# Keeping an Address in the U.S.



## Bircher (May 17, 2011)

Wondering if anyone has run into this. I'm moving out of the U.S., but plan to keep an address there for banking, etc. What I'm wondering about is state tax. Say, for example, that $1,000 in interest is reported on a 1099 that has an address in my former home state...a state that taxes interest based on residency. I would, of course, report that amount to my new country of residence (and on the 1040 filed with the IRS), but I wouldn't file a state return at all. Would the state somehow be informed of the 1099 (I know banks send copies to the IRS, not sure about to states) and expect a cut?


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## Bevdeforges (Nov 16, 2007)

If you keep a US address there is always the possibility of some confusion on the state issue. Yes, the banks file their 1099's with the state based on the address you're using for your banking.

OTOH, there is no real need to maintain an American address to continue your current bank relations. I've been doing my bank accounts by long distance now for years, using my address here in France. 
Cheers,
Bev


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## Newyorkaise (Nov 30, 2010)

As I noted in my reply to your post over on the Canada forum, merely having an address in a state doesn't constitute having your "residency" there, so if taxation of interest (or any other income) is based on residency, and you have established residency for tax purposes elsewhere, you should not in principle be affected.

That doesn't mean the state won't ask, but so long as you don't exhibit any of the indicia of residency (driver's license, voter registration, paying in-state university tuition for your kids...), you should ultimately be OK. I've moved in and out of New York State several times, and when they once phoned to ask why I hadn't paid state taxes for certain years, I simply told them I'd been living elsewhere during those years - and I still owned a house there at the time.

Legally speaking, the concept of "residency" requires that you have your permanent home somewhere, that it be "the place you intend to return to whenever you go away" (as one Midwestern state so poetically phrases it). That's clearly not your situation if you just keep a convenience address.


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## DavidM (Mar 27, 2011)

*Tax Advice*



Bircher said:


> Wondering if anyone has run into this. I'm moving out of the U.S., but plan to keep an address there for banking, etc. What I'm wondering about is state tax. Say, for example, that $1,000 in interest is reported on a 1099 that has an address in my former home state...a state that taxes interest based on residency. I would, of course, report that amount to my new country of residence (and on the 1040 filed with the IRS), but I wouldn't file a state return at all. Would the state somehow be informed of the 1099 (I know banks send copies to the IRS, not sure about to states) and expect a cut?


Hi, 

Yes, your State would probably hear about your 1099 from the IRS and you will in all likelihood be required to file a State return. You may not, however, be required to report the $1,000 of interest to your host country. This will depend on where you are living. Some countries do not tax you on income earned outside of the country. 

For example I think in the UK you can earn GBP 2,000 abroad before you need to report it. 

I hope this helps. If you have further questions please let me know. 

Sincerely, 

David McKeegan


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## Bevdeforges (Nov 16, 2007)

DavidM said:


> Yes, your State would probably hear about your 1099 from the IRS and you will in all likelihood be required to file a State return. You may not, however, be required to report the $1,000 of interest to your host country. This will depend on where you are living. Some countries do not tax you on income earned outside of the country.


Excuse me, but this is not correct. You do not have any state tax liability if you are not resident within the state, but are living abroad. What matters is where you are physically located and where your "center of interest" lies. This principle was established pretty clearly when the right of overseas Americans to vote was established.

Whether or not your US interest is declarable or taxable by the country in which you are living is dependent on where that is. The OP will, of course, have to continue to file US federal tax returns and declare this interest along with all other worldwide income.

To avoid misunderstandings, it's probably better to simply give your US bank your overseas address. 
Cheers,
Bev


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## Bircher (May 17, 2011)

Thanks for the reply, but, yes, I would be taxed on my complete world income. I would assume that many expats use a U.S. address for U.S. investments, so people must have run into this situation before. The reason for not supplying the non-U.S. address is that brokerage firms (e.g. Vanguard) will not accept it and will simply close this account.


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## Bevdeforges (Nov 16, 2007)

Bircher said:


> Thanks for the reply, but, yes, I would be taxed on my complete world income. I would assume that many expats use a U.S. address for U.S. investments, so people must have run into this situation before. The reason for not supplying the non-U.S. address is that brokerage firms (e.g. Vanguard) will not accept it and will simply close this account.


Interesting, I've had a Vanguard account (an IRA account admittedly) for years under my foreign address. It's usually not possible to open a new account with a foreign address only, but transferring an existing account to a foreign address shouldn't be a problem.

But in any event, using a local "mail drop" address does not create a tax liability in the state you happen to choose. You may have to have a conversation with the state tax authorities every few years, but you aren't liable if you're not resident under the usual criteria.

There are even services set up to provide foreigners with US mailing address - mostly for packages that are then forwarded on to their overseas addresses - and many expats use these services for maintaining a US address for credit cards or other billings. 
Cheers,
Bev


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## Bircher (May 17, 2011)

Thank you for the information. Apparently, the restriction is only on people with a Canadian address. If you do a search on Vanguard and "Canadian address", you'll find information like this:

"I'm a US citizen and Canadian resident. I've been transacting happily in my Vanguard account...Today I received a letter from Vanguard saying their policy is changing. After 14 Dec 2007 I will no longer be able to purchase any Vanguard mutual funds in my retirement and taxable accounts. Dividends and capital gains can be reinvested, but no new purchases, exchanges, or automated systematic investments. After 14 March 2008 the same restrictions will apply to my VG IRA brokerage account. I will also have to transfer assets from my taxable brokerage account to a Canadian brokerage." 

As I understand it, the body that regulates Canadian investment sent letters to all the U.S. brokerage firms telling them to cease & desist, and this was the result. Even places like Schwab International won't service a Canadian address. 

However, my real question has to do with with the "address of convenience" issue...whether that creates a taxable situation. You say it doesn't for you, and that's great to hear.


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## DavidM (Mar 27, 2011)

Hi,

It will really depend on what State you were living in. Some States make it harder to “leave” then others and if you show an indication of returning to the State you may be required to continue to file in that State. As was mentioned by Newyorkaise it is a matter of residency and domicile. If you have things like voter cards, property, driver’s license, bank accounts, etc then the State can say you are still domiciled in the State and that you plan to return. California is notorious for this. Here is a quote from their taxation instruction booklet

“Nonresidents of California who received California sourced income in 2010, or moved into or out of California in 2010, file either the Long or Short Form 540NR, California Nonresident or Part-Year Resident Income Tax Return. California taxes all income received while you resided in California and the income you received from California sources while a nonresident. See page 5 “Which Form Should I Use?” to determine which form to use (Long or Short Form 540NR).”

So if you have California sources of income – rental property, interest, etc. you could owe CA State taxes on this income. Again, it all depends on what State you are from as the rules are different in all States.

Hope that helps,

David


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## Bircher (May 17, 2011)

Thanks again. 

I called the state tax department and asked whether having a 1099 with an address in the state would make me taxable there. The answer I received was that I probably would hear from the state if I didn't file a return, but if I proved my residence was elsewhere, it shouldn't be a problem.


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