Limbo State Of Residence

[staccyy]

I live here. My state of legal residence is Cal. Which is quite high for tax reasons. (Investments) But if I change it to an international residence. How can keep my credit cards other US banks accounts (happy?). I get enough grief, as it is, as they have “shut – down” my credit cards about 4 times this month while traveling about in SE Asia (suspected fraud). Then I get some lame- arse Customer Service lady telling me "you know you cant be out of the US for too long… Blah blah blah"

This is probably a stupid question. BUT what is the (State) rate you are taxed if you live overseas? Would it be possible to just change my legal address with my investment house- yet keep my Cali address with my American bank? I wouldn’t think so. Any insight please..? Thanks Staccyy

[thohts]

""you know you cant be out of the US for too long… " THAT'S FUNNY

As if persons are supposed to travel for only a set amount of time.

As long as you maintain residence somewhere in the US, there shouldn't be a problem. Financial institutions don't like to mail anything outside of the US for US citizens. "Extended holiday" is all they need to know.

What one should do is notify your CC company of which countries you will be traveling to, so they can note that in their system when your transactions do pop up. Problem is, fraud may take a bit longer to identify if your number or card gets stolen and used in that country.

The state rate is the state you last had residence in (for tax purposes). Some states do not tax you if you are outside the country for 6 or more months. For federal tax, you are not liable on the first $80,000 in income, although capital gains tax is another issue - check the tax code and consult a professional for details.

Always state that you reside in the US and you should have no problems. Ideally, move to a tax free state like Nevada. (Change your address with the IRS, etc)

If you need your mail forwarded, use a service like usabox or mail2me (I think those are the names)

[Thaigreg]

""you know you cant be out of the US for too long… " THAT'S FUNNY

As if persons are supposed to travel for only a set amount of time.

As long as you maintain residence somewhere in the US, there shouldn't be a problem. Financial institutions don't like to mail anything outside of the US for US citizens. "Extended holiday" is all they need to know.

What one should do is notify your CC company of which countries you will be traveling to, so they can note that in their system when your transactions do pop up. Problem is, fraud may take a bit longer to identify if your number or card gets stolen and used in that country.

The state rate is the state you last had residence in (for tax purposes). Some states do not tax you if you are outside the country for 6 or more months. For federal tax, you are not liable on the first $80,000 in income, although capital gains tax is another issue - check the tax code and consult a professional for details.

Always state that you reside in the US and you should have no problems. Ideally, move to a tax free state like Nevada. (Change your address with the IRS, etc)

If you need your mail forwarded, use a service like usabox or mail2me (I think those are the names)

Hi thoths,

Could you please explain why he would not be liable for federal taxes on the first $80,000 of income. Thanks.

Greg

[Dragonman]

""you know you cant be out of the US for too long… " THAT'S FUNNY

As if persons are supposed to travel for only a set amount of time.

As long as you maintain residence somewhere in the US, there shouldn't be a problem. Financial institutions don't like to mail anything outside of the US for US citizens. "Extended holiday" is all they need to know.

What one should do is notify your CC company of which countries you will be traveling to, so they can note that in their system when your transactions do pop up. Problem is, fraud may take a bit longer to identify if your number or card gets stolen and used in that country.

The state rate is the state you last had residence in (for tax purposes). Some states do not tax you if you are outside the country for 6 or more months. For federal tax, you are not liable on the first $80,000 in income, although capital gains tax is another issue - check the tax code and consult a professional for details.

Always state that you reside in the US and you should have no problems. Ideally, move to a tax free state like Nevada. (Change your address with the IRS, etc)

If you need your mail forwarded, use a service like usabox or mail2me (I think those are the names)

Hi thoths,

Could you please explain why he would not be liable for federal taxes on the first $80,000 of income. Thanks.

Greg

In recent weeks the overseas allowance has been increased to $82,400 but allowances for living expences have been reduced in order to achieve a further $2 billion from overseas residents. Government said they were being too generous! You need to live overseas for a calendar year or 330 days of tax year out of the Country. Otherwise good advice from thohts.

