Some practical info on getting a U.S. state residency if you need one

[Jingthing]

I know many of us expats attempt to maintain "faux" U.S. state residencies for various purposes such as making dealing with U.S. financial institutions much easier. They have been known to boot out expats ... and that's just one example of a reason for wanting/needing this.

Of course sometimes having faux state residency can become a real pain ... like being called for jury duty in a county you haven't actually lived in for years or even decades. Also state taxation.

In any case, I thought this article might be useful.

I haven't actually even reviewed it yet but the basic idea of establishing residency AFTER you leave I found interesting.

http://jalopnik.com/how-to-get-residency-in-a-state-when-you-live-in-your-v-1694736427

For U.S. expatriates, the United States, and one of its states specifically, isn’t really home. My home is not the United States, so in the conceptualisation we have of “home is where the heart is,” everyone knows that Japan is my home.

That doesn’t, however, exempt me from having and maintaining a domicile in the United States. The only way to do that is to relinquish U.S. citizenship, because as a natural-born American, I am a “citizen of the United States and of the state in which (I) reside.”

Edited April 5, 2015 by Jingthing

[Rhys]

thus give up the US citizenship... if you don't plan to return or want anything from the US.

Many have thought this, found ways to take care of THANGS..

[NeverSure]

Good thread, JT.

I would suggest that people compare what you suggest with this outfit in S. Dakota. State laws of residency, income tax and all are important I agree.

http://www.mydakotaaddress.com/

http://www.mydakotaaddress.com/SD%20Residency%20faq.htm

[JLCrab]

When I applied for Social Security, I gave them my physical address in Florida which was a UPS store as the type mentioned in the article i.e. street address and then private mail box (PMB). The next question was:

Do you live at this address?

[NeverSure]

When I applied for Social Security, I gave them my physical address in Florida which was a UPS store as the type mentioned in the article i.e. street address and then private mail box (PMB). The next question was:

Do you live at this address?

I gave the wrong links, darn it. I haven't used it for 4 years and I've never been there. Been to S. Dakota but not to this place.

Did you get a physical address or a mail box? Did you give the business name and address or your own name and address?

Were you already enrolled with SS and just changing addresses?

THIS place which I meant to link also owns a motel and RV park on premises. I gave their address as my address and they sorted the rest. I wasn't yet on SS so I don't know. A person would have to ask them.

After all research I did decide that S. Dakota is the best state because they don't require any number of days to be there for residency and they have no income tax.

[JLCrab]

All that is moot: I have been a resident of Florida for 20 years voter registration, driver;'s license etc. They asked if I LIVED at that address. I answered NO. To say YES would have been fraudulent and they might have said that a case worker from our Sioux Falls, SD Social Security office will be visiting with you shorty.

They have no problem sending materials to my address in Thailand which is a PO Box.

[CaptHaddock]

A terrible article.

The author of the article claims that all US citizens must maintain domicile in a US state. This is flatly wrong. It ignores Puerto Ricans, Guam Islanders, and residents of DC, for one thing. It also ignores children born abroad of US parentage who may never even have visited the US, much less lived there. And it ignores most of us Americans here on TV. There is no legal requirement to maintain a domicile in a US state or to pay income tax in any state as an expat. Whether or not you are still obligated to pay income tax to your former state of residence depends on the tax domicile rules of that state and whatever steps you have taken to avoid being entrapped in them.

It may also be fraud to claim residence in a state when you do not live there.

The writer's goal was to move her residence of record from Texas, which has no income tax, to New Mexico, which does. She appears to be unaware that she is exposing herself to liability for NM state taxes.

The writer should be seeking advice, rather than giving it.

Edited April 6, 2015 by CaptHaddock

[Jingthing]

Negative feedback on the info in the articles is welcome as well.

I agree that it doesn't sound at all correct, that all U.S. citizens legally need a U.S. domicile.

