Looking for expat tax referral

[Docfranco]

Hi,
I’m beginning to plan for future cruising plans and would love to find an expat cruising friendly tax financial planner to help with some questions. I’m in California but expect to retire out of the US but own property here and want to plan ahead…
Tia….

[valhalla360]

Will you be earning money overseas?
Will you be obtaining legal residency overseas?
Is there some other tax issue, you are trying to solve?

If you just happen to be spending time in a variety of countries (moving about without earning or obtaining residency) while living off your US investment earnings/pension/SS, just keep it simple and file in your home state.

Only thing you might consider is trying to change your domicile state to get away from California taxes but that get's messy unless you spend enough time and associate enough with another state that you can legitimately claim to have moved domicile. Moving about overseas with no solid links to a new state will likely get challenged by California...and it's guilty until proven innocent.

We just buy tax preparation software and do electronic filling from where ever we are.

Bottom line, what are you trying to accomplish.

[mvweebles]

Why would you need s financial planner with experience with expat/cruising? You need someone experienced with US laws and regulations.

That said, two thoughts come to mind.

First, there is a decent blog by a family who circumnavigated on a small cat, and are now in the Caribbean on a trawler. If I remember, he advertises himself as a financial planner. Www.Bumfuzzle.com. I have no relationship or knowledge, just pasing along a name.

Second, unless your ties to California are relatively deep, establish domicile elsewhere. Anywhere (well, except NY NJ). Their tax authority is extremely efficient and ruthless. As described in previous post, once in their crosshairs, you are guilty until proven innocent. Many cruisers use a a mail forwarding service such as St Brendan's Isle in Florida as their home address. Apparently, it's legal to use a boat as your home, though there are complications. Even through mail forwarding places have a normal street address with suite number instead of PO Box, their address is recognized as a private PO box.

Good luck.

Peter

[valhalla360]

Originally Posted by mvweebles

Second, unless your ties to California are relatively deep, establish domicile elsewhere. Anywhere (well, except NY NJ). Their tax authority is extremely efficient and ruthless. As described in previous post, once in their crosshairs, you are guilty until proven innocent. Many cruisers use a a mail forwarding service such as St Brendan's Isle in Florida as their home address. Apparently, it's legal to use a boat as your home, though there are complications. Even through mail forwarding places have a normal street address with suite number instead of PO Box, their address is recognized as a private PO box.

This is where you want to be careful. If you just get a PO Box and never actually domicile in your new state, California can challenge it...and likely win if you fight them over it.

A lot of low tax states won't really care but high tax states will chase the dollars.

To domicile, gets to be a bit of a gray area from traveling folk.
- For normal land based people with a house or apartment, it's pretty straightforward to establish a new domicile. You have a house or lease. You have utility bills, you drivers license is changed to the new state, all your bills go to the new state, etc... Everything points to you being domiciled in the new state.
- For traveling folk, if you don't spend any time in the state, the corroborating evidence that you are domiciling in the new state is largely missing and if California challenges you, it's hard to make a case that you have moved to your new state.

PS: If you move overseas, you generally fall under the jurisdiction of the last state you were domiciled in.

[mvweebles]

Originally Posted by valhalla360

This is where you want to be careful. If you just get a PO Box and never actually domicile in your new state, California can challenge it...and likely win if you fight them over it.



A lot of low tax states won't really care but high tax states will chase the dollars.



To domicile, gets to be a bit of a gray area from traveling folk.

- For normal land based people with a house or apartment, it's pretty straightforward to establish a new domicile. You have a house or lease. You have utility bills, you drivers license is changed to the new state, all your bills go to the new state, etc... Everything points to you being domiciled in the new state.

- For traveling folk, if you don't spend any time in the state, the corroborating evidence that you are domiciling in the new state is largely missing and if California challenges you, it's hard to make a case that you have moved to your new state.



PS: If you move overseas, you generally fall under the jurisdiction of the last state you were domiciled in.

Totally agree - California Board of Equalization (their tax authority) is ruthless and very difficult to work with if they suspect you are skirting taxes. Cruisers from California have long had difficulty extracting themselves. The BoE is legendary for requiring plane tickets, cell phone records, proof of payment for housing, utility bills, etc.

