# Domicile or Residence...



## sailordave (Jun 26, 2001)

So I'm considering several options that I could implement over the next few years as I move on to the next chapter. 

1. Stay here in VA and cruise part time.

2. Sell everything and cruise full time.

3. Sell my house and buy another small place in another, more tax friendly location and do some combination of 1 and 2.

4. Sell, not buy, but rent somewhere else and cruise.


The trouble is if establish residency somewhere else, SOME states try to tax the hell out of you even if you aren't there more than half the year. (I believe MN is one) (Not that I want to live THERE!) You need to establish SOME place as your domicile of record. And nowadays you have to have a PHYSICAL address to get a driver's license and you need to have some place of residence for your USCG Doc paperwork. 

I was wondering what full time cruiser's do and what folks do that cruise part of the year and then spend part of the year ashore. I wouldn't mind having a house that I live in for 3, 4 months of the year, but I'll be damned if I'm going to pay state taxes to someplace that I don't claim as my domicile. 
And what about Ex-Pats? If you're living outside the country and aren't even in the US except maybe a month for visiting do you even have to claim a state of residence?

Just wondering how to deal w/ this issue.


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## wingNwing (Apr 28, 2008)

We're fulltime liveaboards with no land house. My drivers license used my marina lease to establish residency and the slip # is part of my legal address. Talk to the folks at St Brendan's Isle mail forwarding service; they are used to dealing with this issue & can get you FL residency. They are also the address we use for our USCG documentation.


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## Slayer (Jul 28, 2006)

sailordave said:


> (I believe MN is one) (Not that I want to live THERE!).


Yea,,,,,who would want to live in Minnesota....that place SUCKS!!!

(Been a long day and just goofing on your emphatic feelings of living in MN. Actually, I have never met a person from Minnesota that I didn't like.)


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## PorFin (Sep 10, 2007)

+1 on the St Brendan's Isle.

Located in Green Cove Springs, FL, SBI can assist you in getting all of your paperwork lined up to establish FL residency using that address. It's not difficult. FL won't tax your income, whether it's W2 or 1099R.


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## sailordave (Jun 26, 2001)

Slayer said:


> Yea,,,,,who would want to live in Minnesota....that place SUCKS!!!
> 
> (Been a long day and just goofing on your emphatic feelings of living in MN. Actually, I have never met a person from Minnesota that I didn't like.)


Minnesota is very pretty. And I'm sure it's wonderful for oh, say 7 weeks out of the year. I just could not do fall, winter, and spring there.

And yes the people are nice. Lots of places in the country are NICE, inexpensive and totally NOT near the open water.

I've heard a lot about St. Brendans. Are there any other such services that are NOT in FLA? (Yes, that's one other such place I really don't want to live) even though it would just be an address.
I know, picky picky picky.

And what do folks do that totally leave the country? Establish residency/domicile in a foreign country?


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## SV Glossa (Oct 23, 2012)

When we lived in a foreign country, we kept the state where we had lived in previously. It is a state without state income tax. It was a slightly different situation, but I just used my parents address if for whatever reason I NEEDED to put down a physical address.

We now live on a boat in the same state, and the few times that someone has NEEDED a physical address, we generally give the marina address, I will confess to not changing my drivers license yet, so I am not sure if it will be PO Box or Marina on it . . .


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## Minnewaska (Feb 21, 2010)

First I'm hearing of a state that can tax your income, even if you are not there at all. All states have rules about when you owe taxes, based on staying longer than a prescribed amount of time. 

It is common for a state to run database matches on things like driver's licenses and send tax due notices to people with local addresses and no tax return. Its a scare tactic and they may be right much of the time. However, if you've followed the rules, you don't owe. The substantial obligation is that you can prove where you actually were. You can send your mail anywhere you like, that also doesn't mean you are there.

States don't find everyone, but when then get onto you, they get very aggressive. They will check your cell phone records, credit card statements, IP address where you signed onto your email address and more. You better be where you say you are.

We will adopt the part time cruising option at some point and stay ashore for the rest of the year. When we do so, we are leaning heavily on establishing residency in a state with no income taxes. Leading contenders are NH and FL, right now. However, that will mean that we actually spend 6+ months there and cruise the rest. Said differently, we will be sure we don't live aboard anywhere for longer than the time they state requires one to pay.

Bottom line. Follow the rules very carefully. Penalties and interest for screwing up are a killer. Intentional fraud, such as claiming you are somewhere you are not, is criminal.


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## sailordave (Jun 26, 2001)

Minnewaska said:


> First I'm hearing of a state that can tax your income, even if you are not there at all. All states have rules about when you owe taxes, based on staying longer than a prescribed amount of time.


I think if you go back and look at my OP, you'll see I qualified that statement w/* even if you aren't there more than half the year. 
*

I've read of a few court cases involving this and basically the states took a very aggressive position of what constituted "Domicile". Personally I think we'll see more of this as states face budget issues.