But having one to state does smooth things out for doing a lot of things while living abroad, and some of those things can be quite vital to our existence abroad.

[CaptHaddock]

Negative feedback on the info in the articles is welcome as well.

I agree that it doesn't sound at all correct, that all U.S. citizens legally need a U.S. domicile.

But having one to state does smooth things out for doing a lot of things while living abroad, and some of those things can be quite vital to our existence abroad.

Domicile, in this context, means that it is your legal address, making you liable for state taxes. We don't need that. All we need is a mailing address. Very different from domicile.

[BKKSnowBird]

There is no problem giving Social Security your Thai address. Perfectly legal to collect it in Thailand.

[JLCrab]

There is no problem giving Social Security your Thai address. Perfectly legal to collect it in Thailand.

... however my funds are direct deposited into a bank in the USA then I can transfer to BKK Bank NYC branch even though all correspondence is sent to my Thai address.

[gk10002000]

FYI: In 2006 when I applied for Florida Blue Cross Blue Shield, I had to certify that I physically was present in the state for the past 90 or 180 days. I forget now since it was 2006. Fortunately I was because I had taken a contract assignment there. I had moved there back in 2001 but as a contractor, I often was working out of State and usually was not in the state for large contiguous amounts of time. Just cautioning to check the fine print. Residency for Uncle Sam can be a pain. I plan to keep a residency in FL . It just seems to make so many things simpler when living overseas, mail, keeping a State Driver's license, etc. Now, with Obamacare which I plan to avoid when I live overseas, residency comes up in a new light. If I put down a US Florida address on my tax return, that would seem to be questionable and might invoke more Obamacare issues?

[gudtymchuk]

When I became eligible for Soc. Sec. I applied thru the Soc Sec office within the US Embassy in Manila. All done with email and a phone interview with an intake administrator in Manila. I do keep a "mailing address" in the US so that I can maintain a US bank account. Soc Sec sends any documents, notices, etc to my Thailand address. I have never been aware that a US citizen must maintain a US address of residency.

[BKKSnowBird]

Good question. I have medicare that I can not use in Thailand but satisfies the Obamacare thing. I wish I could keep my part C but residency is required.

[skatewash]

FYI: In 2006 when I applied for Florida Blue Cross Blue Shield, I had to certify that I physically was present in the state for the past 90 or 180 days. I forget now since it was 2006. Fortunately I was because I had taken a contract assignment there. I had moved there back in 2001 but as a contractor, I often was working out of State and usually was not in the state for large contiguous amounts of time. Just cautioning to check the fine print. Residency for Uncle Sam can be a pain. I plan to keep a residency in FL . It just seems to make so many things simpler when living overseas, mail, keeping a State Driver's license, etc. Now, with Obamacare which I plan to avoid when I live overseas, residency comes up in a new light. If I put down a US Florida address on my tax return, that would seem to be questionable and might invoke more Obamacare issues?

Well, this year I filed my federal tax return with my Florida address (despite living full-time in Thailand) and included IRS Form 8965 claiming my Obamacare exemption (C - A U.S. citizen or resident who spent at least 330 full days outside of the U.S. during a 12–month period). I'm hoping the 8965 trumps the use of the Florida address on my 1040. If it doesn't and I receive an inquiry from the IRS, I will be amending my 1040 to use an address in Thailand.

It's unfortunate that the 1040 doesn't seem to allow one to indicate both the address where one lives and one's mailing address. (My personal situation this year is complicated by the fact that I don't have an officially registered address to have mail delivered to in Thailand yet as I've just moved into a newly constructed condo which does not yet have one.) I would in general much prefer to receive mail at my US mail service, where I am notified by email immediately upon its arrival, and have the option to have the contents scanned for online access. Much better, it seems to me, than to wait for it to be delivered to me in Thailand (if it gets delivered to me at all, it will be days or weeks later than to the US).

