Usa Expats: Are You Maintaining Virtual Us Residence?

[girlx]

i don't maintain a virtual life in the US- all i have is a SkypeIn number from NY which rings through to me here in Thailand. my bank addresses, IRS, etc. are my thailand address.

[Jingthing]

I have a question about maintaining bank accounts related to this topic.

When you open a US bank account, they almost always require a valid US driver's license ID (number, expiration date).

If you opened an account with a valid ID and you didn't get a new driver's license on expiration, do you think they would ask for the updated ID after the ID on their record expires? I suppose it varies bank to bank, but wonder if people can share experiences on that one.

Another question about maintaining US credit cards:

When you get a new credit card, they require that you call them to activate the card. When you call them from the US phone number on their record, it is AUTOMATICALLY activated. So if you have a US phone number to do this with, very easy. What happens when you call them from Thailand from a non-US number to activate? I am sure they won't activate it automatically that way. Will they activate it at all? Experiences please. (I have heard many times many companies will not mail the card to Thailand, at all!)

Edited May 18, 2008 by Jingthing

[vagabond48]

I still keep my US health insurance, with a huge deductible, just in case something really major happens and for peace of mind.

Can't see the reason for doing that, honestly... depending on where you live in Thailand. At least in BKK, I actually think I'd feel better about getting major care here, if I needed it, compared to back home in the U.S. And I keep a health insurance policy based in Thailand that has very good coverage and would allow me access to whatever facility I choose.

When I go back to the U.S., I get health travel insurance for the couple weeks I'm there, just in case.

I'm not sure about PFV's insurance coverage but I too have US BCBS health insurance with high deductible but my insurance covers me through the world. If I have an emergency or the hospital is within my network like Chiang Mai Ram or Lanna, I have 20%/80% coverage. Althought I have to admit that most medical procedures would probably be well below my deductible. I also don't have the ridiculous low lifetime maximum of 5000k to 15000k baht. Anything higher here, is double what I am paying. I have to be grateful that for 40 years of my adult life, I have yet to go in for any type of surgery. Lucky so far.

Edited May 18, 2008 by vagabond48

[Spaniel]

I still keep my US health insurance, with a huge deductible, just in case something really major happens and for peace of mind.

Can't see the reason for doing that, honestly... depending on where you live in Thailand. At least in BKK, I actually think I'd feel better about getting major care here, if I needed it, compared to back home in the U.S. And I keep a health insurance policy based in Thailand that has very good coverage and would allow me access to whatever facility I choose.

When I go back to the U.S., I get health travel insurance for the couple weeks I'm there, just in case.

I will be going back to the US in June. Do you get the travel insurance in the US or a policy khere in Thailand?

[jonniebkk]

Unless things have changed, you're supposed to file a non resident tax form (540NR) to report that California income. And, the other unpleasant aspect is that your tax bracket is based on all income, not just that from California sources.

I do not agree with those who opine that filing the for 540NR is required in a case such as I described. This is because you are missing the primary qualifications for filing this form: namely being a "resident" of California for tax purposes. If one studies the Instructions for the Form 540NR itself, and specifically who qualifies as a "resident," I believe my interpretation is correct. The mere fact of having an investment in California DOES NOT make one a "resident" for California tax purposes. If that was the case, anyone anywhere in the USA who had a stock investment in a California based or domiciled company would have to file California tax returns or in reverse, if a California resident held stock in a Deleware or NY based company, the California resident had to file a Deleware or NY State income tax return. As you can see, this is patently ridiculous...or have all you guys been filing income tax returns in states all over the America all these years

[jonniebkk]

What happens when you call them from Thailand from a non-US number to activate? I am sure they won't activate it automatically that way. Will they activate it at all? Experiences please. (I have heard many times many companies will not mail the card to Thailand, at all!)

