Us Fed State Tax Address Question

[Upcountry]

Hi folks,

This is our first tax return while living in Thailand. Our options are using our Thai address or a U.S. in a state other then the one we were living in.

It would be good to hear from others who have faced this question. I'm attempting to keep a U.S. credit presence for future needs. I wonder if the address on our tax return will be available to credit agencies, and so on.

Thanks

[Thaiquila]

Good question. I am also curious though not living in Thailand yet. Another question about this; if you use a US address, don't you increase your chances of the US STATE wanting you to file and pay also? Some states are worse than others. For example, if you are an ex-Californian, and you expatriate and stop paying California tax, if you ever move back to California, they go after all back taxes plus interest and penalties.

On your specific question, I would be surprised if the credit reporting agencies have access to your tax return. Not shocked, but suprised.

[bkkharry]

I maintain a US address for receiving my US mail, ie, credit cards, retirement check statements, and income tax informantion. My retirement checks can only be deposited in a US bank account, so need local address for bank statements to be sent to. I also file our (joint return,but only one income) tax return electronicly, and the refund is then deposited in my US bank account. Very easy to file your income tax using the internet, much faster and great software available to make sure all is right before filing. Plus if you receive a refund it is usually deposited into your account within one week, vs 6 weeks if done through mailing tax return to IRS center.

I have lived in Thailand for 4 years, but will always maintain a US mailing address to receive all my US mail. Have friend who sends all mail to me by fed- ex, much safer than using regular mail. if I happen to not return to US for an extended period of time, otherwise pick it up when I go back to the US.

I lived in Nevada and we have no state income tax. Not sure about other states if you retirement is subject to state income tax, just know we are still responsble for paying federal income tax on our retirement benefits no matter where we live.

Income earned outside of a state should not be taxable, only the income earned in the state should be taxable.

[Upcountry]

Hey, thanks to both of you for your replies.

I'm working on finding out about Arizona and their laws.

I have interest income in a Massachusetts bank right now, but that might change.

If I get mail sent to Arizona, and use that address to file my Mass. and Fed. taxes, I wonder if that makes me an official resident for tax purposes. We can't have it both ways, can we? ;-)

The tax aspect is academic at the moment, since my income will be small next year, but you never know!

[MrMud]

Upcountry

I use my Thai address even though retirement goes to US bank. That way no problems with states wanting their share. Living here, there is no share for any state.

Thaiquila

"For example, if you are an ex-Californian, and you expatriate and stop paying California tax, if you ever move back to California, they go after all back taxes plus interest and penalties."

Not True. Law change in about 1996 says if you no longer live in the state you owe taxes (in my case, retirement money) for previously earned money in whatever state you now reside in. Since I/we live in Thailand there isn't any state due taxes from us.

If we don't owe them now, there are no back taxes, interest or penalties for them to go after later.

It's late, I'm tired - hope that's not confusing.

[Thaiquila]

Are you specifically talking about a CALIFORNIA law change?

I continue to hear information that California is notorious for going after expatriates, ESPECIALLY, if they don't pay for years, and then decide to move back. Solution: never move back.

Best advice is to get specific information about the last state you clearly lived in.

Check out this info; the stuff about evidence of tax domicile could be of interest.

"If I am living and working abroad, do I have to file a U.S. state return each year?"

There are 50 states with 50 different rules on this question. If prior to leaving the U.S., you lived in a no tax state such as Nevada, Washington, Texas or Florida no return is required. Some other states say if you are gone for more than six months, no return is required. Other states such as Virginia and California look at whether you still have a “tax domicile” in the state and then still require you file a return even though you have been gone for years. They look at your intent to return to the state after your stay abroad, and various indices that may indicate you never planned on giving up your “tax domicile” such as if you still maintain a state drivers license; state voter registration; library card; bank accounts; real property; license plates for your car; or if you children still go to school in the state.

If you want to avoid tax problems with your previous home state with “tax domicile laws” many years down the line demanding you file state income tax returns for the entire period you lived abroad, and demanding you pay all of the taxes, interest and penalties due for that period, you should not move back to that state when you return permanently to the U.S. You must also upon moving abroad give up all state drivers licenses, bank accounts, real property, voter registration, etc. Not all states are this tough, but some like Virginia and California do impose very tough rules

[JimGant]

some like Virginia and California do impose very tough rules

Thaiquila,

Sounds like you might have been researching Virginia tax law specifically(?).

