closing brokerage account because of overseas address any us tax experts here?

[steveb6]

Got a letter from my brokerage company that they were closing my account because my address is overseas due to some new regulation in October. I have the option to use my brothers US address but the agent was not sure if i would be responsible for state tax or any other problem.

Does anyone have any experience of maintaining an account that generates income using a US address but living in Thailand. I know I am responsible for federal tax but the agent was not sure if the state would also tax me or any other problems that may occur using a US address..

[Buzzz]

I keep my Schwab account in the USA at my sisters address.

Every spring I use TurboTax online to declare my income. They will let you know what taxes are owed to whom.

Now the question may be, does the State tax situation vary from State to State? Maybe some States are more tax friendly. I don't know.

[taxout]

The IRS shares information with the states, including the information on Form 1099-Div. Of course, how the states use that information is another question; no doubt some are more efficient than others.

Point is, whether you are in fact a resident of the state for income tax purposes by law, the state income tax authorities will probably become aware of your existence from the information provided by the IRS. If you hear from them as a result, then it'll be your burden to demonstrate that you are not in fact resident there for state tax purposes.

All in, it'd be simpler if your brother moved to Texas or Florida.

[meatboy]

i posted in the issan forum 2weeks ago that banks and tax revenue/customs are checking all who are registered for tax purposes but use a different address to where they actually live.

[gk10002000]

What state did you last file taxes in before you moved to Thailand? Some states, notably New Mexico are very nasty and preface their tax manuals up front with numerous warning that just because you leave the state, it does not mean you are not a NM resident any more. They place a lot of burden on you to establish residency in another state. Do they enforce it and chase people down? I have no specific data on that but I have heard of some states that have gone after people or contacted them if nothing else because they filed taxes one year, and the state expected them to file taxes there the next year. In general, I don't think you will have an issue with a state, especially if you have been out of country for many years.

The best thing to do if possible is to establish state residency in a state that has no State Income tax. This maintains your US presence and you incur zero state tax liability. I am a FL resident. There is not even a state form to fill out. I do rent a room at my sister's house and I do pay a modest rent for Room, even if I am not there. All straight and above the board. My mail goes there as does my credit cards, debit cards, and a few other things that are easiest gotten if a USA mail address is used.

Now as for taxes, when you close the account (s) I assume you will sell off the assets, equities, stocks, bonds, funds, etc then take a check(s) or the funds will be wired to your bank or other accounts, rolled over into IRAs if appropriate, etc. Keep an eye on those IRA roll overs/transfers and make sure you don't get whacked with penalties and taxes if you do it wrong. You may incur short or long term capital gains or losses. That will all be on your 1099 Div, and will be fully accounted for. In case you haven't done much with that recently, remember as of a few years ago the IRS got the cost basis automatically recorded whereas before you had to account for that. So there is that other form you may have to fill out for equities you originally bought several years ago and that may require some digging up of your old transactions and cost basis. If so, you better be sure you get all your records before the account(s) is closed.

[skatewash]

What state did you last file taxes in before you moved to Thailand? Some states, notably New Mexico are very nasty and preface their tax manuals up front with numerous warning that just because you leave the state, it does not mean you are not a NM resident any more. They place a lot of burden on you to establish residency in another state. Do they enforce it and chase people down? I have no specific data on that but I have heard of some states that have gone after people or contacted them if nothing else because they filed taxes one year, and the state expected them to file taxes there the next year. In general, I don't think you will have an issue with a state, especially if you have been out of country for many years.

The best thing to do if possible is to establish state residency in a state that has no State Income tax. This maintains your US presence and you incur zero state tax liability. I am a FL resident. There is not even a state form to fill out. I do rent a room at my sister's house and I do pay a modest rent for Room, even if I am not there. All straight and above the board. My mail goes there as does my credit cards, debit cards, and a few other things that are easiest gotten if a USA mail address is used.

Now as for taxes, when you close the account (s) I assume you will sell off the assets, equities, stocks, bonds, funds, etc then take a check(s) or the funds will be wired to your bank or other accounts, rolled over into IRAs if appropriate, etc. Keep an eye on those IRA roll overs/transfers and make sure you don't get whacked with penalties and taxes if you do it wrong. You may incur short or long term capital gains or losses. That will all be on your 1099 Div, and will be fully accounted for. In case you haven't done much with that recently, remember as of a few years ago the IRS got the cost basis automatically recorded whereas before you had to account for that. So there is that other form you may have to fill out for equities you originally bought several years ago and that may require some digging up of your old transactions and cost basis. If so, you better be sure you get all your records before the account(s) is closed.