Jing...when did you actually expatriate yourself? You seem to have all these worries about managing your former USA financial relationships from overseas. Whether is banks, credit cards, taxes, whatever. You know, most business in USA are equipped to deal with customers who live overseas...I mean, you are not the first American who is either working or retired outside the United States! Millions of Americans are in the same position so don't worry about managing your affairs from afar

As to your specific question about activating new credit cards using a Thai based telephone...I have never had a problem. I have activated at least a half-dozen new and renewal credit card accounts from both landl-line and mobile phones in Thailand with no problem. My most recent was for a new American Express card that I BOTH applied for online AND activated by phone when it arrived to me here in Thailand. (This is for a US based Amex account - not a Thai based account.) For my new Citi ATM and credit cards, when I used to live in Bangkok, I could also activate them at the ATMs at Citi's branch on Sathon if I so wanted.

[autonomous_unit]

I would agree with the comment that it may be illegal to avoid taxes in both countries. This is tied up in the same endless debate we have here about telecommuter status, but the US foreign-earned income exclusion only applies to (wait for it)... foreign-earned income. You are making a declaration to the IRS with form 2555 that you have not told the other country (or countries) that your earnings are not subject to their tax. So, to have excluded income by IRS standards would require that the income be taxed in another country, in my opinion. I would not want to risk an audit situation or back-taxes if I fell in the gray area!

Due to our experiences with disappearing mail in Bangkok, I use a family member's home address as a permanent address for US-based financial correspondence, but when I speak to the bank staff I tell them I am living abroad but using this for reliable mail forwarding. They have been pleased with this, as they really only want a mail destination where they can legally deliver notices related to accounts etc. I've also found that my banks are happy with high-quality scan/print copies of documents and signature pages, so I can get my family to scan forms and upload them for me, and I can scan and download a signed copy and print at their house, to be popped in local mail to banks. This helps get fast turnaround times on some forms of paperwork...

I got a Thai driver's license when I moved here, so I use my passport number in lieu of a driver's license when opening new US accounts etc. I've even opened online accounts just specifying "US Passport 12345..." in the field where they want a driver's license number. If possible, I select "other" ID type on forms and enter the same information.

On the advice of a tax-preparer, I also use my US permanent address in the address block on my tax returns, but I use my real Thai address on my form 2555 copy, and claim the bona-fide residence test since my first full year here. I filed a state return once for the first year abroad, when I severed my residence and had to pay partial-year residence taxes.

The one thing that annoys is the FVAP rule: I have to keep registering to vote via my last residence address in California, rather than being able to consolidate all addresses and use my permanent address. I don't like the fact that some random voter-related mailings might wind up going to that address and into the hands of strangers.

[dingdongrb]

I would agree with the comment that it may be illegal to avoid taxes in both countries. This is tied up in the same endless debate we have here about telecommuter status, but the US foreign-earned income exclusion only applies to (wait for it)... foreign-earned income. You are making a declaration to the IRS with form 2555 that you have not told the other country (or countries) that your earnings are not subject to their tax. So, to have excluded income by IRS standards would require that the income be taxed in another country, in my opinion. I would not want to risk an audit situation or back-taxes if I fell in the gray area!

Wait a minute, you think 'foreign income' means 'baht'??? I get paid in USD, not Thai baht and it is direct deposited into my US Bank. Since I do not get paid Thai baht, I have no earned income for Thailand. Otherwise I would have to pay Thai taxes. I have a reliable CPA that has been doing my taxes for me each year since I have moved overseas. She has signed on the dotted line just as I have and is willing to 'go to bat' with me if I ever would happen to be audited. She has been doing taxes for over 30 years and for many expats so I am sure she is fully aware of the tax laws. By the way, 'foreign earned income' refers to any monies (US or foreign) made while working outside of the USA. Mind you there are other restrictions that must be met before you can use the foreign income form.. (i.e. residing outside the USA for 330 or more of the year)

Due to our experiences with disappearing mail in Bangkok, I use a family member's home address as a permanent address for US-based financial correspondence, but when I speak to the bank staff I tell them I am living abroad but using this for reliable mail forwarding. They have been pleased with this, as they really only want a mail destination where they can legally deliver notices related to accounts etc. I've also found that my banks are happy with high-quality scan/print copies of documents and signature pages, so I can get my family to scan forms and upload them for me, and I can scan and download a signed copy and print at their house, to be popped in local mail to banks. This helps get fast turnaround times on some forms of paperwork... I agree I would never trust the Thai mail system, if that is what you want to call it. I sort of do as you do except I do not rely on others for assistance. I recieve a document via email (or downlaod it from a website), print it, sign it, scan the signed copy, and then email it back to them. This has work more times than I would rather count.

