How to pay taxes when living nomadically

[alexg75]

If I transition to a nomadic lifestyle, how does that affect my taxes?  Specifically, would I need to file a state tax return in any state that I'm physically located in when earning money in that state (even if for just a short time, e.g., a week or a month)?   Or do I need to maintain an official "permanent" address that would be associated with my state taxes (I currently live in MO)?   Does a PO box count as an official permanent address?  Additionally, if I'm working/living outside of the US, how does that affect the way I'd need to pay my US taxes?

[JaredS_CPA · Accepted solution]

Hello alexg75,

Thank you for joining us today. As to your question, for the most part, nothing will really change for your federal return except possibly for the time spent outside the US. Being a US citizen, you are taxed on your global income, but you may be eligible for the foreign earned income exclusion or foreign tax credit depending on a number of factors (who your employer is, how long you were gone, did you pay foreign taxes, etc.).

As to your state tax return, that is a little more complicated.  To keep it simple, you should file one for your domicile state, meaning the state you left from or will be returning to. Basically, it will be the state you consider your home. If you don't have a physical resident address to use (family/friend), then a PO Box is fine. 

Whether you will need to file part-year or nonresident returns in other states you will be travelling through depends on that state's specific tax laws, the amount of time you are there, and the nature of your income (remote versus physical in-state work), regardless if you have established a domicile state.

I have helped many taxpayers in your situation. Some of them choose to keep the state they leave from, some have established "residency" through a PO Box with a state that doesn't have an income tax, and others permanently live outside the US where they don't file a state tax return at all.

I hope that helps.

[Early]

Hi JaredS_CPA,

To prevent tax fraud by filing a tax form in a state other than the one a taxpayer is a resident of, the state of NJ, and likely other states, requires the use of the taxpayer's physical residential address on the tax form.
Also, the USPS forbids using a PO Box as a legal address, one such usage being for the purpose of filing taxes.
Currently, only the IRS allows using a PO Box, only when all of the taxpayer's mail is being delivered to it. This is a circumstance when someone is selling their home and does not yet have a new home to move into.
Please reply with your view on this issue regarding the ability to use a taxpayer's PO Box address on a NJ state personal income tax form.
Thank you

[HollyP]

In the case where an individual does not have a current residential mailing address, then the use of a authorized representative may be beneficial until a new mailing address is established.  See the NJ address change webpage for more information. Also,  @Early you can contact NJ for more assistance. 

[Early]

@HollyP

Reading between the lines of the NJ tax filing rules reveals the fact that a person who does not have a physical address does not have the economic liberty to acquire a taxable income, earned and/or unearned, while they are transitionally homeless, or more discretely put, living nomadically. 

A return address would certainly be useful for a correspondence audit which must be replied to.

As you indicated, would an authorized representative be equivalent to a certified tax preparer as H&R Block?

Thanks for your assistance.

[JotikaT2]

Please see this link for more details on who is qualified as an authorized representative.  The types of people in this situation would typically be those who are authorized to speak to the IRS on your behalf though.

As far as tax preparers, that would depend upon who you utilized to prepare your return and the type of services offered.  I'm unaware of any that would offer the use of their address for mail services but you would have to directly reach out to that person or company directly to confirm.

As HollyP mentioned above, contacting the New Jersey Department of Taxation would be the best way to officially confirm what type of address they will accept.

@Early