Green card abandonment and continuing LLC ownership

Yes, you can continue to own a U.S. LLC after abandoning your green card. There is no requirement that LLC owners be U.S. residents or citizens. However, your tax treatment will change significantly. You will transition from being taxed as a U.S. tax resident on worldwide income to being taxed as a nonresident alien only on U.S.-sourced income and income effectively connected with a U.S. trade or business.

If you are a long-term resident (held a green card for 8 of the last 15 years) and meet certain net worth or tax liability thresholds, you may be subject to the expatriation tax under Section 877A of the Internal Revenue Code. This mark-to-market regime treats you as if you sold all of your worldwide assets at fair market value on the day before expatriation. The gain above an exclusion amount (adjusted annually for inflation) is subject to tax. Your LLC interest would be included in this deemed sale calculation.

After abandoning your green card, you become a nonresident alien. Your single-member LLC income that is effectively connected with a U.S. trade or business will be taxed at graduated rates on Form 1040-NR. You must still file a U.S. tax return to report this income. Any income that is not effectively connected but is U.S.-sourced (such as certain investment income) may be subject to a flat 30% withholding rate or a lower treaty rate.

You must file Form 8854 (Initial and Annual Expatriation Statement) in the year you abandon your green card and for subsequent years if you have deferred tax obligations. Continue filing Form 1040-NR for any U.S.-sourced income from your LLC. You may also need to file state tax returns if your LLC operates in a state that taxes nonresident income. The Form I-407 (Abandonment of Lawful Permanent Resident Status) must be filed with USCIS.

Plan your green card abandonment carefully with professional help. Consider the timing of the abandonment relative to your income and assets. Review whether your home country has a tax treaty with the U.S. that could reduce withholding on LLC income. Evaluate whether restructuring the LLC (such as electing corporate tax treatment) could be beneficial after expatriation. Start the planning process at least a year before you intend to abandon your green card.