Agree with your strategy as it's what I do myself. Just wanted to clarify that I'm considered a resident of Florida because that's the last place I lived before moving to Thailand. In other words, I don't have to maintain an actual physical residence to continue to be considered a Florida resident. I do, however, have a commercial mail receiving agency (CMRA) company that provides me with a Florida mailbox. I can have received mail scanned for me and view it remotely or can have it physically forwarded to me. It is really essential for an expat to maintain a US mailing address, preferably at a friend or relative's house, but a CMRA works for that purpose too.

Also, you can file a Declaration of Domicile at your county courthouse in Florida to declare that Florida is your domicile. This may help if your former state (before moving to Florida) were to pursue you for state income taxes as a former resident. Of course, the way to establish your domicile in a state such as Florida is to sever all ties (e.g., bank account, driver license, library card, vehicle registration, bank accounts, voter registration, etc.) with your former state and establish the same with your new non-state income tax state (Florida). The Declaration of Domicile is just one more piece of evidence of your intention to become a resident of the new state, which means you are no longer a resident of your former state.

So, not disagreeing with what you say, just didn't want to leave the impression with the OP that you had to continue to pay rent for a place to live in the state to be considered a resident. You are considered a resident if that's where you lived and established residency immediately before expatriating.

[skatewash]

Sorry to hear from the OP that this is happening to him. I think it's dreadful.

It may be possible to correct the problem though.

First, what is your former state, the one you lived in (and had established residence in) immediately before moving out of the country? That is your state of residence, even if you no longer live there (unless you established a new state of residence somewhere else). If that state is one without a state income tax then what you should do is get a friend or relative to let you use their address in as your own. Tell the US financial institution that you live there and provide them that address.

If your former state is one that does have a state income tax, then my suggestion is to sever ties with that state and establish ties with a state that does not have a state income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming). Then get a US mailing address in that state, can be with a family member or friend who lives in the state, or barring that, a commercial mail receiving agency (CMRA) of which there are many in states without state income tax (for reasons you can now appreciate as an expat).

Obviously, this is all easier to do before you expatriate from the US, but I think it could be worthwhile trying to do even afterward if necessary. Much can be accomplished online from wherever you are, but a trip back to the US may be necessary for things that can only be done in person.

In dealing with US financial institutions keep in mind three rules:

1) Never tell them you live outside the US. Provide them with a US mailing address as your address not a foreign one. Use a friend, relative's or CMRA provided address for this purpose.

2) It's nice to have a US phone number as well. You can get from a provider such as MagicJack (VoIP) or I believe Google Voice. Give the US financial institution your US phone number.

3) Use a VPN set to somewhere in the US when you do anything online regarding your US financial institution. It will appear to them (if they are interested) that you are in the US.

Once your US financial institution has reason to believe you live outside the US bad things happen. You may be able to rectify the situation now, but obviously it's better if the situation doesn't arise in the first place.

[steveb6]

I was planning to change the address to Mew York. Does anyone know if the 1099 is sent only to the IRS or is it also sent to the state from the financial institution.

[skatewash]

I was planning to change the address to Mew York. Does anyone know if the 1099 is sent only to the IRS or is it also sent to the state from the financial institution.

Most states have an income tax, and they will receive all the same information the IRS does. So if you missed a 1099 on your federal return, be aware that your state will probably catch up with it, too.

-- http://www.forbes.com/2010/01/27/irs-1099-computer-matching-audits-personal-finance-robert-wood.html

[skatewash]

Duplicate post removed.

Edited July 15, 2016 by skatewash

[gk10002000]

What state did you last file taxes in before you moved to Thailand? Some states, notably New Mexico are very nasty and preface their tax manuals up front with numerous warning that just because you leave the state, it does not mean you are not a NM resident any more. They place a lot of burden on you to establish residency in another state. Do they enforce it and chase people down? I have no specific data on that but I have heard of some states that have gone after people or contacted them if nothing else because they filed taxes one year, and the state expected them to file taxes there the next year. In general, I don't think you will have an issue with a state, especially if you have been out of country for many years.

The best thing to do if possible is to establish state residency in a state that has no State Income tax. This maintains your US presence and you incur zero state tax liability. I am a FL resident. There is not even a state form to fill out. I do rent a room at my sister's house and I do pay a modest rent for Room, even if I am not there. All straight and above the board. My mail goes there as does my credit cards, debit cards, and a few other things that are easiest gotten if a USA mail address is used.

Now as for taxes, when you close the account (s) I assume you will sell off the assets, equities, stocks, bonds, funds, etc then take a check(s) or the funds will be wired to your bank or other accounts, rolled over into IRAs if appropriate, etc. Keep an eye on those IRA roll overs/transfers and make sure you don't get whacked with penalties and taxes if you do it wrong. You may incur short or long term capital gains or losses. That will all be on your 1099 Div, and will be fully accounted for. In case you haven't done much with that recently, remember as of a few years ago the IRS got the cost basis automatically recorded whereas before you had to account for that. So there is that other form you may have to fill out for equities you originally bought several years ago and that may require some digging up of your old transactions and cost basis. If so, you better be sure you get all your records before the account(s) is closed.

