Do Any Of You Retirees "establish" A Residency In America?

[phetaroi]

I am fully retired and now living here full-time and "permanently" on a retirement extension (since last May). Unless unforeseen things occur, I have no intention of returning to the U.S.

I am working with my old CPA on my federal and state taxes for 2009 and she is telling me that I need to establish residency in some state that does not have state taxes so that my old state (Virginia) will not keep coming after me for taxes.

But, I don't have a residency in any state. I don't own property in any state.

What do you folks in a similar situation do?

Thanks!

[JimGant]

That Virginia "gotcha" has come up before. Click on this link HERE, and then go to post 93.

If it's not too late, give your CPA an address of a relative or friend to put on your Virginia tax form. This way, the "last known address" in their database won't be Thailand, but another state.

Completely unenforceable -- I hope.

[tripplejjj]

A good CPA will site you the State laws defining “residency” for tax purposes. Every State has its definition. For example, having a driving license, billing addresses, and proper time constitute a residency for tax purposes.

I use Turbo Tax when filing taxes. Turbo Tax asks me questions to get the correct answers. If I am not really sure, then it directs me to the actual laws. I know other tax programs do the same thing. I would be surprised if your CPA does not use some sort of tax software.

[gpdjohn]

I have lived here for the last 3 years but maintain my residency in Arizona. I also use Turbo tax without any problems. All my CC billing address's are in AZ and they all know that I live here. My 2 govt retirement checks are direct deposit and funds are withdrawn out from the bank here w/o problems.

So far, no hassle whatsoever.

( and I do have to file AZ state taxes, since one retirement check is from the State of AZ )

[phetaroi]

( and I do have to file AZ state taxes, since one retirement check is from the State of AZ )

And I think that's the catch that will require me to continue to pay taxes in Virginia...it's a state pension, so I don't want to mess with that.

[thaihome]

I was able to get my State Revenue dept to recognize I am not a resident. This was after I was assessed $70k in back taxes, not including interest and penalties, for not filing for 10 years after moving overseas. This happened when I renewed my driver’s licenses. I now have a letter stating that though I maintain a mailing address I am not a resident and do not have to file tax return.

This of course cost over a thousand dollars in tax attorney fees and took over a year to solve.

I now use a mailing address in a non income tax state, but still have the driver’s licenses from the old state which has been renewed again.

Sounds to me like the OP is going to have to file Virginia income tax return if that is the source of his income.

TH

[Searat7]

I live in Thailand 7-8 months a year, returning to USA (Connecticut) in summer. In my state the tax law says you have to live in the state at least six months a year to have a state income tax liability.

I still maintain an address in Connecticut by having a mailbox at a UPS Store. They forward my mail monthly after tossing all the junk mail. An stateside address can be useful for many reasons.

[Thanyaburi Mac]

Virginia, D.C., and Maryland are really difficult to "escape" from. I departed VA in 1987 overseas but still working so they hit me up for tax, had a house there too. 1992 I retired in Thailand, they still hit me up for several years until I finally changed over to the Retirement Extension of my Non-O visa status. I sent them a letter and copies of my passport, told them bye bye. That seemed to work. Bank is a credit union in Maryland. I still have the VA house.

At the time I also had a house in Oregon, plus a driver's license, and a bank account. House since sold, license still valid, still have the bank account. Started filing Oregon NR, Non-Resident status income tax. A few years later Oregon passed a change with "Oregon earned income ceilings" that if you're under, don't even have to file the NR form. That's where I sit now, only Oregon income is a wee bit of interest.

Your situation? Thai Visa status?

Check the Virginia Dept of Revenue for Non-Resident filing requirements. Below where I fall under Oregon's:

Mac

xxxxxxxxxxxxxxxxxxxxxxxx

Oregon tax guide 2009 Publication 150-101-431 (Rev. 12-09)

Part-year residents and nonresidents

Amounts apply to Oregon-source gross income and gross income received while an Oregon resident.

Page 23 Filing requirements

Part-year residents and nonresidents

Amounts apply to Oregon-source gross income and gross income received while an Oregon resident.

You must file an Oregon return if:

Your filing status is: Married/RDP joint return

Age: One 65 or over

And your Oregon gross income is more than: $4,895

[mahjongguy]

Same states, including California, require a non-resident who is receiving a state or municipal pension to file and pay tax on (only) that income even if they are a resident of another state *if* that state has no income tax. This effects retirees who move to Nevada, or to Thailand. Seems like Virginia has a similar law.

And of course in most states you must file a non-resident state form if you own property, particularly if you sell it.

[JimGant]

A good CPA will site you the State laws defining "residency" for tax purposes.

And that's exactly what his CPA did. Virginia is trying to scare former Virginians who didn't move to another state. Here is their directive:

If you are a Virginia resident who accepts employment in another country or moves outside the United States for other reasons, the fact that you are living abroad does not mean that you are no longer considered a Virginia resident for tax purposes. Unless you have established residency in another state, you will still be considered a domiciliary resident of Virginia, and will be required to file Virginia income tax returns.