I got a Thai driver's license when I moved here, so I use my passport number in lieu of a driver's license when opening new US accounts etc. I've even opened online accounts just specifying "US Passport 12345..." in the field where they want a driver's license number. If possible, I select "other" ID type on forms and enter the same information. I have already pointed out in a previous post on why I feel there is no need in obtaining a Thai drivers license.

On the advice of a tax-preparer, I also use my US permanent address in the address block on my tax returns, but I use my real Thai address on my form 2555 copy, and claim the bona-fide residence test since my first full year here. I filed a state return once for the first year abroad, when I severed my residence and had to pay partial-year residence taxes.I have always used my foreign address when sending in my tax returns. Why would I want to perjure myself and say my address is in the USA, even though I still have property there? Yes, the first year I lived overseas I had to pay partial state taxes as well since I was not out of the country the entire year.

The one thing that annoys is the FVAP rule: I have to keep registering to vote via my last residence address in California, rather than being able to consolidate all addresses and use my permanent address. I don't like the fact that some random voter-related mailings might wind up going to that address and into the hands of strangers.

[lannarebirth]

I maintain an address in America and have a brokerage account and credit union account there. Both institutions are aware that I am not a US resident, as is the IRS. I like the credit union vs a bank, as they have all the same sevices, pay me an annual dividend and have higher money market rates. I also like that every senior employee there knows be my name, acts on my call, and we can dispense with most rules and paperwork.

Jonnie, I don't doubt that you have researched your CA property issue and feel confortable with your filing status. Just know that the CFTB is the most aggressive taxing agency on the planet and their computers WILL, at some point, generate some bullshit notice, saying you owe them some back taxes. This will cost you time and money to sort out and of course the clock will be ticking before penalties and interest accrue on the bogus charge from their "revenue enhancement officers"(no shit, that's what they call themselves. After 3 of these assualts I finally said to hel_l with it and pulled the plug on all California entanglements.

[jonniebkk]

Jonnie, I don't doubt that you have researched your CA property issue and feel confortable with your filing status. Just know that the CFTB is the most aggressive taxing agency on the planet and their computers WILL, at some point, generate some bullshit notice, saying you owe them some back taxes. This will cost you time and money to sort out and of course the clock will be ticking before penalties and interest accrue on the bogus charge from their "revenue enhancement officers"(no shit, that's what they call themselves. After 3 of these assualts I finally said to hel_l with it and pulled the plug on all California entanglements.

Lanna Re Birth,

I appreciate your concern. Having been born, lived, and worked in California for all of my 33 years on the planet before expatriating to Thailand, I too am all to familiar with the rapacious revenue agents of the State.

I don't avoid paying any and all taxes that are due to any legitimate US tax authority. As I said, I still file and pay taxes on my Federal tax returns annually. I also pay property taxes in the county where the property is located. If I was legally a resident of California, I would file state income tax returns as well...but if one is not a legal resident of California one is NOT required to file state income tax returns. It's that simple...I think you are too spooked by the run-ins with those friendly folks at the CFTB

[Jingthing]

What happens when you call them from Thailand from a non-US number to activate? I am sure they won't activate it automatically that way. Will they activate it at all? Experiences please. (I have heard many times many companies will not mail the card to Thailand, at all!)