[staccyy]

Yeah! some of the C/S reps. are too much on the phone.

And yes, Ive told them I'm here- Indonesia was a real problem.

Anyhoo...

My question again. As an American do I have to even maintain a state of residence?

Been here 4 years- married to a local- home is here.

Setting up a new PO box in Nevada is a good idea- But Ive gotten lots of grief before. Banks and such dont like PO boxes, not to mention the service fees with freight forwarding. right now i have a very trusted friend helping in California... Any other ideas? Kindly, Staccyy

[Thaigreg]

""you know you cant be out of the US for too long… " THAT'S FUNNY

As if persons are supposed to travel for only a set amount of time.

As long as you maintain residence somewhere in the US, there shouldn't be a problem. Financial institutions don't like to mail anything outside of the US for US citizens. "Extended holiday" is all they need to know.

What one should do is notify your CC company of which countries you will be traveling to, so they can note that in their system when your transactions do pop up. Problem is, fraud may take a bit longer to identify if your number or card gets stolen and used in that country.

The state rate is the state you last had residence in (for tax purposes). Some states do not tax you if you are outside the country for 6 or more months. For federal tax, you are not liable on the first $80,000 in income, although capital gains tax is another issue - check the tax code and consult a professional for details.

Always state that you reside in the US and you should have no problems. Ideally, move to a tax free state like Nevada. (Change your address with the IRS, etc)

If you need your mail forwarded, use a service like usabox or mail2me (I think those are the names)

Hi thoths,

Could you please explain why he would not be liable for federal taxes on the first $80,000 of income. Thanks.

Greg

In recent weeks the overseas allowance has been increased to $82,400 but allowances for living expences have been reduced in order to achieve a further $2 billion from overseas residents. Government said they were being too generous! You need to live overseas for a calendar year or 330 days of tax year out of the Country. Otherwise good advice from thohts.

Hi Dragonman,

So, are you saying as a retiree living here. My first $82,400 of income is not liable for federal income tax, or did misinterpret something? Thanks.

Greg

[Thaiquila]

It is earned income in the non US country that is excluded.

Passive income like for investments at Vanguard not excluded (dividends, stock sale profits). Also social security not excluded.

IRA and 401K withdrawals not excluded. The exclusion is to avoid double taxation.

About mail boxes that forward, it is my impression this is a real problem if a bank, credit card, or investment company sees that as a POST OFFICE BOX. Any stories of success or failure with changing address to mail forwarders of important things like that? In my attempt to directly ask mail forwarders if they think their addresses will be seen as OK by such firms, no response.

Also, as far as tax residence, if you came from a hard core state like California, just changing your address to a mail forwarder in Nevada will NOT establish your tax residence in Nevada. The way to do that is to actually MOVE there and get a drivers license and file a tax return there. If you ever moved back to Cali, you would likely be in for a rude shock. You may want to check out the community board for Americans retiring abroad, which is specializing in these American expat issues: http://www.retireaway.com

Edited June 28, 2006 by Thaiquila

[autonomous_unit]

If you've really moved overseas permanently, there is no reason you would be subject to ANY state tax. You should probably read IRS Publication 54 "Tax Guide for US Citizens and Resident Aliens Abroad". Your taxes are not related to the mailing address you use with banks or other institutions. You can also vote in any election at your last US residential precinct without jeapardizing your non-resident status. Expats born overseas can register to vote at their parents' last US residential precinct, etc. There is a form to register as an overseas absentee voter.

The other thing to note is that you do NOT have to spend any particular number of days physically abroad if you are a bona fide resident of another country. You can read the definition yourself, but it basically hinges on paying taxes there, not declaring yourself a non-resident (i.e. to avoid foreign taxes) there, and believing it to be an indefinite duration residence. Living somewhere temporarily does not qualify. It actually hinges on whether your intentions are to move "indefinitely" or to return soon.

