U.S. Taxes from investments while cruising

[kaiserlp2]

Originally Posted by letsgetsailing3

Before you go all in with the "tax-dodgin' " scenario, check on what it will actually cost to go with your real situation.

If you own property in a state, it may make sense to keep that as your state of residence.

With that level of income, you're not likely to incur very much of a tax burden after deductions. Like others have pointed out, it may also make sense to retain state residency to help with in-state tuition or other state benefits. Will you be returning to a particular state?

I don't really have a problem with people gaming the system a little, but it's worth first consulting with your accountant -- I've seen people go all out to avoid taxes while shooting themselves in the foot in some other financial or logistical way.

I'm not sure "Tax dodging" exactly describes my question, unless you consider "legally minimizing your tax obligation" as "dodging".

We live in Missouri right now... I don't see us returning to this area, but stranger things have happened.

My daughter is much less concerned with where she goes to school, than she is with minimizing her costs to do so. In this case, our options open up quite a bit, luckily.

My initial question was to find out what people had actually done. For instance... Missouri isn't exactly the "easiest" state to get an absentee ballot for. Another reason I might consider moving my residence to a different state, would be to find somewhere that process was easier.

I just never really thought about how many 'other' things than money there were involved with cutting ties to land for an extended period of time

Thanks

Phil

[kaiserlp2]

Originally Posted by John A

I think you need a mailing address within a State to establish residency, before enjoying there tax codes.

I believe that all offshore Health plans, or those within the US, really want you to obtain your treatment within the US, so plan on travel cost.

Be sure that your driver's license doesn't expire!

Activating a credit card from some distant country is always interesting.

My life was far less complicated when I gave a TRUSTED relative power of attorney and used their address for everything. They can even file your Federal Income taxes for you.

Thanks John... great points.

My concerns with health plans are more from a "you have to be covered or we'll penalize you". It would be unfortunate to have to pay for something that I won't be able to use, just because "thems the rules". But it is what it is.



Phil

[kaiserlp2]

Originally Posted by BandB

Back on the first topic of taxes. Growing up in the tax accounting field, I remember my father's stock answer was "If you'd like to come in, I'll be glad to review things so I can answer your questions." The point was that without knowing all the specifics, the advice can't be good. St. Brendan's may be an excellent choice but then where is your daughter going to school? What exactly is the source of your income? What assets do you have and where? Changing residency can be complicated and requires a complete effort. Again, St. Brendan's is expert on that. At one time Florida had an intangibles tax but no longer does. Then there are things like registration of your boat and it's home country and port. Will you have to pay a use tax when moving it? What about automobiles and taxes on them?

All EXTREMELY valid points.

I guess the purpose of my post was to see if anyone out there was in the same situation, and what path they may have taken. As you point out, "advice from an expert" is usually worth the money it costs.

The nice part of this, is that I've picked up even MORE items that I should have on my list to ensure are taken care of:

Drivers license: renewed for an extended period
Mail forwarding: Need a solution for this
Absentee voting: How would this work (would need the previous item)

quite a few others.

Thanks

Phil

[letsgetsailing3]

Originally Posted by kaiserlp2

I'm not sure "Tax dodging" exactly describes my question, unless you consider "legally minimizing your tax obligation" as "dodging".

We live in Missouri right now... I don't see us returning to this area, but stranger things have happened.

My daughter is much less concerned with where she goes to school, than she is with minimizing her costs to do so. In this case, our options open up quite a bit, luckily.

My initial question was to find out what people had actually done. For instance... Missouri isn't exactly the "easiest" state to get an absentee ballot for. Another reason I might consider moving my residence to a different state, would be to find somewhere that process was easier.

I just never really thought about how many 'other' things than money there were involved with cutting ties to land for an extended period of time

Thanks

Phil

My point was that maybe you should figure out what your REAL plan is first, before you go with the "I don't want to pay state taxes" as your primary planning tool.

You might just find that the "real plan" is less hassle or cheaper.

If you're 50 and really have no idea which state you'd come back to, you are a great candidate for casting off the lines, and Florida might be the place for you. If, on the other hand, you have some idea about where your daughter would like to go to college, or where you might move back to (family?) then I'm humbly suggesting that these might be important data points to consider.

The point is to look at the longer-term implications of the choices you're making. Your daughter's college choice, or boyfriend at the time, is likely to have a far greater impact on your decision than state taxes on $30K minus deductions of income.

Just something to think about.

[BandB]

Florida remains an exceptionally easy state for this. You can literally establish residency in as little as 24 hours. Now this does mean cutting ties with your old residency as if you spent more time there than in Florida it would be considered a sham relocation. But many use St. Brendans and let them handle everything. Others get dock space and a postal box at one of the private services.

