Not a Resident of Anywhere Buy My Boat

[stillbuilding]

My first wife of many years was a US citizen who resided in New Zealand and then Australia for over 30 years without a US address. Was still entitled to vote and all the other benefits pertaining to US citizenship. Is there anything to stop you maintaining a base overseas and drawing whatever benefits from there. Hong Kong has many older US citizens doing exactly that without difficulty.

[Richard5]

Originally Posted by jeremiason

The woman was very helpful and curtious... Which was a stark contrast to the California Court System, which will not take telephone calls or do dimissals without you making an apperence.

As a longtime resident of California I have received several summons for jury duty. Each of the summons has an area to be filled out and returned by mail stating why I cannot appear. Of the several times I really was not able to appear I did fill out that portion of the form and mailed it to the specified address. I've not had a problem.

I've been fairly nomadic for the past decade or more. For the fed govt, a drawn map to location suffices for physical address. The problem is receiving mail but that can be resolved by forwarding. The problem then becomes keeping track of what mail was likely forwarded to which location.

[Boatguy30]

You don't have to renounce, you would need to be a legal resident of another country AND spend less than 2 weeks a year in the US for tax purposes.

[Doodles]

Originally Posted by Boatguy30

You don't have to renounce, you would need to be a legal resident of another country AND spend less than 2 weeks a year in the US for tax purposes.

To which post are you responding? I'm asking because I think you may be incorrect.

[Boatguy30]

To no longer be a resident for purposes of jury duty, etc you need to be a legal resident of another country. To avoid taxes, you need to be outside US at least 50 weeks or paying taxes in another country with a dual agreement with the US that has the same or higher rates. like if you work in NZ and pay tax there, you can spend plenty of time in the US and not pay taxes and also vote in both places whilst avoiding jury duty, etc if you are a legal resident of NZ.

[Wavewacker]

I was audited the year after I returned from being overseas, I owed nothing, but the taxes I would have paid overseas from any source of income there was simply a deductable amount from the amount I would have been paying to the IRS, I don't believe you entirely avoid a tax liability by having paid a lesser sum in taxes somewhere else.

Each state will view residency differently, perhaps very similar or the same as many states simply adopt statutes of other states, but here the rule is spending more than 6 months in a county will define residency for civil and tax requirements. Regardless, if you own real estate or have personal property remaining in any county, those taxes remain due regardless of where your residence is. If you have property in your care, custody or control, even if you don't own it, they want your money!

Yes, it's taxation without representation....

[osirissail]

There is so much varying interpretations of a US citizens obligations to pay US Federal Income Taxes that it seems that if you want the straight "scoop" why not just go to the only valid source - The IRS, specifically in this case see Publication 54. Publication 54 (2012), Tax Guide for U.S. Citizens and Resident Aliens Abroad

But for those too lazy to wade through endless pages of tax explanations, the IRS puts out their own summary, as follows:

U.S. Citizens Overseas
Question: I am a U.S. citizen working for a U.S. firm in a foreign country. Is any part of my wages or expenses tax deductible?

Answer:

• U.S. citizens and resident aliens are taxed on their worldwide income.
• Some taxpayers may qualify for the foreign earned income exclusion and foreign housing exclusion, or foreign housing deduction, if:
  o Their tax home is in a foreign country,
  o They are U.S. citizens who are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
  o They are U.S. resident aliens who are a citizen or national of a country with which the United States has an income tax treaty with a nondiscrimination article in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  o They are U.S. citizens and resident aliens who are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
• Taxpayers may be able to claim a foreign tax credit if required to pay a foreign income tax to the foreign country, if he or she has not elected the foreign earned income exclusion with respect to that income.
• Taxpayers may also qualify to deduct away from home expenses (for travel, meals, and lodging), but not against excluded income.

I added bold to the phrase "foreign earned income" as that phrase is rather important. "Earned income" is basically "wages." It does not include interest on bank accounts, etc. that you have in foreign banks, etc. So if you are working overseas and meet the other qualifications, your wages, etc. can be subject to the exclusion (roughly US$95k this past year).


Bottom line, if you are a US citizen the first answer line is the rule - you are subject to taxation on any and all forms of income worldwide. And then there are exclusions and credits that are available to help reduce what is "taxable."

[Boatguy30]

Most countries with good jobs have higher taxes so it is almost a non-issue. there are some exceptions of course.

[xymotic]

Originally Posted by Canibul

It's pretty challenging to live outside the USA and still function there. We have a travel trailer parked in Colorado, and keeping plates on it is another hassle. I think we're going to form an LLC in Montana for that.

I currently have my trailer registered in Arizona, because you can do a 5 year registration And I've resisted getting a new License because my oregon one is good for 10 years, I just got it less than a year ago, and the damned thing cost me $250. I'm currently living in WA, but I don't plan to be here more than a few more months so they can suck it as far as I'm concerned.

It does make it hard to buy guns though

[Ex-Calif]

Wow! Jumping in a bit late here - but man there is some interesting advice being given. Firstly, I have been an expat since 1984 and a manager of expats since around 1993. I am not a tax consultant, residency specialist or lawyer but I have dealt with residency and tax issues for 20 years.

Osirisail posted a nice summary of the "rules" - Note my federal tax return runs about 130 pages and E&Y is paid about $4k to prepare my local (Singapore) federal and state (Ohio & now California) returns.

State residency - Doodles nailed this. States which tax residents (Ca. example) claim you forever until you reestablish residency in another state. We used to have guys simply "change" their state residency from "wherever" to Florida thinking they were exempt from state tax. Many got away with it. Many fought and lost and I don't know of any who fought and won.

