# Where is your domicile?



## eastwind (Jun 18, 2016)

Domicile is a US legal term, different from residence.

I'm currently living near Seattle, Washington, planning to move to Mexico for the next few years. 

I did some research online and got the impression that for US tax purposes, my last domicile state in the US would continue to be considered my domicile until I took action to change it to a new state, even if I moved permanently out of the country. I was preparing to take actions to move my domicile to Texas, primarily because while neither Texas nor Washington have income taxes, Washington has an estate tax.

My attorney gave me advice that conflicts with what I thought I understood. She told me that I could establish Mexico as my domicile, and that since I wouldn't (any longer) have any assets in Washington state (financial assets being in the cloud) I wouldn't be subject to its estate tax.

It may be that I was misinterpreting what I read, which was mostly aimed at people living in the US full time in their RVs, but at no fixed place. 

Obviously no one here can give legal or tax advice, but I suppose most of you know where your domicile is. Do you have "domicile" in mexico for US tax purposes? If you were from a US state with income taxes, did you stop paying/filing after a year? How has that worked out for you? I'm hoping people can tell me about their situation without running afoul of any proscriptions against giving legal advice.


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## perropedorro (Mar 19, 2016)

Best way to bequeath liquid assets is make sure the beneficiary on the account is current. If youŕe worried about the Washington estate tax, congratulations. Only applies to estates >$2 million. That sort of property you really do need professional advice.


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## eastwind (Jun 18, 2016)

Thanks, I wasn't really trying to ask an estate tax question as much as a domicile one. I've gotten the professional advice, and I trust my attorney, but as RR used to say, Trust, but Verify.


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## perropedorro (Mar 19, 2016)

Beats me the definition of _domicile_ for tax purposes, sounds like a synonym for residence. No lawyer is me. In Mexico only heard in context of immigration law, specifically the place where a couple, married or common law, are living together. Mexico requires a two year national domicilio test for naturalization by marriage.


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## ExpatEmigre (Nov 22, 2015)

I wouldn't use a WA address for anything. Unless there is some res of an estate in WA, how would WA have taxing jurisdiction? Also note that federal tax obligations are unaffected.


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## michmex (Jul 15, 2012)

*More than You Ever Wanted to Know*



perropedorro said:


> Beats me the definition of _domicile_ for tax purposes, sounds like a synonym for residence. No lawyer is me. In Mexico only heard in context of immigration law, specifically the place where a couple, married or common law, are living together. Mexico requires a two year national domicilio test for naturalization by marriage.


For more than you ever wanted to know about Residency versus Domicile:

http://www.lanepowell.com/wp-content/uploads/2012/05/PTXL1205_Gadon1.pdf
The article concerns itself primarily with personal income taxes, but the arguments, in general, carry over to other taxes as well depending on the statutory definitions peculiar to a specific state(s). 

Some items seem to be more problematic than others such as; where your vehicle is registered, issuing state of your driver's license, where you maintain your banking and/or investment accounts, source of your income, where you own real property and voting registration.

Recent legislation and other regulations that have been adopted to combat money laundering, tax evasion and terrorism have made it increasingly difficult for many expats to change banking arrangements and/or to change diver's license and registration to another state.

Taxation situations are very specific to the individual and tax and/or legal advice should be obtained from properly experienced and licensed professionals.


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## perropedorro (Mar 19, 2016)

michmex said:


> Recent legislation and other regulations that have been adopted to combat money laundering, tax evasion and terrorism have made it increasingly difficult for many expats to change banking arrangements


I've run up against that. They've been successful at blocking direct deposit of my modest pension or occasional transfers from a U.S. bank to Mexico while the likes of el Chapo are able to move billions in dirty money around with little trouble at all.:confused2:


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## dancebert (Jun 4, 2015)

IN 2007 I researched domicile before retiring because the state of California held that if one's last domicile before becoming an expat was California, then they must pay California state taxes. It didn't help me that there was no clear definition of how one established a domicile in another state or country. What settled it was the realization that California could throw lawyers at me far longer than I could afford to fight. So, I accepted a job offer and moved to Vegas for a while before retiring and leaving the country. Was it necessary? I don't know.