Jing...when did you actually expatriate yourself? You seem to have all these worries about managing your former USA financial relationships from overseas. Whether is banks, credit cards, taxes, whatever. You know, most business in USA are equipped to deal with customers who live overseas...I mean, you are not the first American who is either working or retired outside the United States! Millions of Americans are in the same position so don't worry about managing your affairs from afar

As to your specific question about activating new credit cards using a Thai based telephone...I have never had a problem. I have activated at least a half-dozen new and renewal credit card accounts from both landl-line and mobile phones in Thailand with no problem. My most recent was for a new American Express card that I BOTH applied for online AND activated by phone when it arrived to me here in Thailand. (This is for a US based Amex account - not a Thai based account.) For my new Citi ATM and credit cards, when I used to live in Bangkok, I could also activate them at the ATMs at Citi's branch on Sathon if I so wanted.

Excuse me, but I really, really think you are trivializing an issue that is indeed a big issue for alot of expats. Maybe not you, but alot of us.

One example, I have a huge percentage of my net worth in a US brokerage account.

If I were to tell them I am no longer a US resident, they would force me to SELL all my assets there, causing me a HUGE tax bill on ten years of profits, not to mention forcing me to sell at a time I do not think is a good time to sell. I don't want to do that! So I keep my US address with them. I am sure there are hundreds of variations on that kind of story. Get it now?

Edited May 18, 2008 by Jingthing

[lannarebirth]

What happens when you call them from Thailand from a non-US number to activate? I am sure they won't activate it automatically that way. Will they activate it at all? Experiences please. (I have heard many times many companies will not mail the card to Thailand, at all!)

Jing...when did you actually expatriate yourself? You seem to have all these worries about managing your former USA financial relationships from overseas. Whether is banks, credit cards, taxes, whatever. You know, most business in USA are equipped to deal with customers who live overseas...I mean, you are not the first American who is either working or retired outside the United States! Millions of Americans are in the same position so don't worry about managing your affairs from afar

As to your specific question about activating new credit cards using a Thai based telephone...I have never had a problem. I have activated at least a half-dozen new and renewal credit card accounts from both landl-line and mobile phones in Thailand with no problem. My most recent was for a new American Express card that I BOTH applied for online AND activated by phone when it arrived to me here in Thailand. (This is for a US based Amex account - not a Thai based account.) For my new Citi ATM and credit cards, when I used to live in Bangkok, I could also activate them at the ATMs at Citi's branch on Sathon if I so wanted.

Excuse me, but I really, really think you are trivializing an issue that is indeed a big issue for alot of expats. Maybe not you, but alot of us.

One example, I have a huge percentage of my net worth in a US brokerage account.

If I were to tell them I am no longer a US resident, they would force me to SELL all my assets there, causing me a HUGE tax bill on ten years of profits, not to mention forcing me to sell at a time I do not think is a good time to sell. I don't want to do that! So I keep my US address with them. I am sure there are hundreds of variations on that kind of story. Get it now?

What kind of brokerage doesn't allow you to transfer securities to another broker? That's pretty standard stuff.

[Jingthing]

What kind of brokerage doesn't allow you to transfer securities to another broker? That's pretty standard stuff.

US mutual funds for US residents only. So what kind of US brokerage house? ALL of them.

I didn't know my future overseas plans when I started investing this way. It just so happens it is the most common way for Americans to invest. So I am common.

Edited May 18, 2008 by Jingthing

[jonniebkk]

Excuse me, but I really, really think you are trivializing an issue that is indeed a big issue for alot of expats. Maybe not you, but alot of us. One example, I have a huge percentage of my net worth in a US brokerage account.

If I were to tell them I am no longer a US resident, they would force me to SELL all my assets there, causing me a HUGE tax bill on ten years of profits, not to mention forcing me to sell at a time I do not think is a good time to sell. I don't want to do that! So I keep my US address with them. I am sure there are hundreds of variations on that kind of story. Get it now?

What are you talking about and who is your broker??? Where do you come up with this stuff!! If that is the case, which I find very hard to fathom, then you have an account at a very strange brokerage house.

