WGroleau

Legal aspects of U.S. State tax

15 posts in this topic

I know that I can "establish residence" in any state I want, but I wonder about the legalities.  Details of my situation on another forum, but the summary is that I am homeless by choice since October 2014, and have "lived" in several U.S. states and six other countries.  One article recommended Texas, but some of the reasons don't apply to me (no vehicle to register, only a bicycle, voting irrelevant since Texas is overwhelmingly Republican).  Anyway, it's the legalities that concern me.  I've been told that changing my mailing address to reduce taxes is fraud.  But I own nothing at the current address except a few things not-yet-discarded in storage and it's not the address I retired from.

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Americans are free to live whatever state they choose.  If you don't have a job holding you down, then you can choose from pretty much anywhere.  The usual checklist begins with those states that don't have state income taxes and from there you get into the issue of what states will permit you to have residency with only a mail forwarding address.  That's why SD, TX, and FL are typically selected as finalists.  There are valid reasons for people to favor any of those; we happen to have chosen SD.

Don't let anyone tell you that there's something fraudulent about changing residency to reduce your taxes as long as you comply with the rules of the state in which you choose to live.  For example, SD requires "travelers" like us to spend at least one night in the state within a year of the time that you renew your driver's license.  We didn't think that was an unreasonable request and we complied in order to ensure that we were playing by the rules established by the state.

Other than that, relax and decide if you want to be a Texan, South Dakotan or something else!

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The main tip is to move mid-year and file a partial year tax return in the state you are departing. That makes it clear you are leaving that state. It then helps to move as much of your business as you can to the new state. I recommend registering to vote even if you don't plan to vote because it helps establish that the new state is now your domicile. Registering to vote does put you on the list to be called for jury duty but Livingston, TX, understands fulltiming so it's easy to be excused. I'm not sure what would happen if you got called by a federal court, though.

Linda Sand

 

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4 hours ago, WGroleau said:

I know that I can "establish residence" in any state I want, but I wonder about the legalities.  Details of my situation on another forum, but the summary is that I am homeless by choice since October 2014, and have "lived" in several U.S. states and six other countries.  One article recommended Texas, but some of the reasons don't apply to me (no vehicle to register, only a bicycle, voting irrelevant since Texas is overwhelmingly Republican).  Anyway, it's the legalities that concern me.  I've been told that changing my mailing address to reduce taxes is fraud.  But I own nothing at the current address except a few things not-yet-discarded in storage and it's not the address I retired from.

Going to the "another forum" link, you seem to have a very complex situation. 

I am very confused by the conflict between your opening statement in the other forum where you "hit the road", yet you state here you don't have a vehicle to register in Texas. 

Would you clarify?

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I do not have a vehicle that requires registration.  My primary transportation is bicycle or walking.  I only use fossil fuels when there's an ocean in the way or when time constraints require.  Being retired, time is rarely an issue.  I have been primarily pedal power since four years prior to retirement.  Nor do I have to worry about insurance costs.  Currently all my "business" is in Oklahoma, though I did register to vote in Texas since I was there the last five months of 2016 at a college.  It may not be worth the trouble of "relocating" as I only sent Oklahoma seven dollars last year.  But I do need to get someone else to handle my mail.  My mother doesn't need the aggravation.  Plus she's not online, so she can't send me a PDF of anything important.

 

"Hit the road" to me just means traveling.  Doesn't imply a particular type of locomotion, nor even a "road."  

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7 hours ago, docj said:

For example, SD requires "travelers" like us to spend at least one night in the state within a year of the time that you renew your driver's license.  We didn't think that was an unreasonable request and we complied in order to ensure that we were playing by the rules established by the state.

That's certainly not unreasonable.  But if SD says "He spent the night here, therefore he's OURS," what's to stop Oklahoma from saying, "He spent seven nights here, so he's OURS" or Indiana saying, "He rspent twenty years here and he's not getting away that easily!"  :-)  I'm only half-joking—my wife's pension from New York Public Employees is labeled EXEMPT from state taxes.  But Indiana said, "Nope, if they won't tax it, we will!"