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## RVGRINGO (May 16, 2007)

We retire to full-time RV life, traveling throughout the USA & Canada for a few years. By US standards, we were homeless when we sold our house, and needed a mailing address. We found a service in Florida and used it for several years. That seemed to solve the problem, as we could call them when we would be stationary for a week, and they would send us our accumulated mail. Of course, that was before internet and homeland insecurity, etc. It also gave us voter registration and licenses & registrations in Florida. 
Upon selling the RV and moving to Mexico, we simply subscribed to one of the mail services with a Laredo address and received our mail at their Chapala location. As we drove into Texas, on the way to Mexico, we stopped in a small town and registered our car in Texas; no questions asked. By then, we had internet banking and bill paying, so little mail was received, but it seemed to satisfy our bank and others. For some reason, we continued to get absentee ballots from Florida for the next decade.
Now, having relocated to Tucson, we have become aware of the obsession with multiple forms of ID.
I think the USA needs a federal ID card, maybe the passport card, for retirees who are mobile, and maybe even a vehicle registration in “the state of retirement“.


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## eastwind (Jun 18, 2016)

Thanks to both of you! I'm hoping to do something very similar to what you did, RVGringo.
When I finish getting my RT I plan to fly back to the US and get my car and drive it to Texas, re-register it there, and then on to Mexico. I already have the texas mailing address service set up.


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## RVGRINGO (May 16, 2007)

It may not be as easy now, as it was back then. You might want to consider SD, which we eventually did, because TX requires inspection and proof of US insurance. SD does not.


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## NoVaDamer (Mar 10, 2012)

*Here's my take*

I am going through the same situation, preparing to move from Virginia to Mexico. What I learned from my financial advisor was, first, if you are a US citizen, you must establish a tax domicile, meaning the place you intend to return to if you live in the US. It doesn't matter if you ever do plan to return, but once you choose a domicile, you are subject to the tax laws of that state while you are an expat. Every state is different: I plan to choose Ohio, which does not tax my pension if I am not residing in the state even if it is my domicile.

You can choose any state as your domicile, because it only represents an intent to return. But here is the tricky part: if you are living in Mexico full time, how do you support your claim that a given state is where you intend to return? Well, you can register to vote there, get a drivers license there, own property or get a mailing address there, get a library card, etc. But some of those actions require you to be in the state and do something. Again, it varies by state.

My state (the commonwealth of Virginia) is especially picky about expats: I have to ensure I give up my drivers license, library card, voter registration, all businesses and properties, and have no immediate family members residing in Virginia to claim to be a non-resident expat. You'll have to check what Washington wants, and whatever your new domicile wants.

Hope that helps!


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## eastwind (Jun 18, 2016)

Thanks very much. I have read Virginia is one of the most tenacious states about trying to hold onto you for tax purposes. I grew up in Virginia, and in the 70's my older brother, who had been living, working and filing taxes in Massachusetts for 7 years, quit his job, bought a backpack and headed off to tour europe. He forwarded his mail to my parents in Virginia and stored some stuff in their attic. On the strength of that alone, Virginia claimed him as a resident and accused him of failing to file Virginia state tax returns for the years he was overseas. He ended up doing a graduate degree in Sweden and working some while he was there for the University, so he had some income to tax, and it got complicated enough that he never told me how he worked it out, but eventually he was able to move back to the US and get Virginia off his back. As it turned out, he moved back to Massachusetts, so that may have helped him make the case that for domicile purposes he never left.

In my case Washington state doesn't collect income taxes, so there's nothing to worry about there. I do plan to change my driver's license, car registration and voter registration to Texas, assuming they let me, get a will done in Texas, and file federal income taxes using the Texas mail service address. All of this is to avoid having to worry about Washington State claiming me for estate tax purposes, because I'm fortunate enough to have to worry about that. Hopefully by the time the issue matters, Washington State will have no reason to wonder whatever happened to me.


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## RVGRINGO (May 16, 2007)

Keep it as simple as you can. Start by choosing a state that has no income tax, like Texas, and have your mail service based there.


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## NoVaDamer (Mar 10, 2012)

*Yup, That's Virginia*

Somewhere along the way, the Commonwealth decided there were rich residents who were pretending to be expats by buying property outside the country but still residing in Virginia. So they made it real hard, and rigorously pursue anyone who might "owe" them. Luckily for me, I have no remaining family in Virginia, and some family in Ohio, so I can make that switch. I still intend to get rid of all the encumbrances (car, license, library) just to make sure.

I remember considering Texas, but I think they had some minimum residency or documentary requirement. It should be easy to research, if you already know what state you want to choose, since you can figure out who to contact. The hard part is trying to compare a large number of states, since you have to reach out to different offices in each one.

Good Luck, and remember to pass back through here and post what you learned!


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