I doubt I would go the St. Brendans route unless I am w/o a house and off cruising full time; don't want to live in FLA and wouldn't want the hassle of "proving" I was a FLA resident.

Of course the other option is to just not own anything (cept the boat of course) and keep moving! Then they can't catch ya!:laugher


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## sd1953 (Mar 21, 2010)

I live in Florida, in part because there is no income tax (but mostly because it does not s**w in the winter). I am not asking to provoke you SailorDave, but why would you not want a Florida domicile while you cruise? Was Mickey Mouse mean to you? We can talk severely to him on your behalf if we have to.


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## satillasam (Apr 16, 2012)

I came back to Maine because of my boat. I'll make it through one more winter here. Lordy the wind chill has been rugged the past few days. I like the looks of Pamlico Sound, Oriental, New Bern. Feedback?


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## caberg (Jul 26, 2012)

As a US citizen, you are always domiciled in one state, but only one state. The test for changing domicile is moving to a new domicile (state) with an intent to remain there indefinitely. In theory, you could be domiciled in one state and go travel for 20 years, but until you choose a new domicile (intend to remain indefinitely) you do not change your old domicile. Because the question is one of "intent"--and intent is hard to discern--factors such as having a driver's license, being registered to vote, registering a vehicle or boat, receiving mail.... will all point to domicile in the state in which those things are done.

Most states define residency for purposes of state taxes as where you are domiciled, but there are many exceptions and caveats to this state-by-state, often depending on how many days in a year you are physically in the state.

Domicile has other implications as well outside of tax, though not as important to most people.


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## sailordave (Jun 26, 2001)

> I live in Florida, in part because there is no income tax (but mostly because it does not s**w in the winter). I am not asking to provoke you SailorDave, but why would you not want a Florida domicile while you cruise? Was Mickey Mouse mean to you? We can talk severely to him on your behalf if we have to.


No offense, but I just don't like FLA enough to want to live there. And if I'm not going to have even a part time residence there I'm not sure claiming FLA as my domicile would pass the "smell" test.

Out of curiosity, what do ex-pats do who move to another country to live? I know they (may) still have Federal tax obligations, but do they have any state obligations?


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## miatapaul (Dec 15, 2006)

I have a New York state Drivers License with a PO Box listed as my address. She had no trouble putting it in the computer, though she did think it was odd.


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## SV Glossa (Oct 23, 2012)

sailordave said:


> Out of curiosity, what do ex-pats do who move to another country to live? I know they (may) still have Federal tax obligations, but do they have any state obligations?


It depends what state you are talking about. The state that we were from, their is no state income tax, I have never in my life filed anything with my state as far as taxes are concerned. Living in the state or out of the state.

As far as Federal Taxes, yes, you still have to file, but depending on your exact circumstances, you may not have to pay anything and anything that you did pay may be refunded. I was working for a US company and they were paying me in USD, however, I could not manage to get them to not take out Federal Tax although I put in a ton of exemptions on my tax form that I filled out when I started working for them, they thought they were being nice by not taking out the State tax from where the company was based (which was technically not legal for them to do anyways). So every year I had to use the foreign earned income tax exclusion and got a huge refund because I did not owe any federal taxes. Which is the same thing I would have needed to do if they had not taken out the Federal tax, just in that case I would of had the money much sooner.

However, we had other friends who had to file taxes for their state, some had to pay taxes, other didn't. It just depended on a variety of things.


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## Minnewaska (Feb 21, 2010)

SV G introduces a very good distinction. What is required to be withheld has ABSOLUTELY nothing to do with what you owe. Employers have the legal requirement to withhold (not opining on this posters specific situation) and can be personally liable for it if they don't. 

If you don't end up owing anything, you have to go get it back.


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## sd1953 (Mar 21, 2010)

You might want to investigate Texas. I was told (in another context) that establishing "residency" in Texas does not require moving there... and they have no state income tax.


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## misfits (Dec 9, 2011)

Minnewaska said:


> When we do so, we are leaning heavily on establishing residency in a state with no income taxes. Leading contenders are NH and FL, right now.


We may not have state income tax here but NH property taxes are a killer.
Although I've lived here most of my life & love it, we're planning on leaving NH once our kids get out of school. It's pretty sad when your monthly property tax bill is close to a house payment.

Personally I'd be looking for a state that has low property taxes if you're looking to own a home. Far as state income tax is concerned, I guess that all depends on what your income is.
For me, I'll be looking at the balance between both issues & go with whatever is the cheaper option in the long run.

Bob


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## Minnewaska (Feb 21, 2010)

misfits said:


> We may not have state income tax here but NH property taxes are a killer.
> Although I've lived here most of my life & love it, we're planning on leaving NH once our kids get out of school. It's pretty sad when your monthly property tax bill is close to a house payment.
> 
> Personally I'd be looking for a state that has low property taxes if you're looking to own a home. Far as state income tax is concerned, I guess that all depends on what your income is.
> ...