I have a brokerage account of 7+ figures (with cap gains of over 1000%) so would also have massive capital gains if sold. I don't have any problems with where I live anywhere in the world or where my mailing address is located. In fact, I met with my financial adviser when I was getting ready to expatriate to Thailand and informed him of my plans. We set up the accounts so that I could manage all my affairs from overseas, e.g., preparing wire-transfer agreements and address changes for the accounts with no problem. During the past 10 years, I have, on various times and for various reasons, switched my mailing address back and forth from Thailand to the USA. My broker has never had a problem with this and all my stocks that I bought cheap 20 years are still there sitting in my account.

I really am curious, who is your broker...and did they actually tell you this (that they would liquidate your positions if you didn't have a US mailing address) or is this just something you think is correct?? In fact, IMHO, it would certainly be illegal for them to do any such thing and you would certainly have a cause of action for damages if any such event were to occur without your specific authorization.

The only financial consequence for me of having an overseas residence/address for some accounts and pensions is that they have to (by law) automatically withhold 10% of whatever pension payment or account funds withdrawl they are sending to me for Federal tax purposes. When I file my income tax returns, I receive this money back if I am owed a tax refund.

Edited May 18, 2008 by jonniebkk

[Jingthing]

Call Schwab. Call Vanguard. This is not weird. This is the way it is. The expat ladies I mentioned before in Mexico. This is what happened to them. They were forced to sell all their assets when they informed their US brokerage house they were living abroad.

[JimGant]

I do not agree with those who opine that filing the for 540NR is required in a case such as I described. This is because you are missing the primary qualifications for filing this form: namely being a "resident" of California for tax purposes.

No, the prime qualification for filing the 540NR is being a "Non Resident" (hence, the "NR") *and* receiving income from California sources.

I'm more familiar with Virginia, who, like California, taxes non residents on rents from property within the state. But, they do *not* tax non residents on investment income nor pensions derived from Virginia. And, conversely, they allow for a tax credit if, as a Virginian, you're paying another state taxes as a non resident *EXCEPT* for California, where by agreement you would claim your tax credit on California's 540NR form (Virginia also has the same agreement with Oregon, Arizona, and DC.)

It's kinda hard to find on the 540NR instructions, but California too doesn't tax investment income (which, yes, would be a nightmare nationwide):

Alimony income, interest from bank accounts and interest from promissory notes are intangible assets and not taxable to a non-resident recipient. Likewise, a non-resident investor's purchase or sale of stock and bonds (considered intangible assets) through a California broker is not taxable.

Also, under federal law, California can no longer tax retirement payments received by non-residents who worked here when those benefits were earned.

This last bullet was a real interesting issue, as California went after all their former residents now living in tax-free Nevada (and elsewhere) -- taxing not only pensions but IRAs and 401ks -- until the Feds ruled.

If I was legally a resident of California, I would file state income tax returns as well...but if one is not a legal resident of California one is NOT required to file state income tax returns. It's that simple

Quite simply, you're wrong. But, I wouldn't lose any sleep over it. (But, then again, I don't own property in California )

[jfchandler]

Jing, sorry, I don't understand the idea you're talking about...

I have a brokerage account with mutual funds based in the U.S. I am an American citizen. When I opened the account, I was living in the U.S. Now that I'm living abroad, and probably staying in Thailand more than the 330 or whatever days per year, as far as I know, that doesn't change the status of my brokerage accounts, or my ability to buy or sell anything in them.

Do you have some different understanding about that, or, you have some kind of specialized investment of which I'm not aware????

[jonniebkk]

Call Schwab. Call Vanguard. This is not weird. This is the way it is. The expat ladies I mentioned before in Mexico. This is what happened to them. They were forced to sell all their assets when they informed their US brokerage house they were living abroad.

So you are relying for financial, legal, and accounting advice on some old retired American ladies in Mexico Maybe I suggest you consult an accountant or tax attorney instead! These ladies sound like the equilivent of the famous beer-bar "bar-stool" foreigners who are experts on all aspects of Thai property law and investing.

As to calling Schawab or Vanguard, I don' have to as I am in SFO now and I had actually planned to visit Schwab's office tomorrow for some other business so I will add you inane inquiry to my list.