My wife and I left California and moved to Thailand, and we filed a 540-NR return (non-resident) for the partial year when we moved. We will file no further returns with California. We use a relative's California address for bank and credit card mailings, and always make it clear to the customer service people that we live overseas but use mail forwarding because too much foreign mail gets lost in Thailand.

I have also heard that it is a good idea to keep track of your overall travels to California as an ex-resident, because you may have to make a very detailed filing if you ever become resident again. Sometimes, it may help to hire a professional to sort out these sorts of circumstances. However, I think there are also plenty of fear-mongers who want to make it sound impossible to solve without large professional fees. We only really learned all of these rules ourselves after being frustrated with an expensive tax preparer who we eventually ditched.

[lannarebirth]

I live here. My state of legal residence is Cal. Which is quite high for tax reasons. (Investments) But if I change it to an international residence. How can keep my credit cards other US banks accounts (happy?). I get enough grief, as it is, as they have “shut – down” my credit cards about 4 times this month while traveling about in SE Asia (suspected fraud). Then I get some lame- arse Customer Service lady telling me "you know you cant be out of the US for too long… Blah blah blah"

This is probably a stupid question. BUT what is the (State) rate you are taxed if you live overseas? Would it be possible to just change my legal address with my investment house- yet keep my Cali address with my American bank? I wouldn’t think so. Any insight please..? Thanks Staccyy

If I were you, I would change my state of legal residence, if not nation of residence. The California Franchise Tax Board is the most aggressive taxation agency on the face of the earth, they have computers kicking out letters all day long suggesting you "may" owe them back taxes. If you don't respond and refute this extortion within 60 days they "assume" they are correct and penalties and interest begin to accrue. If you don't NEED to be a resident of California, GET OUT!

If I were you I would speak with each of your banks and tell them you are now a resident of Thailand. I would make arrangements to conduct as much of my affairs online as I possibly could. If you can't do that consider changin g residency to a state with no state taxes, such as WA, SD, TX, NV, AK, FL. NH.

[backflip]

staccyy,

Your post is so different from my experiences, I don't know if you're simply trolling, or haven't tried hard enough. During the last 20 years I live in CA, I used a POB for everything: credit cards, insurance, driver's license, car registration. I never had any problems whatsoever. Now that I moved to BKK, and am working in Shangahi for a couple years, I use the internet to pay my bills. Why haven't you figured out how to do this. I'm using a friend's mailing address in FL, and got a driver's license (as another poster noted, FL has no state sales tax. One credit card company called my relative and asked why I had so many charges in China. That was solved with a single phonecall. The bank in the US uses my FL address. My investment house, and there are several, refuse to deal with clients outside of the US, unless they have a presence in that country. Since they don't have offices in either Thailand or China, I use the FL address. What's so hard about that?

[Thaiquila]

State and federal taxes are not the same thing.

I concur, California is notorious for going after expats, especially if they RETURN to live there. In that case, they are known to go after all back taxes, penalties, and interest for all the time the expat was away.

They are not the only state that does this though.

Each state has different rules for how you can extricate yourself (or not) as a tax resident. Keeping a states driver's license usually means you are still seen as a tax resident. The most foolproof method is to establish tax residency in a tax free state, not so practical for many though.

Edited June 28, 2006 by Thaiquila

[MartinBKK]

staccyy,

Your post is so different from my experiences, I don't know if you're simply trolling, or haven't tried hard enough. During the last 20 years I live in CA, I used a POB for everything: credit cards, insurance, driver's license, car registration. I never had any problems whatsoever. Now that I moved to BKK, and am working in Shangahi for a couple years, I use the internet to pay my bills. Why haven't you figured out how to do this. I'm using a friend's mailing address in FL, and got a driver's license (as another poster noted, FL has no state sales tax. One credit card company called my relative and asked why I had so many charges in China. That was solved with a single phonecall. The bank in the US uses my FL address. My investment house, and there are several, refuse to deal with clients outside of the US, unless they have a presence in that country. Since they don't have offices in either Thailand or China, I use the FL address. What's so hard about that?

