little bit of a high level summary of what we talked about today and you jump in where you think I've missed something. Number one, getting a green card is a solemn decision. It will definitely change your relationship to the United States and ways that are not necessarily good. On the one hand. Let me add one thing there before you move to two. Yeah. People should look, you know, when they go to an immigration specialist, an immigration attorney, that person might say, well, let's get the green card and, you know, you'll be set. They should be asking, given their fact pattern, given their situation and what they need, is it possible for them to just have a US visa? Because these visa holders don't go through the same craziness as the green card holder does. That's exactly right. And that's why a number of highly paid professional athletes do not get green card by the way. Okay. But I mean, you know, let me add a little bit to that. If you're somebody with, you know, as a person of means with a lot of non USA assets, I would be very careful. I'm very careful with this. Okay. All right. Yeah. Because the vehicle that will never be faced with this issue of giving up the visa, it's not the same as giving up the green card. There's the tax issues don't come into play. Well, the actual tax rules only come into play if, you know, if you are a green card holder, basically. That's right. I never quite thought about it this way. This was always funded at each podcast with you. But I'm going to make a statement. And you tell me if you agree or disagree. Having the green card arguably restricts your mobility in and out of the United States. I think so. I think it certainly can. Okay. I think it certainly can. Okay. Now, staying on the green card, the second point that that I think we made or I hope we made is that the test for maintaining the green card is maintaining the intention to live permanently in the United States. Correct? Yes. Okay. So we've got this immigration type style. Now, abandoning the green card. Okay. So, so the next piece of the puzzle, I think, is, are you a special green card holder, meaning a long term resident, one that gets special attention? And that means that you have had the legal status, right? They've given you the right to live in the United States because of the green card for eight of the previous 15 years agreed. Mm hmm. On one second, one millisecond of having the green card in a year counts as a full year agreed. That's right. That's right. So you could have like six years plus a breath of fresh air, each of the each of the two book end years agreed. And you are a long term resident for tax purposes, right? Next piece of the puzzle. Leaving the United States physically has nothing to do with terminating your relationship with the IRS agreed. Yep. Okay. And that relationship, because you have the green card is taxed with the full internal revenue code applies to you. Tax is reporting penalties, all these sorts of things. Okay. F bars, foreign information returns, you name it, it applies. Okay. Absolutely. It applies. All right. So, so you're not you can't leave the United States and just sort of key, you know, without having a formerly abandoned the green card, the way to abandon the green cards by filing the I-407 agreed. Yes. Okay. Or we're not talking about this today. There is a way to do it by a tax treaty, but we'll make that a separate discussion. Okay. Mm hmm. All right. Next. Okay. If you're a long term resident, you've had this green card for eight of the 15, the abandoned the green card, the filing the I-407 would have you will, because you're a long term resident, subject to the exit tax rules agreed. Yes. And that can be a real horror story. Yes. Absolutely. Therefore, if you're flying into the United States or driving or via a ship or dropped out of a plane, okay, whatever. All right. Any entry to the United States where you're asked whether you're nicely invited to file an I-407 to sign the I-407, probably shouldn't be done. But if you do it, you need to understand that that is an expatriating act. And if you are a long term resident, all hell can break loose agreed. That's correct, John. Okay. Is that a reasonable summary of what we talked about today? I think it's a perfect summary. And people who want to learn more can read my most recent article on Forbes. I'm a contributor on Forbes. And I have just done an article on this entire topic of giving up the green card at the border. Absolutely. Absolutely. I would also recommend the blog posts on this topic that Virginia has written over the years. And that's where's your blog to be found, Virginia? Right. That's easy. www.us-tax.org. And I have a full category on green card holders. So there is a blog post specializing in this topic. Yeah. And I think to reinforce the point again, right? Green card holders are like US citizens in the sense that their tax relationship to the IRS is no longer based on any subjective issues, how long you spend in the United States. It's a status based thing. You are now, you have now become a green card holder. And that's why before the podcast, I was saying, you know, it's actually analogous to marriage, isn't it? You know, I mean, you know, it changes your status. And I think that's perhaps will reinforce the seriousness of it. Yes, doesn't matter how many girlfriends you have, you're still married. Yeah. Okay. All right. Well, on that note, thank you very much, Virginia. This has been, I think actually a pretty good podcast. Okay. What's a pleasure we'll be back again. Oh, we certainly will. Okay. Thanks, Virginia.