How about Citibank...have you every heard of them...or Smith Barney? They are my bankers and brokers and they don't require you to sell appreciated stocks if you have an overseas address. May I suggest you investigate banking with them and make your life easier!

[jfchandler]

The only financial consequence for me of having an overseas residence/address for some accounts and pensions is that they have to (by law) automatically withhold 10% of whatever pension payment or account funds withdrawl they are sending to me for Federal tax purposes. When I file my income tax returns, I receive this money back if I am owed a tax refund.

I was not aware of that, not being quite yet of the pension age... But... assuming that's true, that would seem to be another argument in favor of an expat, depending on their circumstances, at least maintaining a mailing address presence in the U.S. -- and not switching everything over to an overseas address.

More broadly, while it may well be true that many (or in your view most) institutions have no problem with their customers switching to overseas addresses, I would think none of us want to be the one who ends up losing a credit card renewal or having a problem opening a new account for lack of a U.S. address. As long as I'm alive, I'm going to keep one... How much and where I use it, will depend on the circumstances of my business/financial relationships.

To say it's fine to just switch everything overseas and not think there may be some negative consequences at some point, I think, oversimplifies the situation and doesn't take into account the wide variety of practices that exist among different companies, large and small.

[lannarebirth]

What kind of brokerage doesn't allow you to transfer securities to another broker? That's pretty standard stuff.

US mutual funds for US residents only. So what kind of US brokerage house? ALL of them.

I didn't know my future overseas plans when I started investing this way. It just so happens it is the most common way for Americans to invest. So I am common.

I did, at one time have a Credit Suisse account. They would not let me buy US mutual funds, but would allow "Global funds" that included US stocks. My banker told me it was related to Switzerlands reluctance to comply with US disclosure laws and I figured it was something only related to Switzerland.

I just checked "Schwab Global" and they say new accounts can transfer in "from a list of 6,000 mutual funds", but I note they only offer "offshore mutual funds" themselves. So, I'm not sure what the story is.

Edited May 18, 2008 by lannarebirth

[Jingthing]

I am talking about US based mutual funds that are for US residents only and I have called the major brokerage houses. I am not interested in being personally insulted further especially by people who have personal financial planners (the elite). I cite one of my specific issues that is common. There are many others. There is a good reason 80 percent of the people here state they have a virtual US identity. I am sure there are people who feel they don' t need to do this. Everyone is in a different situation, and alot of it does revolve around money mechanics.

Edited May 18, 2008 by Jingthing

[jonniebkk]

The only financial consequence for me of having an overseas residence/address for some accounts and pensions is that they have to (by law) automatically withhold 10% of whatever pension payment or account funds withdrawl they are sending to me for Federal tax purposes. When I file my income tax returns, I receive this money back if I am owed a tax refund.

It is most certainly true...the Feds require this so as to try to minimize tax fraud from overseas residents. However, as it is money that may be owed at the end of the tax year anyway,and if one's intention is to maintain a clean tax record with the Federal authorities, it's really not a problem. As I said, when you compute your taxes, if you are due a refund, you will receive it back and if you owed taxes, it's applied to your balance owed. Exactly the same as when one is working and an employer withholds estimated taxes.

However, if it makes a difference in one's financial situation not receiving the full amount immediately (though you will eventually owe it anyway), the way to avoid it is to maintain a Stateside mailing/forwarding address.

[jfchandler]

I will be going back to the US in June. Do you get the travel insurance in the US or a policy khere in Thailand?

I bought my travel policy last time through my own Thai insurance broker here, and I think it was thru the same company that I have my regular Thai medical insurance with. I suppose I could have bought the same policy in the U.S... but I figured it was likely to be more expensive there...since everything medical is more expensive there.

I think it's also important to consider what kind of insurance, if any, you have here....

My Thailand medical policy excludes coverage in the U.S., except for emergency care. No outpatient or regular inpatient coverage in the U.S. So for me, when I go back home, it makes sense to get traveler's insurance to cover me, just in case.

The traveler policies are really cheap and based on how many days you'll be abroad. I don't remember exactly, but the last time I did it for two weeks, I think it was like $40...