I recently filed a Virginia Tax Form 760PY (Part Year), as the wife "officially" gave up Virginia residence in 2003 for Thailand (I haven't yet, but I was allowed to file jointly with her on the PY). We researched all the potential 'gotchas,' including all the individual tax rulings turned up googling. I think we're on solid ground with her giving up domicile in Virginia: Out of state more than 180 days per year; Thai drivers license, passport, and home ownership. And Virginia drivers license turned in (they asked for it after I filed the PY).

When I'm able to leave for Thailand for more than 180 days/year, it might get trickier, especially if I keep the house here for occasional returns to the States. When I get to that point, I'll get a definite answer from the State-- and sell if I have to. Until then, I'll continue to pay Virginia taxes, filing "married, but filing separately." The wife will no longer have to file, or pay. If they question her bonafides, since I'm still here, I'll just say we're 'separated.'

Virginia's tricky. But I know several former Virginians who snowbirded to Florida, where they are now residents. They've kept a place up here for visits, and none have been hassled by Virginia revenuers. But it might be an easier case to prove domicle change when you move to Florida, not to a foreign country. I don't know.

[MrMud]

Are you specifically talking about a CALIFORNIA law change?

Yes, I am. I moved to Thailand in 94. About two years after that the law was changed.

I think the pressure from retirees who had moved to “cheaper” states finally got to them. Lots of retirees had moved where taxes were less, but they had to keep paying Calif, even though they no longer lived there. Now, the law says pay where you live. I don’t live in the US, so don’t pay state taxes.

As for your “intent”, I don’t think they would have much to go on if on your Federal tax forms you had declared your home of record in another country.

I’m no expert, and don’t have any intentions about moving back to Calif (probably couldn’t afford to even if I wanted to), but wouldn’t worry about them going after me for something I hadn’t owed at the time.

Best advice is to get specific information about the last state you clearly lived in.

Good advice.

[taxout]

Some confusion here because two different issues are being discussed.

First, if you move overseas and then move back to the same state, that state may claim that you never lost your status as a resident of the state while overseas; as a result, the state will claim back taxes on your income while overseas on the basis that you were always a state resident. Whether the state succeeds or not depends on a lot of factors, including the length of time you were overseas and the ties you maintained in the state while overseas. If this is a concern, get some tax advice.

Second, California (among other states) previously took the position that even though you were genuinely no longer a resident of the state, you were still liable for state tax on pensions paid on prior Calfornia employment. This practice was ended in 1996, not by a new California law, but by Federal statute. P.L. 104-95.

[lopburi3]

This is our first tax return while living in Thailand. Our options are using our Thai address or a U.S. in a state other then the one we were living in.

I have used Thai address for the last 10 years and still have a US credit card (with Thai mailing address) and US debit card with US mailing address so don't believe it is a problem credit wise. Online filing last 3 years using TaxCut which used for free printing of forms previously. You do have to make decision on wife if you want her income taxed and obtain a taxpayer ID number for her to get married tax rates. This can be found on INTERNET. Of course if she is making the money you may not want that.

[bkkharry]

Lopburi3,

A question if you don't mind. Are you saying that you have your US credit cards mailed to your Thai address, but not your US bank debit card. Could you explain why. Do you have any concerns about your credit cards from the US being mailed to your Thai address.

Me I have them all sent to a US address and pick them up when I return to the US, or have them fed-exed to me here.

Also when you usually receive your next US credit card we are required to call the credit card issuer and activate the credit card. Do you have any problems doing that with your cards being sent here. Thanks,

[lopburi3]

A question if you don't mind. Are you saying that you have your US credit cards mailed to your Thai address, but not your US bank debit card.

Yes. Changed the credit card to local address due delay in mail forwarding years ago and now pay the credit card with direct debit from bank account so mail/delay is not a problem. Have never asked bank to send debit card here as pick up when home or have forwarded. Credit card is mailed with no activation needed and the last few years has been sent normal airmail (previously was sent registered).

[Upcountry]

Hey folks,

Good and interesting info here.

I verified with the IRS that I can use my Thai address for filing. Equifax and other credit agencies, etc., would not be able to find this information out. The same is true for my state - Massachusetts.

I have let my credit card companies know of my overseas situation anyway, but that is just so they won't be alarmed by charges made here, etc. I pay my bills electronically, and luckily I can get my "statement" on their websites if necessary. Getting the paper one's forwarded from family in the states hasn't been a problem.

Next year, I'll want to file form 1116 (based on this year's form numbering) and hopefully benefit from a foriegn tax credit. I'm supposed to report my Thai income to the IRS, but hopefully it will actually be to my benefit.