Many banks will not send mail to a P.O.Box.

[Thaiquila]

staccyy,

Your post is so different from my experiences, I don't know if you're simply trolling, or haven't tried hard enough. During the last 20 years I live in CA, I used a POB for everything: credit cards, insurance, driver's license, car registration. I never had any problems whatsoever. Now that I moved to BKK, and am working in Shangahi for a couple years, I use the internet to pay my bills. Why haven't you figured out how to do this. I'm using a friend's mailing address in FL, and got a driver's license (as another poster noted, FL has no state sales tax. One credit card company called my relative and asked why I had so many charges in China. That was solved with a single phonecall. The bank in the US uses my FL address. My investment house, and there are several, refuse to deal with clients outside of the US, unless they have a presence in that country. Since they don't have offices in either Thailand or China, I use the FL address. What's so hard about that?

Many banks will not send mail to a P.O.Box.

Yes, I believe that is true.

But will they send to one of those mail forwarding outfits that has a street address with a # attached to it? As there can't be that many of those outfits operating, it would seem to me they could be indentified. For example, a large bank might have hundreds of customers "living" at the same address.

[Thaigreg]

It is earned income in the non US country that is excluded.

Passive income like for investments at Vanguard not excluded (dividends, stock sale profits). Also social security not excluded.

IRA and 401K withdrawals not excluded. The exclusion is to avoid double taxation.

About mail boxes that forward, it is my impression this is a real problem if a bank, credit card, or investment company sees that as a POST OFFICE BOX. Any stories of success or failure with changing address to mail forwarders of important things like that? In my attempt to directly ask mail forwarders if they think their addresses will be seen as OK by such firms, no response.

Also, as far as tax residence, if you came from a hard core state like California, just changing your address to a mail forwarder in Nevada will NOT establish your tax residence in Nevada. The way to do that is to actually MOVE there and get a drivers license and file a tax return there. If you ever moved back to Cali, you would likely be in for a rude shock. You may want to check out the community board for Americans retiring abroad, which is specializing in these American expat issues: http://www.retireaway.com

Thanks for the explaination Thaiquila, as always you are a wealth of information.

Greg

[thaihome]

I am going through this exact same thing with a state tax authority. I made the mistake of renewing my dirvers licesnce 2 years ago, even though I have not lived in the state for over 10 years, just used a good friends address.

What I have found is several mail forwarding companies (Access USA) will give you an address that is not a PO box. I intend to establish residency in Florida (as noted a non-income tax state) using this address.

Calif is indeed the most agressive states, which is a problem as my companies HQ is there and it took several years before they left me alone.

TH

[Thaiquila]

I am going through this exact same thing with a state tax authority. I made the mistake of renewing my dirvers licesnce 2 years ago, even though I have not lived in the state for over 10 years, just used a good friends address.

What I have found is several mail forwarding companies (Access USA) will give you an address that is not a PO box. I intend to establish residency in Florida (as noted a non-income tax state) using this address.

Calif is indeed the most agressive states, which is a problem as my companies HQ is there and it took several years before they left me alone.

TH

Could you share with us some more details?

Are you going to change your address to that company for bank statements, credit cards, IRA accounts, etc.? Because if you read their website, they don't explicitly support using them that way. And, also, do you plan to take other steps to establish Florida residence, if so, what? Florida of course is an excellent state to be FROM. No state tax!

[thaihome]

Could you share with us some more details?

Are you going to change your address to that company for bank statements, credit cards, IRA accounts, etc.? Because if you read their website, they don't explicitly support using them that way. And, also, do you plan to take other steps to establish Florida residence, if so, what? Florida of course is an excellent state to be FROM. No state tax!