A domiciliary resident of Virginia is one whose legal domicile in the technical sense is in Virginia. Unless an individual acquires a legal domicile in another state, he or she is still a Virginia resident. This applies even if the person is residing in another jurisdiction and may have been residing there for a number of years. The fact that a person has been absent from Virginia, whether in the foreign service of the United States or in the exercise of private enterprise, does not in any way cancel out their Virginia citizenship or legal domicile. As a matter of law, he or she is as much liable to income taxation in Virginia as residents who are physically present in Virginia throughout the year.

TurboTax (or any tax software) does not step you through murky situations like this. They leave it up to you to answer the question of what state or states you're liable for taxes in. At best, they ask the question of whether or not you lived in more than one state during the tax year -- or derived income from more than one state. To ask: "Did you move from Virginia to a foreign country, without establishing residency in a new state" isn't quite covered. Not this tax year, at least (per my checking my TurboTax).

It sounds like Virginia is just trying to set themselves up to be able to collect back taxes, should you ever move back to Virginia. Let's hope that's the extent of their ambition.

[grantbkk]

I live in Bangkok and rarely return to the US. For tax purposes I have an address in Nevada. To avoid being chased by California I have my Retirement info and some other official stuff sent to that address. No problems so far. Changing my mailing address instantly put 14.000 cash in my hand the first year (2003).

[phetaroi]

I live in Bangkok and rarely return to the US. For tax purposes I have an address in Nevada. To avoid being chased by California I have my Retirement info and some other official stuff sent to that address. No problems so far. Changing my mailing address instantly put 14.000 cash in my hand the first year (2003).

But a mailing address is not the same as a residence.

[Langsuan Man]

Turbo Tax only cares about you state tax situation if you use it to fill out your State tax form

I use Pennsylvania's state tax web site to do mine and Turbo Tax is not at all involved

Your can become a resident (for tax purposes) in Nevada by just signing up for a mail forwarding service that has a street address

I was told by the Nevada Department of Motor Vehicles that they would accept any address in Nevada with no other proof required for a Nevada DL

PM me for url since I am pretty sure TV frowns on posting them here

[jazzbo]

As per SeaRat7 I have a UPS Store as a legal address in Florida which has no state income tax... It only required that I fill out several US Postal Service forms in person when I set-up the box... I can pay the annual fee using my bank's 'Pay Bill' service. Someone checks the mail for me periodically or when I am expecting something important.

I did not set it up for personal legal address purposes but for creating a Florida 501c3 tax-exempt corporation... at any time in the future however I can use it also for my 'personal' legal address.

BTW the form is 1583 -- Application for Delivery of Mail Through Agent

http://www.usps.com/forms/_pdf/ps1583.pdf

The form does require an underlying USA address i.e. friend or relative.

[TerryLH]

There is a federal law, mid 90's I think, that basically says that you owe taxes on pensions where you live, not where they are generated. If you don't live in a state, or a state that requires you to pay taxes, you shouldn't have to worry about it.

I have a pension from a county in CA. Since I live here, I'm not required to pay, or even file, in any state.

For a couple of years after I moved here I got letters from the franchise tax board asking why I wasn't filing. Once they understood i didn't live there anymore they quit sending letters.

[longball53098]

When I moved here 5 years ago from WI I was worried the same thing would happen that they would hound me to death about taxes. I did some online looking and found a site saying to remove myself from WI as a resident I should cut up and send back my driver license, write a letter to the local town where I lived and have them remove me from the voter registration records. Pay up any past due tax obligations and notify the tax department that I no longer lived in the state or any other state and show them the out of country address.

Since I did thee things I have never been bothered by the WI tax folks about anything. I have since voted using WI as my place of last residence and no problems. My only pensions are from Uncle Sam and IRA money

[Alwaysright]

I live in Bangkok and rarely return to the US. For tax purposes I have an address in Nevada. To avoid being chased by California I have my Retirement info and some other official stuff sent to that address. No problems so far. Changing my mailing address instantly put 14.000 cash in my hand the first year (2003).

I file state taxes in Calif.,because of the interest I receive from my credit union.My Calif pension is tax free and I don't pay any taxes but I have to file anyway.The US , IRS never forgives or forgets,that is why some fly planes into IRS offices.

[Lancelot]

I became embroiled in similar state tax issue after moving to Thailand.

I use Turbo Tax to file my taxes online, but TT started requiring a US address to file electronically, so I used a relatives address in North Carolina as my mailing residence.

Big mistake. About two years later my relative informed me that the State of NC had presented me with a substantial bill for back taxes. I promptly called the NC Department of Revenue and spoke with a guy explaining that I had resided in Thailand since 2003 and that I was never a resident (of NC). owned property, had a driver's license or any other form of residency qualifications. The guy then asked the most important question "If you were to return to live in the USA, in which state would you reside? Intent

"Texas" I replied (No state tax.)

OK, no problem, just send me a letter summarizing our telephone conversation, which I promptly did including copies of my Thai Retirememnt Visa.

The tax bill went away and I have filed my tax return via the venerable Thai Post ever since.

Who says there are no stories happy endings