[JDGRUEN]

I keep an address in the USA simply because it feels right to me. I am now on an Extension of Stay based on Retirement - but I am not a Permanent Resident of Thailand and obviously I am not a citizen ... I feel I am nothing more than a long term visitor. Being here on an Extension is far from having changed my country of allegiance. I feel I will live here most of the rest of my life - but unless and until I get Permanent Residence status ... then I will keep my American domicile status. This is just how I feel ...

It is easy for me to maintain a residence in America - because I planned it out before coming here. I have an older motor home that I made plenty of use of and now it is parked at a friends place - a large building where he has a shop and a home. I pay him a nominal sum each month for storage and for special expenses. I use his address because that is where my 'home' is parked - set up with plumbing, and electric - even TV ready to sit in and start up the microwave and have lunch. If I need to go back for any particular reason - medical or family - I have a place to stay. This is my residence for the IRS, and the Social Security Administration -- I file on line with both to register my residence via tax filings and the annual SSA form I must fill out to show my residence (or I guess they want to know I am still alive).

I feel I am quite legal in all respects. I still bank in America - it feels better to me and works better for me also. Everyone's situation is different and my finances work just fine this way.

After 16 months now ... I like my arrangement even more... This kind of thing is TO EACH HIS OWN... your shoes do not fit my feet...

Guys who GO ALL IN TO THAILAND -- can do just that ... I have at least one foot back over the pond ...

[craigt3365]

Luckily, the last place I lived was Nevada. No state taxes. I still have a PO box there that a friend looks after, but I rarely get any mail. Everything is sent here or done electronically.

I did run into problems setting up a Schwab account. What a mess. The US is just not oriented to working with people who are overseas. Even though there are millions of us!

[Smokin Joe]

The quote posted in the OP just shows that the guy who wrote it is an idiot. Not you JT, but they guy who wrote the paragraph you quoted. I think he has a serious case of martyr syndrome.

I agree that there are problems with living overseas and using a US address for mailing address but they can all be dealt with. Probably the biggest issue, in my opinion, would be to never try to obtain any state services that requires you to physically live in the state you are using for a mailing address.

I have been using a mailing service on my IRS tax returns for the last 30 years with no problem. I did have one bank balk at an address change once but I gave them a physical address I was associated with but made it clear that I could not receive mail throuth it and they were OK with that and changed my mailing address to my new mailing service address.

I also received a jury duty notice form Clark County, NV (Las Vegas) last month. I get notified by e-mail when anything is received and the notification has the return address so I had them open, scan and e-mail the notice (cost $1 per page). I e-mailed the court and they just aske me to e-mail some kind of evidence that I was currently overseas. They were very lenient in what they would accept, such as a foreign driver's license, utility bill etc. They had no interest in legalities concerning "residence", "domicile" etc. thay just wanted to know I wasn't available for jury duty,

Edited April 12, 2015 by Smokin Joe

[BKKSnowBird]

Luckily, the last place I lived was Nevada. No state taxes. I still have a PO box there that a friend looks after, but I rarely get any mail. Everything is sent here or done electronically.

I did run into problems setting up a Schwab account. What a mess. The US is just not oriented to working with people who are overseas. Even though there are millions of us!

What kind of problems? I have found Schwab great! My ATM card got cut off once but a quick call and it was fixed. They also seem to have no problem with me using a mail forwarding service.

[TallGuyJohninBKK]

Now, with Obamacare which I plan to avoid when I live overseas, residency comes up in a new light. If I put down a US Florida address on my tax return, that would seem to be questionable and might invoke more Obamacare issues?

There are a number of legal exemptions to the requirements of obtaining coverage under ObamaCare.

One of them aimed at expats is if you've been outside the U.S. for at least 330 days in any 12 month period ending during whatever tax year is at issue.

Listing a U.S. state address on your federal tax return vs. listing a Thailand address doesn't make any difference at all in terms of having or not having an ObamaCare obligation, AFAIK.