Not sure what you mean by "they don't explicitly support using them that way". They certainly don't say "we will help you establish Florida residency " but they do say "Access USA forwarding services eliminate the difficulties encountered receiving US letters (statements, checks, etc), magazines and trade journals not available internationally."

My intent is indeed to have all my mail currently sent to my friend’s house sent here. If I happen to be in Fla sometime I will apply for a Fla driver’s license. If they don't give it to me, not a problem. The purpose is not so much to establish Fla residency as to not have any connection to present state (an state income tax state)

TH

[hellohello]

wrong spot

Edited June 29, 2006 by hellohello

[Gary A]

I use Citibank in California. When I moved to Thailand several years ago I changed my address to Thailand and there was no problem. I also changed my US credit cards addresses to Thailand and again no problem. I have NO US address. I still have a CPA in California and he prepared whatever paperwork that needed to be done and I have had no problems at all.

I used the Citibank bill pay service to settle up my utilities and still use it to pay my credit cards. Everything is done online.

[bangsaenguy]

The CC companies will accept most any address. I use my sister's. Then go to their website and choose online billing. No statements will be mailed. You will be notified when your statement is ready online. Pay it online. Been doing it for a few years. Works great.

[Soundguy]

I use Citibank in California. When I moved to Thailand several years ago I changed my address to Thailand and there was no problem. I also changed my US credit cards addresses to Thailand and again no problem. I have NO US address. I still have a CPA in California and he prepared whatever paperwork that needed to be done and I have had no problems at all.

I used the Citibank bill pay service to settle up my utilities and still use it to pay my credit cards. Everything is done online.

Same here works great, using Wells Fargo. But be aware if you use a PO BOX or a mail drop service (that has a suite or #) it DOES affect your credit, I saw on a credit report something like "WARNING! MAIL SERVICE CENTER"

[Thaiquila]

Could you share with us some more details?

Are you going to change your address to that company for bank statements, credit cards, IRA accounts, etc.? Because if you read their website, they don't explicitly support using them that way. And, also, do you plan to take other steps to establish Florida residence, if so, what? Florida of course is an excellent state to be FROM. No state tax!

Not sure what you mean by "they don't explicitly support using them that way". They certainly don't say "we will help you establish Florida residency " but they do say "Access USA forwarding services eliminate the difficulties encountered receiving US letters (statements, checks, etc), magazines and trade journals not available internationally."

My intent is indeed to have all my mail currently sent to my friend’s house sent here. If I happen to be in Fla sometime I will apply for a Fla driver’s license. If they don't give it to me, not a problem. The purpose is not so much to establish Fla residency as to not have any connection to present state (an state income tax state)

TH

Hi again, thanks for the response.

Yes, that mail forwarding outfit does say that, but it is a little vague. I am sure they could handle any mail sent their way. My concern was that certain financial institutions (such as some banks, some investment firms like Vanguard, some credit card companies) would KNOW that an address there was not a real residence address, and then cause some kind of problem, maybe as bad as closing or freezing accounts. One other point to consider is the safety of being sent new ATM and credit cards by mail from them, when the old ones expire. Also, any reports on issues in VALIDATING such cards when received in Thailand? Normally, they like to receive a call from the US telephone number of record.

I am still a bit unclear on your strategy. Are you going to change your address on all correspondence to your friend's address in Florida, or instead change your address on all correspondence to the mail forwarding outfit? Or a combination. Not trying to invade your privacy, just curious about your specific strategy.

[thaihome]

Hi again, thanks for the response.

Yes, that mail forwarding outfit does say that, but it is a little vague. I am sure they could handle any mail sent their way. My concern was that certain financial institutions (such as some banks, some investment firms like Vanguard, some credit card companies) would KNOW that an address there was not a real residence address, and then cause some kind of problem, maybe as bad as closing or freezing accounts. One other point to consider is the safety of being sent new ATM and credit cards by mail from them, when the old ones expire. Also, any reports on issues in VALIDATING such cards when received in Thailand? Normally, they like to receive a call from the US telephone number of record.