Good point. But they didn't seem so bad on some places we've seen. Nevertheless, you're right, it is a balance on what you have to be taxed. In that stage of our life, we don't expect to have a very big house. A condo would even be preferable.


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## sailordave (Jun 26, 2001)

misfits said:


> We may not have state income tax here but NH property taxes are a killer.
> Although I've lived here most of my life & love it, we're planning on leaving NH once our kids get out of school. It's pretty sad when your monthly property tax bill is close to a house payment.


While I don't know that I'd want to live that far north... Property taxes wouldn't be an issue if we didn't own a house and were off cruising!
I was looking at the KIPLINGERS site and they have some good info for retirees and all the different tax issues by state. And you're right; Income tax is NOT the only thing to consider.


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## sailordave (Jun 26, 2001)

miatapaul said:


> I have a New York state Drivers License with a PO Box listed as my address. She had no trouble putting it in the computer, though she did think it was odd.


I can't imagine that any state is still doing this. Maybe you're grandfathered in or something, but everyone I know regardless of what state has had to provide a physical address. Thank you PATRIOT ACT...


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## aeventyr60 (Jun 29, 2011)

Minnewaska said:


> SV G introduces a very good distinction. What is required to be withheld has ABSOLUTELY nothing to do with what you owe. Employers have the legal requirement to withhold (not opining on this posters specific situation) and can be personally liable for it if they don't.
> 
> If you don't end up owing anything, you have to go get it back.


Filling out your W2 correctly tells the employer how much to take out. You can claim 'exempt" from federal Taxes. Of course your year end earnings, interest, dividends, rents, capitol gains, misc income may subject you to additional taxes.

You may want to take a closer look at what qualifies you as a "non resident" for federal tax purposes. Less then 30 days in country qualifies you for about a $90,000 exclusion, not including IRA contributions, deductions etc.Very handsome offshore dividend when I work/live/sail/ offshore.

A good tax accountant will save you a bundle of boat bucks.


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## miatapaul (Dec 15, 2006)

sailordave said:


> I can't imagine that any state is still doing this. Maybe you're grandfathered in or something, but everyone I know regardless of what state has had to provide a physical address. Thank you PATRIOT ACT...


Yea, I was surprised as well. This was last May and I was in the middle of moving so I did not want my "old" address on the license, and did not have a "new" address to use either so she said just use your PO Box since that is stable. My job was able to do an address change to my PO Box as well but may not have been satisfied with that on hiring. Heck my old license had a wrong address on it for 7 years, as I moved about 4 months after getting it and NY does not require you to get an new one, but only to update the state with the new address.


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## misfits (Dec 9, 2011)

Minnewaska said:


> In that stage of our life, we don't expect to have a very big house. A condo would even be preferable.


Only problem w/ a condo, you've got those monthly association dues.

Personally I'd like to go up to midcoast maine. Long as you weren't right on the water, things are pretty resonable up that way. Maine in the summa, down south in the winta.


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## miatapaul (Dec 15, 2006)

misfits said:


> Only problem w/ a condo, you've got those monthly association dues.
> 
> Personally I'd like to go up to midcoast maine. Long as you weren't right on the water, things are pretty resonable up that way. Maine in the summa, down south in the winta.


Condos are nice, especially if you are a seasonal resident, to have lawn care and exterior maintenance done for you. Of course there are association dues, but the price is usually lower than for a freestanding house as well, so it is often a wash.


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## Minnewaska (Feb 21, 2010)

miatapaul said:


> Condos are nice, especially if you are a seasonal resident, to have lawn care and exterior maintenance done for you. Of course there are association dues, but the price is usually lower than for a freestanding house as well, so it is often a wash.


I've lived in a condo more than once, rented, bought homes, built homes, you name it.

I've never seen Homeowners fees exceed the cost of what you would pay for the same services in a home. Garbage, lawn care, snow removal, common area taxes and maintenance, pool maintenance, driveway repair, roofs, gutters, etc. Even with a surprise special assessment, its always been a bargain.


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## misfits (Dec 9, 2011)

I only mentioned condo fee's because when you add them to property taxes it does increase your monthly nut. Problem I have w/ a condo is "air space" is all you really own.


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## Minnewaska (Feb 21, 2010)

misfits said:


> I only mentioned condo fee's because when you add them to property taxes it does increase your monthly nut. Problem I have w/ a condo is "air space" is all you really own.


Fair point, all must be taken into account. But, if you own a fee simple single family home, it has serious cash flow requirements too.

Ask anyone that purchased their home in the '05 to '06 timeframe in just about any US metro area and they can tell you what air space is. It's the lost value of what they thought they owned. 

Don't get me going on the "American Dream" to own one's home. Its a contrivance. Nothing against it, but one would have been much better off renting over the last decade and probably the next to come.


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