RESIDENCE for US Tax Returns

[intrepid]

So this question is more for US expat citizens.  I haven't talked to a CPA or tax consultant about this issue yet.  Also I know the answers I will get here are worth every cent I am paying, but still I'll respect you in the morning if you answer.    When filing your tax returns do you enter you address here in the Philippines or a residence in the US?  I know some of us, including me have maintained either an old residence in the US or maybe even a mail forwarding address.  Is there any benefit to using one over the other?

[AlwaysRt]

33 minutes ago, intrepid said:

So this question is more for US expat citizens.  I haven't talked to a CPA or tax consultant about this issue yet.  Also I know the answers I will get here are worth every cent I am paying, but still I'll respect you in the morning if you answer.    When filing your tax returns do you enter you address here in the Philippines or a residence in the US?  I know some of us, including me have maintained either an old residence in the US or maybe even a mail forwarding address.  Is there any benefit to using one over the other?

I have continued to use my US address. I feel it provides consistency and therefore no red flags for any government agency. I also recieve an email the same day mail is received and can act in a timely manor if important as opposed to waiting weeks, months, or never to recieve mail here.

[scott h]

1 hour ago, intrepid said:

I haven't talked to a CPA or tax consultant about this issue yet.

Int. When we made the move we sold our house and when I retired I listed my home of record as the Philippines. That way my pension is not subject to state taxes. For our state side bank accounts, credit cards and such we use my sisters address. I derive a small income from a rental property owned jointly with my brother and sister (inheritance) which I pay state taxes on.

I have my taxes done professionally by the same lady who has done our taxes for years (they are licensed and all that stuff). She said it was a smart move on our part. No flags have ever been raised or questions asked. My pension is from the federal government so if anyone was going to say something I think they would have by now.

As an aside, our plane tickets, rental car and hotel from our last visit stateside is tax deductible as business expenses sense I did "talk" to my sister about the house

As always this is only my experience, others might have different experiences.

 

[intrepid]

Thanks guys for your input.  Its helpful to what and why others make their decisions.  I think for me I'm going to stick with

using my Florida residence which I used the past two years.  At least no state tax!

[OnMyWay]

I did what Scott did and I changed my IRS address to the Philippines.  I just got my 2016 PIN number a few weeks ago, so not too bad.

I have a rental house in FL, but I didn't want the IRS sending stuff to my renter.

My mailing address is at my sister's house in California.  California is notorious for trying to get taxes from anybody, so that is why I did not use it for the IRS.  Sure enough, I got a letter from CA asking me to file a 2014 (?) return.  I had to write them a letter and never heard from them again.

[AlwaysRt]

My address is Texas so no State Tax either. I kept the address in the States to keep things simpler when dealing with government and financial institutions. Also, if the Feds take a look around at other countries, they might someday decide to screw with retirement/disability benefits of expats. I feel no reason to paint a target on my back. (not that it actually does that, many have Philippine addresses and are fine, just not my strategy)

Edited February 28, 2017 by AlwaysRt

[Happyhorn52]

Are you working or retired There are tax savings if you live outside the USA.

Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. For 2015, the maximum exclusion is $100,800 per taxpayer, $101,300 for 2016 (future years indexed for inflation).

 

 

[Gentleman.Jack.Darby]

1 hour ago, Happyhorn52 said:

Are you working or retired There are tax savings if you live outside the USA.

Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. For 2015, the maximum exclusion is $100,800 per taxpayer, $101,300 for 2016 (future years indexed for inflation).

 

 

I'd be a little hesitant to make the blanket statement that there are tax savings simply from living outside the U.S.

While the U.S. does grant a foreign earned income exclusion for income earned outside the U.S., there are tests that must be met in order to do so:

1. One's tax home must be in a foreign country and;

2. One must meet EITHER the bona fide residence test OR the physical presence test, neither of which is necessarily a slam-dunk;

3. There are also tests for the type of income - some income that one might try to classify as earned income won't meet the IRS test for earned income.

And, assuming one's income qualifies as foreign earned income and is granted the exclusion, the reason for the exclusion from U.S. tax is because, presumably, the income is taxed by the foreign country in which one earned it and of which one is a tax resident.

It is surprising how much higher effective (the rates one actually pay after adjustments, exclusions, credits, etc.) tax rates are in foreign countries when compared to the U.S. - there are a lot of stories, editorials, etc. that are written about how "high" U.S. rates are but the writers generally have only a rudimentary understanding of the U.S. tax code and none about foreign tax codes. Same goes for "a guy in the bar", "my uncles who's filed his returns for 40 years", "the guy that works next to me in the shop", etc.

And, if one's tax home is in a foreign country, it is possible that other income, such as a U.S. pension which, in places offering retirement "visas", such as Thailand, Malaysia, the PI, etc., is normally exempt from taxation, might become taxable.

A while back I was considering Indonesia since it offers a retirement visa and, as part of my due diligence, I took a look at the tax treaty between it and the U.S. since it appeared that taxation of foreign income, such as pension and interest income, was somewhat "cloudy" in the sources one runs across when looking at their retirement visa scheme. I was a bit surprised and that, coupled with one or two other undesirable requirements of their scheme, made me put Indonesia on the back burner. 

 

 

 

[earthdome]

One other thing to consider for using a Philippines address is if you would be subject to paying a penalty to the IRS for not having a US health insurance policy. Though that may not be an issue in coming years if that part of the ACA is repealed.

[robert k]

51 minutes ago, earthdome said:

One other thing to consider for using a Philippines address is if you would be subject to paying a penalty to the IRS for not having a US health insurance policy. Though that may not be an issue in coming years if that part of the ACA is repealed.

Should already be covered by the executive order to the IRS to not collect the penalty. Also the un-affordable care act doesn't apply to people who live outside the country 330 days of a 12 month period.