Residency and avoiding state income tax

Discussion in 'Taxes and Accounting' started by spread, Nov 11, 2011.

  1. spread


    Recently moved in with my long-term girlfriend, into her home in a high-tax state. She's in an excellent job situation, and despite my state income tax exceeding her total income, living elsewhere isn't happening for the next few years.

    I'm a self-employed futures trader. I own no taxable property in any state, and my car has been sold. We're sharing vehicles, all in her name. I make all local purchases in cash. I believe the only thing tying me to a particular state is my health insurance, of which can certainly be changed. The only things I'll write off going forward are my trading software expenses and exchange leases.

    Living together has been long planned, but my other efforts to begin to "disappear" are a result of my thinking that this is an opportunity for me to claim residency in a tax-free state.

    I had initially planned to buy property in a neighboring tax-free state, a drive of 6 hours or so. I'd need to drive there to retrieve certain pieces of mail - or pay someone random to do it for me.

    I've happened upon the idea of using a residency and mail forwarding service. These are largely used by retired couples who "RV" around the country. Some examples:

    Looking for opinions on the viability of this idea. Anyone here claim residence in a tax-free state, without actually living there?
  2. GordonTheGekko

    GordonTheGekko Guest

    Texas and New Hampshire have among the best state taxes.
  3. GordonTheGekko

    GordonTheGekko Guest

  4. Why not focus on reducing your reportable income...

    Do the double irish trick google and ms do.

    Create a foreign corp and transfer your trading technology to it.
    License the trading technology from your own foreign corp.
    The agreement would all for 90% of all winnings as your license fee.
    Pay your foriegn company, reduce your income and move your cash offshore. No taxes until repatriated... if ever or until a tax holiday is granted.
  5. GordonTheGekko

    GordonTheGekko Guest

    I think the "rv" / sentimental home state approach is best... sounds like someone could turn tha scheme into jail time
  6. New Hampshire doesn't quite make the best.

    Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no income tax.

    New Hampshire and Tennessee only tax dividend and interest income.
  7. Aside from owning property the things that tie you to a state are driver's license, vehicle registration, bank accounts, voter registration, mailing address and library card.

    Here is a RV site with useful information

    If you really want to legally disappear you have to adopt the mentality of an illegal immigrant.

    Some states, such as New York, are very aggressive about taxing everyone with any connection to their state.
  8. jprad


    "Connection" being the key issue in this case.

    As a trader, where you originate your network access into the system will leave a footprint regarding where the majority of your trading occurs.

    What I don't get is this; why would you ask something like this here when there's nothing illegal about inquiring with a tax attorney regarding how to set up a legal tax dodge -- such as a trading corp. in a non-taxing state so you can, as an employee, draw whatever minimal income you need in the high-tax state you're living in.
  9. for the op a couple thoughts...

    first, don't know if you've thought about this but some states consider you MARRIED if you and another person have lived in the same residence after a certain number of years. i believe NJ is one of these states. be careful and confirm this.

    if you spend 6 months plus a day in any state for the purposes of taxation you are considered a permanent resident and are required to pay applicable income tax. pls don't think that not owing prob/a car/whatever will somehow make you invisible to the tax man.

    AFAIK, the irs considers you to "live" somewhere if you spend the night in a state. for ex, you can't stand on the CA/NV border and spend 1 minute in CA then jump over to NV for the other 23 hours and 59 minutes and claim NV residency.

    my rec is to move to the great state of Texas, be single and do what you want and not pay any state income tax:D j/k but not really.

    but seriously, the only way to not legally pay state income tax is to spend less than 6 months there. period. the end. i strongly suggest verifying this info on your own/speaking w/ a tax attorney if you need further clarification.
    #10     Nov 12, 2011