Author Topic: Moving to India ? Need help in understand state residency and taxes  (Read 1922 times)

movingtobangalore

  • Newbie
  • *
  • Posts: 3
    • View Profile
I am a very big fan of the blog. Learnt a lot from reading GCC's articles. Really appreciate the time and effort put into writing each article.

We plan on moving from New York to India (Bangalore) permanently in the next 18 months hopefully with partial FIRE. I have the usual accounts many in this community have, like vanguard brokerage & IRA accounts. I also have my work 401k at Fido. I plan to open a virtual mailbox like traveling mailbox (TM) in 0% state like Florida or WA before I move to India. My only relative is in Maryland and was thinking of giving his address in case some financial institution flags TM?s address and ask for a proper residential address. I wasn?t planning on legally establishing residency in any other state.
 I had three questions.

1.   When I move to India, for taxation purposes (I?ll still get dividends from vanguard), which state would I pay taxes; NY, MD or FL?
2.   I know just having a virtual mailbox at 0% state tax state like Florida doesn?t guarantee residency. So in order to get the tax benefits of FL, should I legally establish residency at FL? ? This is not my preferred choice, but the tax benefits could force me to take this route.
3.   If I don?t legally change my residency from NY and open a TM address based in NY, but give my relative?s address in MD as an emergency residential address, will I pay NY state taxes? - This is my preferred choice since this involves least work from my side. :)

Any advise on the best strategy for my situation would immensely help.

Expert help from this community is greatly appreciated.

gocurrycracker

  • Administrator
  • Sr. Member
  • *****
  • Posts: 297
  • I live here.
    • View Profile
    • Retire Early. Travel the World.
Re: Moving to India ? Need help in understand state residency and taxes
« Reply #1 on: January 06, 2019, 08:44:03 PM »
Are you a US citizen?

movingtobangalore

  • Newbie
  • *
  • Posts: 3
    • View Profile
Re: Moving to India ? Need help in understand state residency and taxes
« Reply #2 on: January 07, 2019, 03:35:24 AM »
Yes - US citizen family.

gocurrycracker

  • Administrator
  • Sr. Member
  • *****
  • Posts: 297
  • I live here.
    • View Profile
    • Retire Early. Travel the World.
Re: Moving to India ? Need help in understand state residency and taxes
« Reply #3 on: January 07, 2019, 10:01:59 PM »
Where you pay tax is based on where you are a resident. Or considered to be a resident.

New York is one of those uber aggressive tax collecting states. As such, it is important and necessary to ruthlessly slash all ties with the State. It is also important to show that you are leaving with no plan to return.

Here is a link to a similar question re: CA, another aggressive State
http://forum.gocurrycracker.com/index.php/topic,114.msg449.html#msg449

Without establishing residency in another State, there is always the risk that NY will make your life difficult at some point in the future.
For example, do you plan to vote in future US elections? NY may make the point that you are registered to vote in NY and therefore that is your US residence, and therefore you owe taxes in NY.

Personally, I would probably pay a NY "exit tax" and spend a little time in one of the no-tax States, register to vote, get a driver's license, close NY bank accounts and open them at new-State branches, etc.... If NY has a way you can send them a registered sayonara mail, I'd do that too. And only then give a MD physical address to the brokerages.

movingtobangalore

  • Newbie
  • *
  • Posts: 3
    • View Profile
Re: Moving to India ? Need help in understand state residency and taxes
« Reply #4 on: January 08, 2019, 03:45:59 PM »
Great advise Jeremy. Thanks so much.

I dont think we'll have the time to move to a separate state and stay there for some time before moving to India. Wife and daughter will move next June for school purposes. I'll follow them later in the year. So we'll just continue with status quo, I'll have a CPA help me with taxes. We'll have some income working in India. At some point, we'll return to USA, change residency the correct way as you said and sever all ties with NY.

Our accounts are pretty simple. One BoA account (checking + credit cards), one Fido checking account (per your blog) + 401k, a bunch of chase credit cards (travel hacking, again from your blog) and vanguard.