But on the broader issue of general medical insurance, there also are other kinds of Thailand medical policies. You can get a policy that includes coverage in the U.S., but you'll pay a fortune extra for it, in my experience. Then there also are less expensive policies than my own, because they exclude not just the U.S. but even most other countries outside Thailand, including most of Europe and Japan.

So it's important to consider which countries your Thailand policy does or doesn't cover, and how those relate to the places you plan to be traveling.

You can get a quick idea about traveler's insurance policies by doing a Google search on the Internet, and/or by checking with whatever insurance agent you may have a relationship with.

[jfchandler]

The only financial consequence for me of having an overseas residence/address for some accounts and pensions is that they have to (by law) automatically withhold 10% of whatever pension payment or account funds withdrawl they are sending to me for Federal tax purposes. When I file my income tax returns, I receive this money back if I am owed a tax refund.

It is most certainly true...the Feds require this so as to try to minimize tax fraud from overseas residents. However, as it is money that may be owed at the end of the tax year anyway,and if one's intention is to maintain a clean tax record with the Federal authorities, it's really not a problem. As I said, when you compute your taxes, if you are due a refund, you will receive it back and if you owed taxes, it's applied to your balance owed. Exactly the same as when one is working and an employer withholds estimated taxes.

However, if it makes a difference in one's financial situation not receiving the full amount immediately (though you will eventually owe it anyway), the way to avoid it is to maintain a Stateside mailing/forwarding address.

John, thanks for all your comments and advice here...

On the withholding issue, in a situation where I had a choice, I'd operate on the premise that it's better for me to keep and invest my money throughout the year, and then pay the taxes I owe year end, rather than give Uncle Sam the free use of my money throughout the year, and be denied its earning potential.

[IMA_FARANG]

I maintain virtual US residence. I have a US address, US phone number, and US driver's license. I don't live there and hope I never have to live there again. Why do I do this? Mainly to avoid hassles with my existing relationships with US banks, credit card companies, and brokerage houses.

Do you do the same?

No

I have a bank account in the U.S. but all my business is done online.

I have no U.S. credit cards (tools of the Capitalist Slave Economy) and I don't need them.

As you can guess I have no business with brokerage houses.

I try to minmize my contact with the U.S. as much as possible.

[jonniebkk]

John, thanks for all your comments and advice here...

On the withholding issue, in a situation where I had a choice, I'd operate on the premise that it's better for me to keep and invest my money throughout the year, and then pay the taxes I owe year end, rather than give Uncle Sam the free use of my money throughout the year, and be denied its earning potential.

No problem...I've been dealing with all these issues for about a decade now so just trying to pass along a little of what I have learned...sometime by trial and error

As for maintaining the US mailing address to avoid withholding, this is perfectly legal and in some cases desirable. For as you say, why give "Uncle George" an interest free float on your money for the year. However, just keep in mind that estimated quarterly tax payments are still due so be sure to at least pay these as the rate of your previous year's tax liability to avoid any penalties for underpayment of estimated taxes. If you normally get a refund or are pretty sure of getting one in any particular year, then you can safely skip the estimated payments.

[jonniebkk]

I do not agree with those who opine that filing the for 540NR is required in a case such as I described. This is because you are missing the primary qualifications for filing this form: namely being a "resident" of California for tax purposes.

No, the prime qualification for filing the 540NR is being a "Non Resident" (hence, the "NR") *and* receiving income from California sources.

Au contraire:

In the first instance, my and your definitions of who is required to file a California income tax return are the different sides of the same coin. One has to file a return if one is a "resident," who meets the minimum requirements, and one does not have to file if one is a "non-resident" if one meets certain requirements. The fact that the State has a form entitled "540NR [non-resident]" does not mean that all former and/or non-residents of the state, who may derive some income from from economic activities taking place within the State and to which they may have a claim to all or some of the income or loss derived from that activity, has to file said Form.