One problem, though, is contracting with someone to handle my paper mail.  I've just checked five commercial services.  Four of them charge too much, and none of them has offices anywhere but Miami, Los Angeles, and New York City.  The fifth one has offices everywhere, but very limited services.

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10 hours ago, WGroleau said:

That's certainly not unreasonable.  But if SD says "He spent the night here, therefore he's OURS," what's to stop Oklahoma from saying, "He spent seven nights here, so he's OURS" or Indiana saying, "He rspent twenty years here and he's not getting away that easily!"  :-)  I'm only half-joking—my wife's pension from New York Public Employees is labeled EXEMPT from state taxes.  But Indiana said, "Nope, if they won't tax it, we will!"

With all due respect I think you're making a much bigger deal out of this than it has been for the rest of us.  We did as sandsys suggested and left Maryland after one month of a calendar year.  We filed partial year tax returns for that year and even continued to own property in the State and not once did we get a question raised about our move.

You don't seem to understand that you don't automatically become a resident of a state just because you spend time there.   We spend our winters in TX and even own land here, but we haven't sought employment here and continue to carry SD drivers licenses, an SD nursing license and are registered to vote there.   We abide by the laws of both States and have no intention of giving up residency in SD.  We use our SD address on all our legal and financial documents. 

As for handling paper mail, most of us use mail services based in the State we wish to reside in and the costs are modest.  I have no idea what kind of organization you are considering that has offices in NY, LA, etc.  For most of us our mail handling service establishes our legal address in the State.  I interact with mine via email and stop by to see the staff whenever we pass through.

This really isn't difficult to do.

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2 hours ago, docj said:

(A) You don't seem to understand that you don't automatically become a resident of a state just because you spend time there.  

(B) As for handling paper mail, most of us use mail services based in the State we wish to reside in and the costs are modest.  I have no idea what kind of organization you are considering that has offices in NY, LA, etc.  

(A) I do understand, and so far, Indiana has NOT complained.  But people were telling me that changing your address to redue taxes is fraud unless you really do live there.

(B) What are some of these mail services?  I only know about four of them.  The only one of the four that's ubiquitous is Mailboxes, Etc. and they don't do very much.  The other three are physicaladdress.com, virtualpostmail.com, USABox.com  The lowest cost was eight bucks a month with limits less than the amount of mail I actually get.  I get a lot of mail I don't want from financial places.  One of them thanks me twice a month by e-mail for signing up for electronic delivery, yet they keep on sending the paper.  When I need proof of income for a visa application or something, two of them won't let me get it online; they insist on mailing it.  IRS also refused to let me download en electronic copy of my tax info; had to get it by mail.

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3 hours ago, WGroleau said:

But people were telling me that changing your address to redue taxes is fraud unless you really do live there.

IInteresting statement.  What is meant by "really do live there",   There are 250,000 RVrs that don't really live where their permanent address says they do and many selected their domicile for tax reasons.

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It seems pretty clear to me that you don't understand what the term domicile means, which is not unusual since it very seldom is an issue for most people. It may be helpful to you if you choose to read this article which I wrote for Escapees Magazine several years ago. 

Keep in mind that this site is made up mostly of people who travel in RVs and many of us do use that RV as our only home and domicile can become an issue for us. If your situation is as you state, I'm not quite sure what we can to to help since we do have things like vehicle registrations & insurance, voter registration, mail service, banking, health care, and all of the assorted issues that most homeowners have. 

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6 hours ago, WGroleau said:

(A) I do understand, and so far, Indiana has NOT complained.  But people were telling me that changing your address to reduce taxes is fraud unless you really do live there.

I have no idea who you are getting advice from, but the folks on this forum are probably more familiar with the rules for establishing residency than almost any other group you can ask.  If you choose to accept advice from other people whose credentials we don't know then that's your own business. For almost every topic on forums such as this, if you are shopping for a specific answer you can surely find someone to give it to you.

