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Living in Ajijic and the US: setting up residency, shipping etc

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This July we are moving from Los Angeles into a house we bought two years ago in Ajijic and have rented out.  We spend a lot of time in Ajijic and Chapala and know the area and people  fairly well, plus are intermediate Spanish speakers. We understand that we should establish residency in a "no income tax" state and set up a  new US mailing address and way of shipping things like meds to us in Ajijic.  Any suggestions on the best states and companies to use for this? Thanks...looking forward to meeting tghose of you I have not yet met.

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I think shipping meds is illegal.  Any why do you want to lie and not pay your state taxes?  Just asking 

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1. It was illegal for you to rent out your property as a tourist.

2. You owed taxes on all rental income just like you would in the US.

3. And, your tenant was required by law to withhold taxes since you were not living in Mexico. 

Taxation for landlords and tenants. http://www.soniadiaz.mx/real-estate.html

 

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You mention Los Angeles, so I assume you are currently a resident of California. Regardless of your time/stay in Mexico, you remain a resident of California until you establish a residency in some other US state. Each state has different rules as to what that requires. Usually it requires owning or renting property, getting a drivers license, or registering to vote. A simple Google search will tell you the tax implications of various states, and then you can research the residency requirements of those states. It is not as simple as picking a state: you may not be able to claim residency in some states.

Some States do not have many taxes, and some states have tax advantages for expats. You must research this carefully. I am a resident of Ohio, and there is a way for me to claim as an expat an exemption from Ohio's taxes. However, were I to do so, I would also lose my Ohio Drivers license and voter registration. Just one example.

All US citizens, even those who are permanent expats, must establish a tax domicile in the US. This is an address for tax purposes, which establishes your tax responsibilities for both federal and state taxes. A tax domicile does not have to be a state where you lived: it simply is an "intention" to live there, if you return to the States. You can change it, too. However, you have to meet its residency requirements, in any case.

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We have used, and continue to use, "St. Brendan's Isle Mail Service" in Florida for over twelve years.  The service was originally established for cruising sailors and provides an address that can receive U.S. Mail as well as private carriers such as FedEx, DHL, UPS, etc.  The service scans the front of envelopes which the customer reviews online.  The customer then directs SBI to scan, hold, forward, or shred the individual mail items.  For most mail, one only needs the electronic copy obtained from scanning.  For driving license, cards, permits, etc. one may have them forwarded.  We don't usually get checks, but when we do, we have SBI deposit them  .+1 (904) 284-1200: sbi@sbimailservice.com 

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58 minutes ago, NoVaDamer said:

All US citizens, even those who are permanent expats, must establish a tax domicile in the US. This is an address for tax purposes, which establishes your tax responsibilities for both federal and state taxes. A tax domicile does not have to be a state where you lived: it simply is an "intention" to live there, if you return to the States. You can change it, too. However, you have to meet its residency requirements, in any case.

 

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2 hours ago, NoVaDamer said:

 

All US citizens, even those who are permanent expats, must establish a tax domicile in the US. This is an address for tax purposes, which establishes your tax responsibilities for both federal and state taxes. A tax domicile does not have to be a state where you lived: it simply is an "intention" to live there, if you return to the States. You can change it, too. However, you have to meet its residency requirements, in any case. 

This information is not correct. 

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Angus & Ibarra, care to be more specific? I don't want to put out bad info, but I researched this issue when I moved down two years ago and spent a lot of time dealing with attorneys, states, and the IRS. While still a layman, what I wrote is what I learned. What part is wrong?

BTW, here's a link to a plain English description of the issue: https://www.myexpattaxes.com/state-taxes-as-an-expat

 

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16 minutes ago, NoVaDamer said:

Angus & Ibarra, care to be more specific? I don't want to put out bad info, but I researched this issue when I moved down two years ago and spent a lot of time dealing with attorneys, states, and the IRS. While still a layman, what I wrote is what I learned. What part is wrong?

BTW, here's a link to a plain English description of the issue: https://www.myexpattaxes.com/state-taxes-as-an-expat

 

"All US citizens, even those who are permanent expats, must establish a tax domicile in the US."

Just plain silly to say all US citizens. I'm gone, an immigrant in Mexico. Since I do not make any taxable income in any state in the US or any other country, I am not included in your all citizens claim. Don't feel pity though, I do alright.

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We have lived full time in MX for almost 22 years and have never had a U.S. address. All government agencies that we have dealt with and IRS have our MX address.  We receive S.S. checks in MX bank using MX information.  My husband is a retired Tax Attorney and has thoroughly researched this. It is never, usually, a good idea to say "All". There are always exceptions and, misinformation.

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Angus & Ibarra: thanks for the responses. I stand corrected, and should know better than to use "all" under such circumstances.

I'll return to my main point: if you are a US citizen expat and have earned income or possibly taxable pensions (including SS), you need to be aware that every US state handles these items differently for tax purposes. Also, every state has different rules for determining if you qualify as a resident and whether you continue to be a resident, regardless of your intentions. Finally (forgot this originally), if you have a US will that will be probated through a state court, that will present an opportunity for that state (and others) to claim tax jurisdiction.

Your tax domicile is the location that you can claim (I called it an address, but that is only a common understanding, not a literal requirement) and that can claim you under its tax jurisdiction. You have one whether you know it or not; you may or may not have tax liability as a result.

So if you come from a State which does not covet your or your heir's resources, and does not tax your income or pension, and will never have a will pass through probate in the States, and there is no other state which can claim you: relax and enjoy the good (tax-free) life as an expat!

Actually, the last bit is true, regardless: don't worry, be happy!

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We are also from Ohio and when we left in 2005 our financial guys had us "divorce" the state of Ohio.  We wrote a letter to the Secretary of State and copied the Tax Department that we were leaving the state with no intention of returning and since we were leaving the US we would not be establishing  state tax liability in another state.  Under these rules we had to leave for 5 years an if we returned within 5 years we would owe state taxes on the intervening years.  We allowed our state drivers license to expire and got Mexican licenses.  Before we left we registered our vehicles with Clay county South Dakota for registration, license plates and insurability.

 

The IRS has our Mexican address and everything they send over the years gets delivered in a rather timely manner straight into our buzon slot in the front door.

 

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Solajijic, "divorce" is a good way to look at it. I ended up choosing Ohio and moved my tax domicile there before departing the States, but I had to "divorce" Virginia, which is one of the toughest states on taxing expats. Among the things Virginia demands if you claim a non-resident (expat) exemption from taxes, you have to give up your drivers license, voter registration, library card, any property or business, any income, not visit the state (I forget what the limit on a visit was, but it was short) not use a mailing address in the state, and not have any immediate family members living in the state. Sheesh!

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Recommend Texas..... Works for us!

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Some people like Nevada.  I'm from Oregon and am a nomad who lives nowhere in the US.  I have no state tax liability and only Federal tax liability on my Oregon State pension and SS. 

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