Establishing a new state residency/domicile requires specific actions. Complete them all. For a few years I would get jury summmons from Ca. - turns out that it was tied to my Ca. D/L.. California basically said as long as I had a Ca license they owned me. It often requires establishing a new place to live, changing licenses and even moving bank accounts etc. and then even possibly maintaining the new status for 6 months or some specified period.

State taxes - I just got a wonderful $8k surprise from Ca. for 2011 taxes - Apparently my estranged but not yet divorced wife moved to Ca. Ca. is a communal property state so some portion of my earnings became "jointly taxable as joint income - Whaaaat??? I haven't lived or worked in Ca since 1984! I am assured after the divorce is final Ca. will no longer have their hooks in me.

Fed taxes - Without being rude Boatguy30 you should consider not giving tax advice to people. Yes you can go overseas and ignore the feds and maybe even get away with it. But if you get on their radar and have not been filing or heaven forbid paying what you owe you will be slapped. Although I have had recent experience with the kindler, gentler IRS and I can say they are better than the "evil" days and they are helpful. For many reasons my 2010 filing was delayed almost 2 years - I knew I was pushing my luck but when I finally got it under control the penalty was not bad and the interest was probably less than I would have had from a bank - hmmmm...

How to qualify for the FEIE and how to apply foreign tax credits and if you have significant personal source income in the US can all influence how complex your tax situation. I can say if you are a retiree and all your income is actually derived from US investments and retirement pay it isn't that dramatic or draconian - basically you don't have any foerign income. Foreign income is money earned on a job overseas, overseas investments etc. Qualifying for the income exclusion is a residency matter as much as a tax matter. If you are "cruising" and on the move and unless you specifically take up a visa type that "makes" you some sort of resident in a country then you probably don't and won't qualify as a foreign resident - and the opposite, taking a residency may expose your US earned income to local taxes depending on the country you took residence in. And for those who say "screw Imaginationstan" what they don't know about my income won't hurt them, imagine beinng is tax jail and bargaining from there.

And, once again - Being a foreign resident does not mean you are exempt from US federal or state taxes - It just means you may qualify for a foreign earned income exclusion if you meet certain conditions. If you establish residency in New Zealand and derive all your income from US investments and retirement pay - foreign earned income is actually a red herring. And if it weren't or your income were below the exclusion you still have to file a return to get it - It is not up to you to decide not to file a US return.

The only way I know to really "sever" your US liability is to renounce US citizenship and even if you did that and still took income from US retirement you probably would have to pay US taxes even though you are no longer a citizen - hmmmm? We tax lots of foreigners who work in the USA and earn money there.

Not to be alarmist but really do a little know before you go and if you have a complex income situation (you already know who you are) get some advice as you proabably can afford it.

[osirissail]

Originally Posted by Ex-Calif

. . . The only way I know to really "sever" your US liability is to renounce US citizenship and even if you did that and still took income from US retirement you probably would have to pay US taxes even though you are no longer a citizen - hmmmm? We tax lots of foreigners who work in the USA and earn money there. . . .

To throw some hot salt on your open frozen wound - renouncing US Citizenship is not a very good idea these days if you have any appreciable assets. The IRS has caught on to the trend by "ex-pats" to get out from under the blanket US taxation of world-wide income and had a "little" amendment stuffed into a veteran's bill back in 2008 under G.W. Bush's reign.

See a discussion at: IRS Makes it Tougher to Renounce Citizenship to Beat Taxes.

Basically it boils down to - as the article puts it - "This new tax is complicated, like most IRS codes. But the basic provisions are that anyone renouncing U.S. citizenship will immediately be taxed on all their “unrealized gains.” That is, all stock portfolios, real estate, art, and most other kinds of property and assets will be taxed as though they were immediately being sold at current market rates."

[Ex-Calif]

Originally Posted by osirissail

To throw some hot salt on your open frozen wound - renouncing US Citizenship is not a very good idea these days if you have any appreciable assets. The IRS has caught on to the trend by "ex-pats" to get out from under the blanket US taxation of world-wide income and had a "little" amendment stuffed into a veteran's bill back in 2008 under G.W. Bush's reign.

See a discussion at: IRS Makes it Tougher to Renounce Citizenship to Beat Taxes.

Basically it boils down to - as the article puts it - "This new tax is complicated, like most IRS codes. But the basic provisions are that anyone renouncing U.S. citizenship will immediately be taxed on all their “unrealized gains.” That is, all stock portfolios, real estate, art, and most other kinds of property and assets will be taxed as though they were immediately being sold at current market rates."

Exit tax...

[hellosailor]

Guys, unrealized gains are and were never tax-exempt. Rather, they are tax-deferred, as I suspect you are both aware.

If someone is leaving the US forever, leaving the US tax system forever, it only makes sense to say "Well, those tax-deferred things? Y'all gotta close the book on those too.

Gains washing, asset movements...these things shouldn't surprise anyone who uses an accountant, and the folks who get shocked when they go to empty their mattress, what can you say? That's what happens when you try to stuff it all in the mattress.

[George DuBose]

Personally, I don't look at SS income as a government benefit. I paid into the system for over 40 years and I would like to get some of that money back.

Social Security is NOT welfare. It's more like a refund.

[Doodles]

Originally Posted by George DuBose

Personally, I don't look at SS income as a government benefit. I paid into the system for over 40 years and I would like to get some of that money back.

Social Security is NOT welfare. It's more like a refund.

I do not understand who's post you are referring to but nevertheless personal options about SS are irrelevant to the subject (Not a Resident of Anywhere Buy My Boat). The taxation of SS income is well established and applies worldwide.