On Oct 13, 8:47*am, caj111 <ca...[at]my-deja.com> wrote:
- quote -


I'm sorry I let this thread lie for a few days because I was busy with
other things.

Caj, your client may or may not remain a Maryland resident during his
absence, depending on facts that you haven't provided here.

First, disabuse yourself of the notion that there is some connection
between "tax home" and the concept of residence for state income tax
purposes. They are not the same thing at all. No doubt your client
has established a new tax home in the foreign country, but that has
nothing to do with his state income tax residency status.

Maryland law defines a resident to include all domiciliaries, and
makes no provision for a domiciliary to be a nonresident under any
circumstances. See Maryland Administrative Release No 37 (http://
http://www.marylandtaxes.com/publica...it/ar_it37.pdf) for the
Comptroller's explanation of domicile.

In general, a change of domicile requires all of three elements:
abandonment of the previous domicile, moving to and residing in a new
location, and an intent to remain in the new location permanently or
for an indefinite period of time. Until all three elements are met,
the individual's domicile remains where it was. Thus even if your
client has severed all of his ties to Maryland, he remains a Maryland
resident for tax purposes unless he has moved to another place with
the intention of remaining there permanently.

States generally presume, in the absence of strong evidence to the
contrary, that a US citizen who goes to a foreign country does not
intend to remain there permanently, but expects to return to the US
eventually. Of course there are circumstances where an individual
really intends to live in the foreign country indefinitely, and not to
return to the US; but the burden is on the individual to show that he
or she has actually established a new domicile in the foreign country.

There are Maryland Court of Appeal decisions going both ways on this
issue. In Comptroller v. Mollard, 53 Md App 631 455 A2d 72,
02/04/1983, an ITT employee accepted an executive position in
Belgium. He moved his family to Belgium, they sold their home and
severed virtually all of their ties with Maryland, and they
participated in the community in Belgium in a manner that suggested an
intention to be there indefinitely. When they left Maryland they had
no intention of ever returning there to live, although they did expect
to be reassigned by ITT and to return to the US eventually. The
initial duration of the executive's Belgian visa was two years, and it
would have had to be renewed every two years if he had stayed in
Belgium. As it turned out, he was reassigned by ITT and returned to
the US after 20 months in Belgium. The Maryland Tax Court held that
he had established a new domicile in Belgium, but the Court of Special
Appeals found that the taxpayer had a definite intention to return to
the US at some point. Therefore he could not be held to have
established his "true, fixed home and permanent establishment" in
Belgium.

A more favorable decision is in Comptroller v. Robert E. Haskin, et
al., 298 Md 681 472 A2d 70, 03/12/1984. That case involved three
different taxpayers, each of whom had been determined to have retained
his Maryland domicile during his foreign assignment by the lower
court. Two of the taxpayers had gone to Iran, and the third to
Holland, all on civilian employment assignments. All of them had left
more ties in Maryland than the taxpayer in Mollard; all of them kept
their Maryland homes and rented them during their absence. Each
established ties in the foreign country consistent with an intention
to remain there for a long time; and none of them had expressed a
specific intention to return to the US to live. That seems to be what
turned the tide in these cases, which are otherwise difficult to
distinguish from Mollard. The Court of Appeals held that all three
had established new domiciles in the foreign countries, even though
they returned to the US within a relatively short period of time due
to unexpected circumstances (in the Iranian cases, the revolution).
So they were nonresidents during their absence.

I'd suggest you read both of these cases carefully and consider how
your client's facts compare with them. Depending on your client's
situation and his intentions, he may or may not still be a tax
resident of Maryland.

In the Haskin case the court specifically noted that at least one of
the taxpayers had not voted during his absence. I believe that US
citizens are entitled to retain their voter registration, and that
retaining registration where they lived before moving to a foreign
country has nothing to do with their domicile. However, the Maryland
court seemed to make an issue of it.

As you can see, there is no clear yes or no answer here.

Katie in San Diego

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bayoucitybc wrote:
[snip]

- quote -

FYI:
Members of the military are covered by federal law
(Servicemembers Civil Relief Act).

Basically, the law says you remain a resident of the state from
which you entered the military. You don't lose your residence or
domicile when you are stationed out of state under military
orders. Nor, can a state in which you are stationed under
military orders treat you as being domiciled or resident in that
state unless you actually change domicile. In addition, any
military compensation is not treated as sourced inside the state
where earned if you are under military orders and not domiciled
in that state.

Each State of the Union plus the D.C. is free to enact laws as to
how it will tax its own service personnel. E.g., a state can
agree not to tax its residents who enter the military and move
out of state under orders that are a permanent change of station
(PCS). CA does this. The state can choose to tax all its
residents even there is a PCS.