Massachusetts also wants me to report my Thai income. They couldn't tell me what sort of "tax treaty" the US has with Thailand - that would have an impact.

I also found out that Mass. will not let me give up my residency status there even though I now longer have an address. To prove another state as my place of residency, I need to have a driver's licence in that new state, etc. Not just get mail there. I believe this is in line with what others have said in this thread.

I still have one question about all this, though. How will the US and state know about money earned in Thailand? Does it depend on a tax treaty - i.e., does the treaty involve Thailand sharing "w2" type forms with the IRS, or do they get filed with my visa records to that the IRS can check it easily? Just curious.

Thanks

[JimGant]

I also found out that Mass. will not let me give up my residency status there even though I now longer have an address. To prove another state as my place of residency, I need to have a driver's licence in that new state, etc. Not just get mail there. I believe this is in line with what others have said in this thread.

Tell Boston to kiss your butt! I assume you filed a 'part year' tax form with Mass for 2003? If not, tax amend, as this is the only way to tell 'em you checked out in 2003. I briefly looked at Google for MA tax law, and as long as you're away from MA 183 days a year, and can show intent to re-domicle in Thailand, you're history. If you've really settled in over here, everything you've done (address, car, bank acct, etc) would verify intent. Also, get a Thai driver's license, then with that, get an International Drivers Certificate -- this will take care of driving, if and when you return to the States. Finally, mail your license back to MA DMV, via MA tax dept, with your regards (further proof you've abandoned them). Oh, when they say drivers license from another 'state,' they don't mean just the 50 US ones. States also refers to sovereign states, like Thailand. So, again, get that Thai drivers license.

Massachusetts also wants me to report my Thai income. They couldn't tell me what sort of "tax treaty" the US has with Thailand - that would have an impact.

Nope. After you file your 'part year' tax form, you're done with them. Tax treaty is now irrelevant to Mass.

I still have one question about all this, though. How will the US and state know about money earned in Thailand? Does it depend on a tax treaty -

Tax treaty, signed in 1996, originally didn't have Thailand reporting earnings to the US (no mechanism). But they were supposed to fix this by last year, which maybe they did. What personal id info they would use, I don't know. Probably passport number, which the Feds could easily cross check with social security number.

Next year, I'll want to file form 1116 (based on this year's form numbering) and hopefully benefit from a foriegn tax credit.

You'll benefit, as the 1116 will effectively refund everything you've paid Thailand in taxes. But it's a zero sum process -- you're total tax bill will be exactly as if everything was earned in the States. The practical matter is that your US tax bill will be less by exactly what you paid Thailand.

Don't worry about MA. They don't have ground to stand on, and no long arm to Thailand. Only if you moved back there some day would you possibly need to tap dance. But even in that case, they'd be hard pressed to prove your real intent was to move to Thailand only temporarily. Oh, you might want to 'unvoter' register. Also, recommend you check out 'nonresident' filing requirements to see if something like rental property might be subject to MA taxes(available thru Google).

[lopburi3]

get a Thai driver's license, then with that, get an International Drivers Certificate -- this will take care of driving,

Not completely as you will not be able to rent a vehicle from some of the major companies in the USA without a US state drivers license. If you are US citizen you must show a US license is part of the rental requirements.

As a former resident of NH understand the problem with Taxachusetts. They take it as a huge loss if one gets off the hook.

[mrmnp]

Issue #1. Foreign address affecting credit or card. I use local address for citibank (U.S.) card, no problem. They charge an annual fee of $135 for the card, air miles for each dollar spent type, to expensive since I don't use it anymore. Tried to change the card to a no-fee card, answer: cannot change the card to another product a long as you have a foreign address. Contact us again when you reside in U.S. again. (probably never).

Am waiting for my American Express Card (Thailand) annual fee is 1800 baht, a good saving, then will cancel the U.S. Visa (Citibank card.

Issue#2 Driver's license needed for rent a car. I will be obtaining international drivers licence in Thailand when my U. S. license expires in a couple of years. I surmise that rent a car companies in the U.S. when renting to foreigners accept international drivers licenses otherwise touris business would be non-existent.

Anyone know if rent a car companies DON'T rent to international driver license holders?

[farangene]

Anyone know if rent a car companies DON'T rent to international driver license holders?

Last year I was in line at an Avis counter in America when an Asian couple were trying to get the rental car they had reserved. They were using/showing an international drivers license and that was not a problem.