Now, to begin with, there is no black and white answer to the question of who is a resident of California for tax purposes. (Everything I am about to say applies to California only...I have no knowledge as the laws of any other state.) Like many things in the law, there is a test that has to be performed, with many factors to be considered and their relative importance to be weighed, in order to come to make a determination of if one is a "resident" for tax purposes. The individual (in consultation with professional advisers if necessary) makes a determination. Later on down the road, an examiner from the State may challenge the designation and come to a different conclusion. The parties will then attempt to convince the other who is correct. If necessary, the matter may be litigated in administrative or civil law proceedings.

The FTBC (Franchise Tax Board of California [equilivent to Cal. IRS]) defines a California "resident" as follows:

A person in California for other than a temporary purpose or someone domiciled in California but outside the State for temporary or transitory purposes.

A "non-resident" is anyone who is not a resident.

Sounds simple right...ah...nothing is ever that simple when it comes to paying taxes and the devil is in the details. The Board operates under the theory of where a person has the closest connections to is where their "residence" is when making a determination on residency status.

The factors it considers includes (but is not necessary limited to) the following:

1. The amount of time spent in California,

2. The location of one's wife and children,

3. The location of one's principle residence,

4. Where one's driver's license is issued,

5. Where one's vehicles are registered,

6. Where one is registered to vote,

7. Where one's bank accounts are located,

8. The location of one's principle doctors, lawyers, accountants, and other professionals,

9. The location of one's house of worship, social club memberships, gym memberships, etc.,

10. The location of one's real property and other investments,

11. The location of one's principle personal ties.

As you can see, many factors are taken into account in making the residency determination. The fact that one may in fact own a piece of property in California (even rent it out) or attend a church service on a visit back home, or spend some time per year in the State does not make one a resident. All these factors in their entirety are weight, and if in their totality one has minimal positive association with most of these factors, then one is NOT a resident.

In my particular case, the only factors that apply at all are 1 (time spent), 7 (bank accounts), and 10 (own property). I spend less than a month in the State per year and on many years no time at all. I have several financial accounts in the State, but also have accounts in Thailand. I own a condominium in the State. Each of these contacts with California is greatly outweighed by my much greater contacts with Thailand. Which include the following:

I spend 90% or more of each year outside California; I have no wife or children in California; My principle residence is in Thailand (I own a house in Thailand); My only driver's license is issued in Thailand; the two vehicles I own are registered in Thailand; I am no longer registered to vote in California; my doctors and medical care are all done in Thailand; being an atheist, I have no place of worship; 90% of my personal and social ties are with people residing in Thailand.

So it is easy for me to show that that my contacts with the State of California are so minimal that I am not a resident. So small in fact that even an CFTB examiner would have to admit that he can't get any blood taxes out of this turnip.

So no sir, I don't think I am wrong...it is you who is wrong.

All of this information is explained in detail in Cal. FTB Publication 1031 - Guidelines for Determining Resident Status

Edited May 18, 2008 by jonniebkk

[JimGant]

I realize you've successfully escaped being a California resident. Congrats. Now you'll not have to pay California income tax on all intangible income and tangible income from outside California. However, they gotcha by the short and curlies when it comes to California source tangible income, like rent.

Determining California source income:

As a non-resident, you will be taxed on your California-source income: fees, wages, salaries, business income, rents or other income from real estate or other tangible personal property (vehicles, machinery, equipment) in the state.

The source of this is:California Tax Liability

This link is also instructive in defining terms: More tax info

But, if California comes lookin' stick to your argument given here. They might lower the penalty based on non malicious ignorance. (But I doubt they'll come looking. The Feds, I don't think, send copies of Sched E's to the states with indicated property. However, sneaky states like California might look for disparities between property owner and utilities payer.......)

being an atheist, I have no place of worship

I sure hope dem darn revenuers don't give you pause for religion......

[jonniebkk]

It seems like we'll have to agree to disagree

Been an nice friendly debate, however!

[justcruisin]

So if all of you are from the US of A.

Just a Question?

Why do you have to report back to IRS or Immi. if you do not have tax obligations etc when you live in thai permanentally.Sorry to be a compete Nood