[TallGuyJohninBKK]

Now, with Obamacare which I plan to avoid when I live overseas, residency comes up in a new light. If I put down a US Florida address on my tax return, that would seem to be questionable and might invoke more Obamacare issues?

There are a number of legal exemptions to the requirements of obtaining coverage under ObamaCare.

One of them aimed at expats is if you've been outside the U.S. for at least 330 days in any 12 month period ending during whatever tax year is at issue.

Listing a U.S. state address on your federal tax return vs. listing a Thailand address doesn't make any difference at all in terms of having or not having an ObamaCare obligation, AFAIK.

[TallGuyJohninBKK]

Re one question raised above, there is NO legal requirement that Americans maintain any kind of legal residency (or state-based residency) in the U.S. You can, of course, but there's nothing that requires it.

I choose not to do it, but a person could file their federal tax documents using only a Thailand address, and that wouldn't by itself create any problems, AFAIK.

But I have run into the domicile issue in the past relating to things like voter registration and even a person's U.S. will, which is governed by the laws in their state of residence. But what if you don't have a current U.S. state of residence?

The legal advice I've gotten on that subject in the past, at least regarding wills for an American living overseas, is that the last U.S. state where you previously had residence before moving overseas continues to be your state. Similar with voter registration, in that you can continue to be an absentee voter from the last U.S. location where you were registered, even after you've moved outside the U.S.

The part I still haven't been able to sort thru, with enough certainty, is whether the various mail forwarding address service relationships can substitute for things like establishing jurisdiction for a U.S. will or even voter registration in a "new" state.

Edited April 12, 2015 by TallGuyJohninBKK

[craigt3365]

Luckily, the last place I lived was Nevada. No state taxes. I still have a PO box there that a friend looks after, but I rarely get any mail. Everything is sent here or done electronically.

I did run into problems setting up a Schwab account. What a mess. The US is just not oriented to working with people who are overseas. Even though there are millions of us!

What kind of problems? I have found Schwab great! My ATM card got cut off once but a quick call and it was fixed. They also seem to have no problem with me using a mail forwarding service.

I'm not exactly sure what alerted them to me being overseas. Maybe the IP address the email was sent from? I was immediately referred to an international ops guy who mainly services Chinese. I'm set now, get mail sent here, and am getting an ATM card soon, but due to my overseas location, can't work with or get advice from any of their internal advisers. I've been referred to a company in their Advisory Network, one that works with overseas clients.

It took forever to get the account setup. One big stumbling block was they wanted my name on a utility bill. Well...everything is in my wife's name! And it's also mainly in Thai. Took them forever to get this translated. Ugh....

[TallGuyJohninBKK]

It's always best to do your brokerage, or for that matter, bank interactions using both a U.S. mailing address and also using a U.S. IP internet address.

Sometimes it won't be a problem. But other times it will be, and you'll potentially find yourself with locked or canceled or problematic account issues. And by the time you know it's a problem with a particular financial institution, sometimes it can be too late.

In the case of brokerages, there are federal regulations restricting the types of U.S. investment products that can be offered for sale outside the U.S. There also are other federal regulations requiring the brokerages to know who their customers are. So, they tend to make a practice of distinguishing between their "U.S." customers vs. their "foreign" customers.

In Schwab's case, if memory serves, their international accounts don't allow investment in all the same products that their U.S. accounts do, the opening balance requirement is significantly higher, and I'm not sure that their ATM fee rebates program operates the same. All in all, it's really best to try to keep a U.S. Schwab account vs. their international one.

One thing I know their customers have run into in the past is their online computer system does check for your log-in IP address, and when it recognizes it as a foreign one, it sometimes can lead to their online fraud/security system locking online access to your account until you call in and verify you're the real account holder. Since, because it's a U.S. account, they expect you to be logging in with a U.S. IP address. Dealing with those lockouts is a hassle that no one needs, but avoiding them is easily done.