Agree with your strategy as it's what I do myself. Just wanted to clarify that I'm considered a resident of Florida because that's the last place I lived before moving to Thailand. In other words, I don't have to maintain an actual physical residence to continue to be considered a Florida resident. I do, however, have a commercial mail receiving agency (CMRA) company that provides me with a Florida mailbox. I can have received mail scanned for me and view it remotely or can have it physically forwarded to me. It is really essential for an expat to maintain a US mailing address, preferably at a friend or relative's house, but a CMRA works for that purpose too.

Also, you can file a Declaration of Domicile at your county courthouse in Florida to declare that Florida is your domicile. This may help if your former state (before moving to Florida) were to pursue you for state income taxes as a former resident. Of course, the way to establish your domicile in a state such as Florida is to sever all ties (e.g., bank account, driver license, library card, vehicle registration, bank accounts, voter registration, etc.) with your former state and establish the same with your new non-state income tax state (Florida). The Declaration of Domicile is just one more piece of evidence of your intention to become a resident of the new state, which means you are no longer a resident of your former state.

So, not disagreeing with what you say, just didn't want to leave the impression with the OP that you had to continue to pay rent for a place to live in the state to be considered a resident. You are considered a resident if that's where you lived and established residency immediately before expatriating.

You are correct Skatewash about paying rent, or not and maintaining a domicile. It is usually considered one of the stronger tests if push comes to pull and I do it for some other reasons as I often work around the USA in different states. Some of the questionnaires that pop up ask about "maintaining" and paying for a place in the home state

[steveb6]

So in my case where I do not physically live in New York sate would I be considered a non resident for tax purposes? Would I have to submit some form ?

[taxout]

New York, like California, is a relatively aggressive state. Setting up an address there is inviting a hassle. Now, after a struggle you might in fact prevail as a non-resident, but why invite the hassle in the first place. Best to use an address in a no-income-tax state.

[bluebluewater]

I have had a PO Box for many years in my former state of residence that my daughter checks from time to time. All my statements are done electronically as are my taxes both federal and state. It all makes it really simple for me.

[Langsuan Man]

New York, like California, is a relatively aggressive state. Setting up an address there is inviting a hassle. Now, after a struggle you might in fact prevail as a non-resident, but why invite the hassle in the first place. Best to use an address in a no-income-tax state.

Things may have changed, but when I lived in New York and worked for the Federal Government I was able to deduct days out of the state of New York to reduce my New York State tax liability

[taxout]

If you allocated based on days-in/days-out, then you were not filing as a "New York resident," you were filing a non-resident return. That's been the rule for decade after decade.

[gk10002000]

I was planning to change the address to Mew York. Does anyone know if the 1099 is sent only to the IRS or is it also sent to the state from the financial institution.

I have been a Florida resident for so long, I don't have much knowledge on if a 1099 or parts of it get sent to states as well as the IRS/Feds. I do know that some states require 1099s to be filed by all agencies that pay interest or dividend, etc. So it is possible that your brokerage will send a 1099 or equivalent information to whatever state it thinks is your state of residence. You should be able to talk to your brokerage and find out exactly where they think you live and what they will send out.

Here is an example and excerpt from New Jersey

Per the State of NJ Taxation website:

Form 1099 information returns must be filed with the New Jersey, Division of Taxation by all payors of interest and dividends (including banks, savings and loan associations, building and loan associations, and savings banks); lessees or mortgagors of real or personal property; fiduciaries; employers; and all other payors of interest, rents, salaries, wages, premiums, annuities, compensation, remuneration, or other gains, profits or income, including those who are required to file Federal

Form 1099 or any of the Form 1099 designations, when the amount paid or credited is $1,000 or more in a calendar year or if any New Jersey income tax was withheld from the payment.

[steveb6]

So, does this mean I must file New York state tax?

[taxout]

No, but it would not be a great surprise if one day a letter from NYS arrived for you at your brother's house asking about your status. If that happens you could probably demonstrate you're not resident in New York, but as I said above, why invite that possible hassle. Pick a no-income tax state.

[GinBoy2]

This is a classic example of why you need to think about where you decide to 'reside' as an expat. I'm a Californian, and only woke up to the risks after I'm became an expat, but (see my previous thread, 'Maintaining a US Home Base') the best thing I did was move myself the one of the non state tax States, in my case South Dakota.

If you don't still own any property, moving your residency costs you nothing, but could potentially save you plenty.