Other states may be relatively easy as well but I'm just not knowledgeable on them.

[kaiserlp2]

Originally Posted by letsgetsailing3

My point was that maybe you should figure out what your REAL plan is first, before you go with the "I don't want to pay state taxes" as your primary planning tool.

You might just find that the "real plan" is less hassle or cheaper.

If you're 50 and really have no idea which state you'd come back to, you are a great candidate for casting off the lines, and Florida might be the place for you. If, on the other hand, you have some idea about where your daughter would like to go to college, or where you might move back to (family?) then I'm humbly suggesting that these might be important data points to consider.

The point is to look at the longer-term implications of the choices you're making. Your daughter's college choice, or boyfriend at the time, is likely to have a far greater impact on your decision than state taxes on $30K minus deductions of income.

Just something to think about.

All of that makes sense, definitely.

And all more items to add to the "decision tree".

This "list" keeps getting longer and longer

"boyfriend at the time"... perish the thought!

She is the youngest of 5, so at least this isn't our first rodeo from THAT standpoint

Thanks for the input!

Phil

[BandB]

Originally Posted by kaiserlp2

All of that makes sense, definitely.

And all more items to add to the "decision tree".

This "list" keeps getting longer and longer

"boyfriend at the time"... perish the thought!

She is the youngest of 5, so at least this isn't our first rodeo from THAT standpoint

Thanks for the input!

Phil

One thing to note as college in-state tuition came into discussion. The determination of that eligibility is far different in most states, including Florida, from establishing legal residence. It may require evidence of purchase or leasing of home, or establishing a bona fide domicile which the college defines differently. So just don't assume because you established residency it meets the colleges requirement.

[kaiserlp2]

Originally Posted by BandB

One thing to note as college in-state tuition came into discussion. The determination of that eligibility is far different in most states, including Florida, from establishing legal residence. It may require evidence of purchase or leasing of home, or establishing a bona fide domicile which the college defines differently. So just don't assume because you established residency it meets the colleges requirement.

Thank you!

Duly noted.

Phil

[northwestsailor]

Wyoming has the best tax laws in the country. No state income tax, low property tax, no corporate tax, certain trusts can last 999 years. It takes only 24 hours to become a citizen of the state and we certainly need more people here.
However that being said ACA sucks here. Probably highest in the country at least for me since I am in that bracket just before medicare where they really screw it to ya.

[Stumble]

I can't get into specifics, but frankly this is a question that needs professional advice from a tax expert. Certainly their are a number of good reasons to move domicile (note most people here are talking about domicile not residency), but there are also a lot of good reasons not too.

I know a number of good tax experts in this field and would be happy to recommend one if you want to PM me, but your current tax advisor is likely the best place to start.

A lot of these 'one day' switch domicile schemes are very dangerous from a state revenue standpoint. If they are challenged (admittedly rare) many of them are disallowed resulting in years of back taxes owed, fines, penalties, interest, and possible jail time for evasion. It is not a situation that should be addressed on an Internet forum.

[floridabilly]

Originally Posted by kaiserlp2

So we have been working so hard on what we thought was the "difficult" part to become liveaboards (aquiring the funds), that I actually failed to consider all the other "challenges" that are included with leaving the U.S. for an extended period of time.

A bit of background: Turning 50, wife 3 years younger, daughter a freshman in high school.

We will be waiting to leave until she graduates (2017). At this time, we "think" she'll take a year off prior to college and go with us, but that will somewhat depend on college scholarships.

Our plan is to stick in the carribean for approximately 6 months, and then figure out whether to head throught the canal, or across the Atlantic.

Cruising will be funded by dividend/interest income from investments. We are looking at $30k per year.

I've done some forum searching, and haven't really found any advice/guidance on a few of my questions:

1) What "state" do you claim to be a resident in while cruising? Some states don't have "income" taxes, but others do. did you decide based on that? We don't plan on ever bringing our boat to the U.S. (it's in the BVI right now).

2) Health insurance and the ACA... we could "theoretically" claim to live outside the U.S. for the 330 days per year, but we'll still need to insure our daughter while at college. Anyone having to deal with that yet?

3) how ABOUT tax returns? Do you just jump online and fill out the forms, or do you have somone do them for you? Or do you plan a trip back to the U.S. prior to April 15th?

I realize that any "advice" may be worth only what I'm paying for it, but it would be of great assistance to understand possibly how people have tackled some of these issues

Thank you in advance

Phil

Kaiserlp2...What type of vessel are you cruising in?