I am still a bit unclear on your strategy. Are you going to change your address on all correspondence to your friend's address in Florida, or instead change your address on all correspondence to the mail forwarding outfit? Or a combination. Not trying to invade your privacy, just curious about your specific strategy.

Quite frankly, you seem a little paranoid about this, unless of course you have some first hand experience with a bank freezing an account because of they suspect the address is not a real residence (not sure it is required to be, but that is another question). The web site shows a sample of the address:, looks pretty real to me.

Sorry if I was not clear on what I intend to do. Currently I use a friend's address (in a state that has income tax) for all my US mail. I will sign up for this (or one of many others) service and then put a change of address in for my accounts and as well as at the local Post Office in my friend’s town.

TH

[Thaiquila]

Thank you for the clarification!

Yes, again, I know that that mail forwarding outfit (and others) offer an address that SOUNDS like a real residence. However, I think you should be aware that large financial institutions almost definitely know they are not real residences. Given we know some financial institutions will not accept a change of address to a PO Box, I think I raise a fair question about whether some financial institutions might have a problem with such an address, and in turn, cause a real problem for expats.

Yes, I do understand that I might sound paranoid to you, but I do feel the devil is in the details on arranging your business in the US for living abroad. I feel US financial institutions are not geared very well for US individuals living abroad. There isn't a long history of expat culture in the US like there is in the UK. I am hoping this is going to change in the next decades because more millions of Americans will be moving abroad for economic reasons. However, the cross current is the tightening security and lack of privacy issues due to homeland security.

Should be interesting. I think it is great to share information about what different people are doing, and what the results are.

Edited June 30, 2006 by Thaiquila

[backflip]

"Given we know some financial institutions will not accept a change of address to a PO Box..."

Here's something to consider: not all airlines fly to Bangkok. It's absolutely true! So, if you want to fly to Bangkok, you have to find an airline that does so.

Come on guys, what's wrong with you? How come there's so little initiative out there? It's up to you to find a bank that supports your life and lifestyle. If your bank won't accept a PO Box, find one that does. It's not exactly cracking the atom. Stop whining!

[Thaiquila]

"Given we know some financial institutions will not accept a change of address to a PO Box..."

Here's something to consider: not all airlines fly to Bangkok. It's absolutely true! So, if you want to fly to Bangkok, you have to find an airline that does so.

Come on guys, what's wrong with you? How come there's so little initiative out there? It's up to you to find a bank that supports your life and lifestyle. If your bank won't accept a PO Box, find one that does. It's not exactly cracking the atom. Stop whining!

Wait a second, OK?

Yes, it is not exactly cracking the atom, but it is not nothing either.

For expats in the process of moving abroad, they likely have established relationships with financial institutions.

And not only banks, also brokerage houses, and retirement account holders (Fidelity, Vanguard, etc). Maybe their current ones will work, maybe they won't.

So, a fair question might be which larger financial institutions are currently expat friendly or expat unfriendly.

I have been told by some companies that it is FEDERAL REGULATION that if US citizens move overseas they actually have to close longstanding brokerage accounts and reopen foreign trading accounts (subject I think to different availability of funds). I am not an expert on that, but have been told this by as big a company as Charles Schwab.

And also consider these policies change over time, due to either the companies policy change or governmental regulations making them change. These kinds of governmental policies do change as we have seen since 911.

So lets imagine things are going great, and then there is a problem while an expat is settled abroad. Then have fun opening a NEW US account of any kind while living abroad without a real US residence.

I really don't think these issues are that trivial.

All I am saving is that there are tricky issues about all this, and hoping people will share strategies that have worked and have not worked. I think many, many US expats solve this by depending on a friend or relative as their "fake" US address. So what happens if the friend is a flake, becomes disabled, or dies? There really ought to be a clear system in place that protects US citizens from these hassles, but I don't believe there is.

Until then (if ever) all that we have that can help is INFORMATION.

Edited June 30, 2006 by Thaiquila