- quote -

States with no individual income tax are Texas, Nevada,
Florida, Washington, South Dakota, Alaska, and Wyoming. New
Hampshire and Tennessee tax only interest and dividend
income of resident individuals.

If you want to become a nonresident of Wisconsin before you
embark on your foreign travels, you must change your
domicile to another state. Wisconsin defines a resident for
tax purposes to include all domiciliaries, whether present
in the state or not. Wis. Stat. =A7 71.02(2). In order to
change domicile, generally you must meet all of three tests:
(1) abandon your previous domicile (move away from it,
sever your ties to it); (2) move to and reside in a new
location (light somewhere); and (3) intend to remain in the
new location permanently or indefinitely. The third step is
the most difficult for a person in your situation to meet,
because you presumably will be leaving the country shortly
after moving to the new location. However, you can
strengthen your position by severing ALL of your ties to
Wisconsin, establishing a clear physical presence in the new
location (buy or lease a home and maintain it during your
absences, register to vote, actually vote there, change your
bank accounts, driver's license, vehicle registrations, etc,
etc.) and when you return to the US during your foreign
travels, always return to your new home and when you leave
the US again, begin your trip from your new home. And stay
out of Wisconsin.

Note that it is immaterial whether the new state considers
you a resident, unless you move to a state that does have an
income tax. Even if it does, however, the fact that it
considers you a tax resident will not make you a nonresident
of Wisconsin. The important thing is to be a nonresident
under Wisconsin law.

There are no guarantees here, and the longer you can stay in
the new location before you begin your foreign travels, the
better.

Katie in San Diego

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"San Diego CPA" <gcolle...[at]sbcglobal.net> wrote:

- quote -

It is entirely possible, and frequenly happens, that an
individual is a tax resident of two states at the same time.
In that case, both states require resident income tax
returns, taxing all of the individual's income regardless of
its source.

Each state defines residence by its own statutory rules.
Generally a person whose domicile is in the state is a tax
resident, although some states (e.g., California, Illinois,
Arizona) allow a domiciliary to be a nonresident under some
circumstances. A person who is a resident by reason of
domicile may be referred to as a domiciliary resident. In
addition, most states define a resident to include
individuals domiciled elsewhere who are present in the state
for a purpose that is not temporary or transitory (as in
California), or who maintain a place of abode and spend a
minimum amount of time in the state (often, 183 days -- see,
e.g., NY, NJ, PA). A person who is a resident by virtue of
presence in the state, rather than domicile, may be referred
to as a statutory resident. It often happens that an
individual is a domiciliary resident of one state and a
statutory resident of another at the same time.

In these "dual residence" situations, some credit is usually
allowed by one state for taxes paid to the other, but some
income may not be creditable. Generally, states allow their
residents credit for taxes paid to another state on income
that has a source in the other state. A few states do allow
credit for taxes paid to another state on any income taxed
by the other state, whether the other state taxes it on a
source or a residence basis. In general, a person who is
taxed as a resident by two states can expect to pay state
income tax on income from intangibles (interest, dividends,
gains/losses on sales of intangibles, etc.) to both states
with no credit relief, because intangible income is
generally considered to have its source at the residence of
the owner -- hence, it is source income in both states, and
neither state will allow credit. Income from real property,
tangible personal property, business activities, and
personal services (salaries, wages, earnings) generally has
its source at the location of the property or the place
where the services are performed, and the other state
generally will allow credit for the tax paid to the source
state on that income. But the analysis is complex and has
to be done on a state-by-state basis, because there is so
much variation.

Katie in San Diego

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First, thanks everyone for your replies. I was running on
wrong information. If I have to be outside the US for over
330 days, declare another country my residence, and pay that
country taxes instead, then this is all academic since I do
need to be in the US for more than 35 days a year and I
would be traveling all over the world pretty much
continuously. I will be traveling to the casinos around the
world doing reviews of them. Two weeks at one then move
onto the next one.

As for state taxes, if I am going to be out of the US a lot,
I guess it would be a wise decision to make my state of
residency in a state without a state income tax. As far as
I know, there's only two states like this. Nevada (thanks
to the casinos) and Alaska (thanks to the oil). In fact,
doesn't Alaska pay its residents money and not collect any?
Or am I misinformed on that or more as I was about not
having to pay taxes if I'm out of the US for most of the
year?

And I will be doing the casino reviews as one of the things
I will do as a host of an Internet radio show (a.k.a.
podcast). A show I will own and be paid to produce. Does
that factor into anything here? Like which state to make my
state of residence? Right now, I'm a resident of Wisconsin.
From what I've read, The Land of the Cheddarheads is one of
the most heavily taxed states in the Union and thus one I
probably should switch for another state. Good veteran
benefits, but since I'll be out of the state pretty much all
of the year, I doubt they will be worth the state income
taxes I'd have to pay.

Scott

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It seems based on the above that a California resident can
be a resident of two states at the same time. For example,
a taxpayer moves to another state for a job that is expected
to run for a period of anywhere from 6 to 15 months. As
they relocated for a purpose and did not intend to stay
permanently, they could still be a CA resident. However, as
the job started in Dec 05 and they were a resident in the
other state for the entire year of 2006, then that state
would also consider them a resident. Is this correct? Would
a "resident" state tax return be filed for each state or
would the state w/ the temporary job be a non-resident
return in spite of the physical presence?

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L K Williams wrote:

- quote -

Ah,

FICA Taxes are subject to treaty considerations.

The Canada-US Tax Convention allows that a resident pays
FICA (Social Security and Medicare) only to the state of
residence.

So a US Citizen, self-employed in Canada, earning less than
$82,000 USD per year can take the Foreign Income Exclusion
plus claim treaty benefits to not pay Social Security or
Medicare. But better not have any young children.