That said, I moved out of California 15 years ago but my boat remained there until 3 years ago when I took it to Mexico. I proactively reached out to thr BoE and they asked that I have my SF marina draft a letter that I am leaving. I guess they were confident that if I just moved to another marina that they would find me.

But you are correct. In states like California, you really have to work to scrub away your footprint. I suspect that changing domicile but not changing your job is a big red flag (well-heeled silicon valley techies have long sought to declare Nevada as their residence to avoid taxes). Only advice I can think of is do as much forward planning as you can (vs as little as you think necessary). That means changinf drivers license and car registration, etc.. And do not underestimate the California BoE.

Peter

[capn_billl]

Originally Posted by mvweebles

Totally agree - California Board of Equalization (their tax authority) is ruthless and very difficult to work with if they suspect you are skirting taxes.
Peter

Board of Equalization. Can you get any more Orwellian?

Is it next door to the Ministry of Truth?

[sailing_gal]

There is a U.S. Expat group on facebook. There are several knowledgeable individuals and practitioners that post to the group. Search under U.S. Expat Tax Questions.

[salfarina]

If the property you own is in CA, then seek the advice of a CA tax accountant or attorney. This should be your starting point.

[Larry Florida]

Best thing you can do taxwise is to get out of being a Caltardifornia citizen. If you depart from Corrupt Cali you will remain a CalTard citizen for tax purposes even if you are away for decades. There is a 20 year statue of limitations on CA collecting back taxes.

You're welcome

[cruising_ollie]

Originally Posted by Docfranco

Hi,
I’m beginning to plan for future cruising plans and would love to find an expat cruising friendly tax financial planner to help with some questions. I’m in California but expect to retire out of the US but own property here and want to plan ahead…
Tia….

This is what the IRS has to say about US citizens living abroad:
Do I still need to file a U.S. tax return? Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits. https://www.irs.gov/individuals/inte...al-tax-matters.
But permanent, lifelong taxation regardless of residency is extremely rare. In 1995, the U.S. Congress took (yet another) look at the situation and found that only 3 countries in the world taxed based on citizenship rather than residency: Phillipines, Eritrea, and the United States.
A year later, the Phillipines ended its citizenship-based tax regime.
https://www.taxesforexpats.com/expat...omparison.html
Also the tax treaties with other countries need to considered to avoid double taxation. https://www.irs.gov/businesses/inter...reaties-a-to-z

[valhalla360]

Originally Posted by cruising_ollie

This is what the IRS has to say about US citizens living abroad:
Do I still need to file a U.S. tax return? Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits. https://www.irs.gov/individuals/inte...al-tax-matters.
But permanent, lifelong taxation regardless of residency is extremely rare. In 1995, the U.S. Congress took (yet another) look at the situation and found that only 3 countries in the world taxed based on citizenship rather than residency: Phillipines, Eritrea, and the United States.
A year later, the Phillipines ended its citizenship-based tax regime.
https://www.taxesforexpats.com/expat...omparison.html
Also the tax treaties with other countries need to considered to avoid double taxation. https://www.irs.gov/businesses/inter...reaties-a-to-z

Much of this really applies to those who are working and/or have official residency overseas.

For a retired cruiser not earning overseas, your investment earnings are US based and you just do your taxes as if you are living in the USA.

PS: Taxing overseas income is an issue but much overblown unless you are in a high tax bracket. The first $109k in overseas earnings is exempt from US taxation if you meet the residency requirements. Yes, you still need to file but the majority of overseas workers pay little or nothing in US income tax on foreign earnings.

[jmschmidt]

If you are a US citizen, green card holder or "US Tax Person" (look up the definition in the IRS Code) which includes those "effectively connected with a US trade or business, you are required to file US federal and maybe your state tax return annually no matter where you are in the world.

If you are a US citizen and have "legally" renounced you US citizenship at a US embassy or counsel abroad you are on the hook for ten years of filing US federal and maybe your former state tax return annually.

If you are a US green card holder you may officially surrender your green card within two years of issue and will no longer be a US tax person, after two years you are on the hook for ten years.