Also, as evidenced above, you DEFINITELY want to be using a U.S. IP address and U.S. mailing address if you're trying to open a NEW account with Schwab -- as opposed to just doing business once you already have an opened U.S. account. Craig's story above is an excellent/unfortunate example of why...

Edited April 13, 2015 by TallGuyJohninBKK

[skatewash]

Re one question raised above, there is NO legal requirement that Americans maintain any kind of legal residency (or state-based residency) in the U.S. You can, of course, but there's nothing that requires it.

I choose not to do it, but a person could file their federal tax documents using only a Thailand address, and that wouldn't by itself create any problems, AFAIK.

But I have run into the domicile issue in the past relating to things like voter registration and even a person's U.S. will, which is governed by the laws in their state of residence. But what if you don't have a current U.S. state of residence?

The legal advice I've gotten on that subject in the past, at least regarding wills for an American living overseas, is that the last U.S. state where you previously had residence before moving overseas continues to be your state. Similar with voter registration, in that you can continue to be an absentee voter from the last U.S. location where you were registered, even after you've moved outside the U.S.

The part I still haven't been able to sort thru, with enough certainty, is whether the various mail forwarding address service relationships can substitute for things like establishing jurisdiction for a U.S. will or even voter registration in a "new" state.

I know of no legal requirement that Americans maintain a legal residence (state-based) in the US. However, I do believe it is true that Americans are considered residents of the last state they lived in prior to moving overseas. This is certainly true for voter registration, but I believe it extends to other considerations as well.

By the way, voting overseas for me is a very easy thing, but of course, that depends on the local (county) jurisdiction in which you formerly resided. I am able to get my ballot emailed to me (can be done online so it's automatic, although I believe you have to re-authorization this absentee ballot arrangement every few years which can be done online). I'm then able to fill out the ballot, sign an affidavit, and fax everything back to my local board of elections. I can see online if my fax has been successfully received and I can see after the election if my ballot was counted. My understanding is that as long as I continue to actively participate (I vote in every election: primary, general, and local.) my registration will continue as long as I live.

If not sure about US wills since I don't have one. Substantially all my US assets are covered by beneficiary designations, but I would like to know what the rules are for US wills if someone knows and is willing to share the information.

[TallGuyJohninBKK]

I've had similar experienced to what you related above.

As for voter registration, one issue you have to be careful about is state income tax liability. I had an existing voter registration in a state income tax state, and for a time carried on with that as an absentee voter status in that same state.

But, over time and trying to be cautious, I decided I no longer wanted to be registered to vote in my original state, because under its state tax liability rules, voter registration is ONE of a series of criteria they use for determining whether you have a taxable presence in the state. So I canceled by voter registration in that state. I didn't really have any other taxable indicators, but I also didn't want to give the state ANY unnecessary reason for trying to maintain that I had a taxable presence there.

However, I still would prefer to be able to vote, and that meant trying to re-register in my current U.S. address state, which happens to be a no state income tax state. I tried that, it worked initially, and then I got a follow-up letter from the registrar raising some problems -- that at the time, I didn't have the time/ability to pursue. So I think as a result, that original registration now is probably canceled. I probably want to try to revisit that issue.

As for wills, I don't think it matters what you do AFTER you've executed a proper U.S. will in one's state of residence. But, since different states have different state law requirements on what it takes to have a valid will, you want to make sure that when you execute a new will or an updated will, you're complying with the specific requirements of the state where you have your residence/domicile at that time. That could be the last U.S. state where you resided before moving abroad, or it could be somewhere else if you've subsequently established a new legal U.S. residence somewhere else.

But as I said above, I'm not by any means certain that simply maintaining a mail forwarding address in a particular state or using that address for one's federal tax filing is legally sufficient for creating residency status under the various state laws. I'm not a lawyer, but my impression is, state residency requirements are somewhat like state legal will statutes in that the details do vary from state to state.

