State residency as expat??

Forum|Forum|2 years ago
October 19, 2023
2 replies
0 views

Hi - confused about state residency and state taxes.

Home state of NJ until sept 2022. Moved abroad since then.

Changed "mailing address" with some financial institutions etc to relative's home in NC.

Should I move all my addresses from NJ/NC to a virtual mailbox in FL? so i don't have to pay any state taxes for my US contract work and investment income? otherwise, tax forms like 1099 may show NJ/NC as the state.

Thanks!!

Not A Product Question

Anonymous_

Level 15

@pk12_2?

TomD8

Alumni - Champ

Your state tax obligations are based on where you live and on where your income is sourced.

If you owe state taxes, you cannot avoid them by simply changing your mailing address to a PO Box in a no-income-tax state like Florida. If that were possible, everyone would do it.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

pk_

Level 15

@aa2014 not knowing all the facts and circumstances of your particular case, and hedging my bets , I would point that during my days as an expat in Brazil, I knew of a lot of American citizens, that moved their residency to TX or FL ( having a mail box there, and opening a bank account to show closer connection to that state). But they were working for a multinational entity. I don't know if they were ever challenged by the state of their earlier residency ( MI ). I generally agree with @TomD8 that it may or may not work --- because there is always the issue of intent ( did you change residency because of good reasons or just to avoid/evade state taxation while in fact retaining closer connection to your original state of residence ? ).

pk_

Level 15

@pk12_2 as explained to @TomD8 , I do not have any state residency right now.

In this case, is it better to keep a taxable states mailing address (and have the onus to prove non residency to them) or non-taxable states mailing address (via virtual mailbox).

@aa2014 , whereas I applaud @TomD8 's complete and very informational response to your case, at the same time I do recognize that many Expats' desire to not have to pay state taxes, (with no active / passive income from a state ) to a state where they resided before and to whom they have a very tenuous connection. This is especially true for states taxing on world income and not recognizing even foreign tax credit. Many have tried various ways of creating new connections ( driver's license, bank account voter reg. , temporary rental etc. ) to states with no PIT ( such as TX, FL etc. etc. ). Fundamentally what one is trying to do is to create a "closer connection" to a new state. How successful these strategies are is a open question. There is nothing that prevents a person from doing this , especially if the Expat has no idea how long the foreign stay is going to be and whether he/she would even return to the same state at the conclusion of the foreign assignment. And for those Expats whom intend to be permanently abroad , this becomes even more important.

What I am trying to get across is that there is no good/ bad/ best answer to your question, it is not a tax question and you should do what you think meets your goals ( short or longer term ).

Hope this helps