The problem was that they had not brought their origin country license that the Int'l license was based on. Avis refused to rent to them because they didn't have the original country license.

Bottom line: I dont think that major car renters will have any problem renting to int'l license holders.... but

Be sure to bring your int'l license and the country license it is based on when you rent a car.

[JimGant]

If you are US citizen you must show a US license

Hmmm. If they don't check passports, I'll just speak like Greg Norman, call the agent 'mate,' and, hey, good to go!

Was it difficult learning how to speak like an Aussie, Doc?

[Pepe']

I just met with my accountant here in San Diego last week.

Some thing that came up again is that an individual working abroad is exempt from taxes for the first $80,000 earned.

Unless you are making more than that there is no need to file once you have left the country without being here in the tax year for 11 months?

Is that correct?

What does having a drivers license or bank account have to do woth it?

[britmaveric]

Well if you read the IDL - it clearly states that the IDL is only valid when it accompanies the driver license of origin.

[JimGant]

Some thing that came up again is that an individual working abroad is exempt from taxes for the first $80,000 earned.

Earning wages abroad is one thing. And, yes, there is an exemption (if you meet the criteria) from US taxes on these wages. But the operative word is "earned."

For those retiring in Thailand, with pensions, 401k distributions, dividends, cap gains, etc, this 1099 form of income IS taxable by the Feds.

How your US State taxes your earnings abroad, I don't know. But the question of driving licenses on this thread was that to totally sever yourself from your last state of residence, in order NOT to owe them taxes, you might need to turn in your drivers license to underline the fact you've moved out. In the case of Virginia, they demanded the license by turned int, after the Part Year tax form was filed.

[taxout]

The $80,000 exemption isn't automatic, you need to file a return and claim it. And with a few complex exceptions, you need to TIMELY file the return.

If you didn't timely file and want to know the complex exceptions, take a look at IRS Reg. §1.911-7(a)(2)(i).

[lopburi3]

Bottom line: I dont think that major car renters will have any problem renting to int'l license holders.... but

From my reading of the fine print last year they seemed to only allow international license use by non US citizens. If you are a US citizen you must hold a valid US drivers license I believe was the wording.

[Pepe']

taxout,

I downloaded IRS Reg. §1.911-7(a)(2)(i). Can you give me your initial spin on it. It will take me some time to review the whole thing.

What I did gather that seems to apply is that everyone must file in a timely way even if you make less than the 80,000 per year.

Any other interesting points?

[taxout]

If you filed a timely return but didn't claim the exemption, Paragraph B lets you amend your return to claim the exemption within the normal period for filing an amended return, usually three years from the original due date of the return.

If you didn't file a timely return, Paragraph C lets you claim the exemption on an original tax return filed up to a year late.

Paragraph D is the tricky one for the truly late filers. Very briefly, it lets you claim the exemption at any time if either A) you don't owe any tax on the return after taking into account the exclusion or you do owe tax but you claim the exemption before the IRS discovers that you hadn't claimed it. If you're making a late election under Paragraph D you've to got so indicate in specific language on your return.

This is just a summary: check the Regs for the details.

If you're self-employed overseas, remember that the $80,000 exemption under Section 911 doesn't apply to the Social Security self-employment tax. This can be a big number and a big surprise.

[Pepe']

I will study this more in depth. Let's see if I got this right. If you file your return in a timely way your OK. But you are still responsible to pay social security tax if you're not living in the country?!

[taxout]

No -- Social Security tax is a concern overseas only if you're SELF-EMPLOYED (or, if you're employed, if you're employed by an "American" concern).

If you are self-employed, remember that the $80,000 exemption is an exemption from GROSS income, not taxable income.

[justyn]

I live outside the US (not Thailand yet) and have done so for nearly 10 years.

I maintain a mailing address in the US for credit cards and bank accounts because using a non-US address causes all kinds of confusion and make life very difficult.

However, this has nothing to do with US Federal taxes.

If you meet the physical presence test (outside the US for I think at least 330 days in the calendar year), then you qualify for the earned income exemption. If you use a US address on your tax return, you should be clear that the address is a mailing address only. Fill out the physical presence form and you'll be ok. I used my accountant's office as my US address and for my tax return for several years with no problem. He was in NJ. I've never lived in NJ. If you are not a resident of a State, you should not have to file there or pay tax there. Getting interest on a bank account is irrelevant if you are not a resident. Personally, I use my non-US address for the Federal tax return (don't use the accountant anymore). It's not a problem if your postal delivery is reliable.

Hope this helps.