The rest of us are quite content doing what we've been doing.  For example, in South Dakota if you get your drivers license and sign the required affidavit of "Residency For People Who Travel" then you are a SD resident regardless of whether or not you physically have a place of residence other than a mail service.  We have been treated very well in all our interactions with SD authorities; they welcome RVers like us.

Just because you don't currently have a vehicle to register doesn't mean that you don't have a drivers license.  I'll assume that at some time in the past you had one and might still have a current one in some state.  We don't have our RV registered in SD but we are not questioned as to the method we use to travel, so there's nothing keeping you from doing the same thing.  SD might well have a State ID for people who don't drive; many states do these days.

The well respect jurist Learned Hand once wrote, "Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. public duty to pay more than the law demands."  There is nothing intrinsically wrong with trying to reduce one's taxes by all legal mechanisms.

6 hours ago, WGroleau said:

What are some of these mail services?  I only know about four of them.  The only one of the four that's ubiquitous is Mailboxes, Etc. and they don't do very much.

As for mail services there are quite a few more in SD alone, plus those in TX and FL.  We use MyDakotaAddress.com and have been very satisfied.  Anytime a piece of mail is received we are informed by email of the return address info on the item.  If I wish the envelope is opened and the contents are scanned and emailed to me, at no extra charge.

But if you're complaining about a $8/mo charge, I doubt you will find any service that you will want to do business with.  As with most things in life, I'm prepared to pay someone enough to ensure that they will do their job well but that means that they have to make enough money to make doing it worthwhile.  

Edited by docj

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13 minutes ago, docj said:

As for mail services there are quite a few more in SD alone, plus those in TX and FL.

There are mail forwarding services available in most, if not all states. Some have more of them like TX, SD, FL, NV, and OR. I just did a search of several other states and found more than one such service in each one of them. I even found 4 mail service companies in Oklahoma City. 

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3 hours ago, docj said:

I have no idea who you are getting advice from, but the folks on this forum are probably more familiar with the rules for establishing residency than almost any other group you can ask. 

That's why I came here.  Over there, folks are reluctant to believe that I don't have a house and a car.  Although one person did drop a hint that indirectly helped me find this place.

Quote

As for mail services there are quite a few more in SD alone, plus those in TX and FL.  We use MyDakotaAddress.com and have been very satisfied.  Anytime a piece of mail is received we are informed by email of the return address info on the item.  If I wish the envelope is opened and the contents are scanned and emailed to me, at no extra charge.

But if you're complaining about a $8/mo charge, I doubt you will find any service that you will want to do business with.  As with most things in life, I'm prepared to pay someone enough to ensure that they will do their job well but that means that they have to make enough money to make doing it worthwhile.  

No, I wouldn't complain about $8/month if that was the actual charge.  But it was that plus a charge per piece of mail after the first ten (or some similar small number).    And then there was the issue that the ones I looked at were not in low-tax states.  (Except one in Miami).  MyDakotaAddress sounds pretty good, and it gave me a good search phrase to find others.  Lots of others.  Some of them are ridiculously expensive¹, and I haven't yet found any as low as MyDakotaAddress.  I prefer Texas.

¹One says it's $50/year in the web search results, but click on it and it changes to $180/yr.

Edited by WGroleau

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2 hours ago, Kirk Wood said:

There are mail forwarding services available in most, if not all states. 

Yes, lots.  I just didn't know the right search words.  One of them has three hundred addresses in thirty countries, but they are very expensive.  Some of the inexpensive ones don't offer all the services.

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12 hours ago, WGroleau said:

 I prefer Texas.

There isn't any better mail forwarding service in Texas than that provided by the Escapees RV Club.  You do have to be an Escapees member in order to use it ($39.95 per year).  https://www.escapees.com/store/join

There are three levels of service at $95, $115, and $135 per year, plus postage.  The first year will cost more because there are some one-time fees associated with the startup of the mail service. https://www.escapees.com/support/mail-service

Edited by LindaH

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