This clause depends on the treaty. I think Canada-US Treaty
is unique in this clause but I could be wrong.

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- quote -

Actually, that's true of Maryland and many other states, but
not of California. California law does not require an
individual to establish a domicile elsewhere in order to
become a nonresident for income tax purposes. All that is
required is that the individual be absent from the state for
a purpose that is not temporary or transitory. In addition,
California law provides a "safe harbor" for a domiciliary
who is absent on an employment-related contract for an
uninterrupted period of at least 18 months, during which he
or she is not present in California for more than 45 days,
in the aggregate, in any calendar year. Subject to some
exceptions, such a person is deemed to be absent for a
purpose that is not temporary or transitory and, therefore,
a nonresident.

However, many states consider an individual to remain a tax
resident as long as he or she is domiciled in the state. In
order to change domicile, a person must abandon the previous
domicile, move to and reside in a new location, and intend
to remain in the new location permanently or indefinitely.
Generally, states do not consider a U.S. citizen to
establish a new domicile in a foreign country, because that
person generally intends to return to the U.S. eventually.
In that case, unless the state law provides a special rule
for expatriates (as some do), the individual would remain a
tax resident, taxable on all income regardless of source,
during his or her absence

In addition, many states do conform to the federal earned
income exclusion; however, some states, including
California, do not.

Katie in San Diego

Moderator:
I stand corrected as Katie is the resident authority on
State Taxation.

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Scott Jensen wrote:

- quote -

Hmmm...

methinks you have been speaking to people who earn income
outside of the US.

As a US Citizen, the US Model Tax Treaty ALWAYS reserves the
right of the US to tax its citizens as the US sees fit. That
clause is in every US Tax Treaty and is a nasty clause.

Now, you may have mixed up the Foreign Income Exclusion
(FTE) that every US Citizen can take. Form 2555 allows up to
about $80,000 USD per person not to be taxed by the US. BUT
it has to be taxed by the foreign country. If you are moving
around, you won't likely be taxed in the other country. This
is an ELECTION and will REVOKE other credits like Child Tax
Credits.

Alternatively, you can claim the Foreign Tax Credit (FTC)
for the taxes paid to the Foreign Country. You are not
allowed to claim FTC for those amounts you claimed on the
FTE. Unlike the FTE, FTC does allow you to claim other
credits like Child Tax Credit, if you are still permitted.
The form is 1116 and generally people will have more than
one.

Claiming FTC or FTE generally requires you to paper file
with the foreign tax return attached to the Texas IRS
centre. Used to be Philly but that is closed.

DO NOT REVOKE YOUR FTE TO CLAIM FTC! This would be a bad
thing as it can not be corrected easily or changed for
several years.

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- quote -

Not as a general rule. It depends, first and foremost, on
whether or not you're a U.S. citizen or a non-citizen
permanent resident (i.e., greencard holder). If you are,
you are taxable on your worldwide income regardless of
whether or not you ever set foot in the US again. This rule
applies until you either lose your US citizenship or your
greencard. However, if you give up your citizenship or your
greencard for tax-motivated reasons (which you are presumed
to have done in the absence of evidence otherwise), you will
continue to be taxed as a resident for ten years following
the year in which you give up your citizenship/greencard;
further, if, during that 10-year period you are physically
present in the US for 30 days or more in any one year, that
year does not count. See Code Section 877.

If you're not (i.e., you are a resident alien who is not a
permanent resident), then once you meet the tests for
terminating your US residency for federal tax purposes, see
Code Section 7701(b), which could be as quickly as the year
following your last year of residency, or as long as three
years after that last year (although it's difficult to
stretch it out to three years), then you are no longer taxed
on your worldwide income and instead are only taxed on your
US-source income and certain types of foreign-source income
that is effectively connected with a US trade or business
and is, as a general matter, connected with a US office or
place of business.

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"Scott Jensen" <stj[at]nonesuch.org> wrote:

- quote -

The Foreign Earned Income Exclusion may eliminate your taxes
but the actual amount of exclusion depends on a number of
factors unique to each situation. You may exclude some or
all of your earned income if:

1. You are a bona fide resident of a foreitn country. That
means you must live and work there and, if necessary, pay
taxes to that country, or

2. You are physically outside the US for 330 days out of any
12-month period. Only income earned during the period
outside the US may be excluded.

Regardless of the basis for the exclusion, your tax home
must be outside the US. That is, you must earn the money by
providing your services outside the US.

The maximum exclusion is $82,400. The allowable amount is
pro-rated on the number of days that you qualify.

There are other rules but this is the basic summary.

The exclusion is for income tax purposes only. If you are
self-employed or an independent contractor you still have to
pay the self-employment social security tax and, if you work
for a US company or affiliate, you will have the SS taxes
withheld.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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- quote -

It is referred to as "Foreign Source Income" which means
you earned it (read: it is not interest, dividends, or
capital gains) while residing outside the United States.
Establishing a residence is a critical isssue.

Be aware that some States (e.g., California and Maryland)
believe you are a resident of their State until you establish
residency in another U.S. State.

Dick

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"Scott Jensen" <stj[at]nonesuch.org> wrote:

- quote -

As long as you are a US citizen or resident you are subject
to US tax. If you live abroad, you are still required to
file a tax return. However, between the foreign earned
income credit & foreign tax credit, there may not be any tax
liability.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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I have been told that if you live outside the US for long
enough each year, you do not have to pay US federal taxes.
True? If so, how long?

Does it have to be a solid block of time? Saying one
doesn't have a physical home in the US, does this go the
same for state and local taxes? Do you have to declare
another country as your residence or can you be a sort of
continuous traveler?

Thanks in advance!

Scott

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