As regards to wills, I suppose, it might not matter in many cases, particularly if no one's likely to be contesting your will as to its validity. But, you never know what might happen if the future, and everyone's personal circumstances are different. So I prefer to err on the side of caution and correctness in terms of trying to fully comply with the pertinent legal provisions.

[craigt3365]

I think my IP address was caught when I clicked on their website to contact me. Thus, I was put in the international ops group. I would never have been able to setup a US account as I don't have utility statements there in my name. I guess this is a requirement now. Plus, as you say, when I tried to do a trade, and they found out I was overseas, things would get complicated. Also, I think he said PO boxes don't work for addresses???

According to my rep, there are zero differences between a US account and an international one. Just can't use their US based brokers...but can do trades when you are out of the country.

I don't know...dang complicated...

[TallGuyJohninBKK]

Craig, I'm not sure if we're talking about the same Schwab accounts here.

But, if you go to the Schwab International new accounts section, it indicates that a minimum of $10,000 U.S. is required to open a new brokerage account. I don't even see that Schwab offers a checking account to its international customers.

http://international.schwab.com/public/international/nn/open_an_account?country=TH

By comparison, there is zero minimum for a regular U.S. Schwab brokerage account when you open it together with a Schwab checking account, or it seems to be $1000 minimum if you open their U.S. brokerage account alone (without their checking account.)

Also, their website info indicates the international Schwab account will allow you to:

"Trade U.S. stocks, bonds, offshore mutual funds and more with a Schwab One International account."

That fits with my recollection that Schwab international accounts may not be able to purchase U.S. mutual funds.

Also, I see on the international site where they're asking for a recent utility bill. But on the regular U.S. site, they don't seem to ask for that and instead just want a U.S. permanent address, SS# and driver's license info.

I'm wondering if the Schwab rep you were talking to knew what he was talking about if he said "zero differences"?

Edited April 13, 2015 by TallGuyJohninBKK

[TallGuyJohninBKK]

BTW, here's a link to a Creveling & Creveling financial advisors article that addresses the issue of potential restrictions on expat Americans with non-U.S. addresses being able to purchase U.S.-based mutual funds.

If that wasn't enough, U.S. expat investors can't purchase many U.S.-based investment products either. Many U.S.-based investment custodians/brokerages, under pressure from compliance departments to conform with various aspects of the Patriot Act, anti-money laundering legislation, and mutual fund distribution agreements, are increasingly making a distinction between resident Americans and non-resident Americans.

Opening accounts at U.S. custodians have become increasingly difficult for Americans overseas, and with a foreign address they are often shut out from buying the U.S.-domiciled mutual funds that resident Americans can purchase. In some cases, they are offered an offshore version of a domestic fund through their U.S. custodian, but the fees are usually twice as much as the domestic version and the number of funds available is severely limited.

http://crevelingandcreveling.com/blog-list/114-for-american-expats-what-to-do-if-your-private-banker-tells-you-to-go-away.html

Edited April 13, 2015 by TallGuyJohninBKK

[craigt3365]

Yes, all very confusing. But on my application form, for the international account, it's got a check box if I want a checking account and one or two debit cards. I confirmed with my rep that the checks are "in the mail". 555555

As for US based stocks and funds, I can still use their retail platform for ETFs and individual stock purchases, but NOT for mutual funds. This was not clearly laid out for me during out initial discussions.

He did say with a US based account, my transactions will get flagged if originating overseas...guess they track the IP address somehow? Using a VPN would get around this, but I've got no physical US address, only a PO box, which they don't like and doesn't match my driver's license as it's got my old physical address on it from several years ago. Ugh...

He said with an international account, I can purchase stocks/bonds/etc that are overseas based. I guess that's tough to do with a US based account???

The biggest restriction/difference I see so far is the inability to purchase US based mutual funds and the ability to tap into Schwab's internal adviser network. They can only work with US based accounts. Thus, my referral to an adviser in the international network. Which actually, might turn out quite well. Still evaluating that....what a mess....