When a member of the military relocates out of country, the rules
are still the same relative to remaining a resident of the state
from which you entered the military or the state in which you
changed your domicile. Therefore, if one is from a state that
taxes military pay even if under a PCS, the member of the
military may want to think about changing one's domicile to a
state that has no personal income tax on compensation. This would
have to happen before departing the U.S.A. as it is extremely
difficult to change domiciles or convince a state you changed
domiciles when you are stationed out of country.

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I had a client who lived in Alabama - a state with income tax - who
left to live in Hong Kong for an indeterminate period that ended up
being about four years. Alabama took the position that he remained an
Alabama resident with state income tax filing required until he
returned to the U.S. and established residency in another U.S. state.
The client established a tax home in Texas before leaving the country.

I believe this is the position many states take with respect to
servicemen and -women as well.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <fbe24839-8e20-48ea-80ab-af3933271a62[at]i18g2000prf.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:

- quote -

If they rent it out and have income, then yes.

Seth

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- quote -

Because when you took at his federal taxable income from line 37 of
the 1040, which was a considerably reduced number from wages shown on
Line 7, mainly due to the Foreign Income Exclusion, losses on the
rental property (you can show negative rental income so long as less
than $25,000 AND total other income is under $125,000) and student
loan interest, THEN subtracted the Maryland standard deduction AND the
Maryland Exemption amount, taxable net income in Maryland came to
zero.

I also inquired with the state of Maryland and they said I did NOT
need to add back the Foreign Income Exclusion (because they recognize
it) and I did not need to add back the losses on rental property
either.

- quote -

He surrendered his Maryland drivers' license in order to get a
drivers' license in Europe without taking any road test.

He probably is still listed on the voter rolls in Maryland but hasn't
voted in any elections there since 2004. Perhaps he needs to contact
the county board of elections to get off their rolls?

He has nothing stored in Maryland and while he does have a bank
account with a bank located in Maryland, his bank statements go to his
European address.

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D. Stussy <replies[at]newsgroups.kd6lvw.ampr.org> wrote:
- quote -

I would have typed "If" instead of "While". Maryland property
includes bank accounts, investments which, in addition to property
include CD's and IRA's held in Maryland banks as well as Maryland
brokerage accounts, and the list gets longer. Make certain that
he is receiving no 1099's at a Maryland address.

When I leave Maryland, I will make it clear that I have no
intention of returning.

Dick

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

removeps-groups[at]yahoo.com wrote:
- quote -

The issue is: when does a resident of a state stop being a
resident or domiciliary and is therefore no longer subject to
state income taxes except for income sourced in that state?

- quote -

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On Oct 10, 2:49 pm, rdad...[at]panix.com (Dick Adams) wrote:

- quote -

So if a random foreign person buys property in Maryland, do they owe
Maryland income taxes? I know that the owe Maryland taxes on the
capital gain when they sell their property, but it seems strange that
there should be an income tax. What about other states, like
California?

- quote -

A good question.

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"Dick Adams" <rdadams[at]panix.com> wrote in message
news:gcoilj$cla$1[at]reader1.panix.com...
- quote -

Read carefully: Not in 2008 (and after) - he sold it in 2007.

Although he may not have holdings in MD anymore, has he abandoned ALL ties?
Driver's license? Voter's registration? Storage?

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caj111 <caj11[at]my-deja.com> wrote:

- quote -

The Court of Appeals of Maryland resolved this some years
back. Because he still owns property in Maryland, he owes
Maryland taxes.

How did he have zero taxable income in Maryland?

Dick

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Okay,

Here's how the situation played out for my client for 2005, 2006 and
2007. While I know he will have to continue filing federal returns,
I'm trying to figure out if he will need to continue filing state
returns as I don't think he has a "tax home" in the USA anymore.

In 2005, he lived in Maryland for much of the year, paid Maryland and
Federal taxes but moved to Europe in the early fall and claimed a
partial foreign income exclusion for the time he lived in Europe (he
passed the 330-day test because he continue to live in Europe for all
of 2006).

In 2006, he lived in Europe all year long, his wife and children
joined him at the end of the summer. He rented out his home that he
left behind at the end of the year and paid Maryland taxes just like
the year before. He filed a federal return but the foreign income
exclusion, standard deduction and exemptions zeroed out his federal
taxable income (Maryland taxes were considerably less than the year
before but he still owed a few hundred dollars).

In 2007, all of the family lived in Europe all year but he he
continued to rent out his home in Maryland for most of the year while
also putting it up for sale. The property sold in August and he had
no more rental income in Maryland after that. He filed both Federal
and Maryland returns but he had zero taxable income for both.

He is well aware that he will still be filing Federal tax returns like
normal and claiming the foreign income exclusion. Unless his job
gives him a huge raise, his federal taxable income will probably be
zero for the foreseeable future.

Now he no longer has any real estate in Maryland, and the only asset
he has in Maryland, or the entire United States for that matter, is a
bank account.

Does this mean his tax home is still Maryland?

Does he still need to keep filing a Maryland return?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >