Author Topic: Moving to India – Need help in understand state residency and taxes  (Read 459 times)

movingtobangalore

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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 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.

FatFI2025

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Re: Moving to India – Need help in understand state residency and taxes
« Reply #1 on: January 06, 2019, 07:49:57 PM »
Recommend reposting in the taxes forum. Read this: https://www.greenbacktaxservices.com/blog/tax-for-expats-state-taxation. Then read this: https://www.tax.ny.gov/pit/file/pit_definitions.htm

The big question is are you giving up your domicile in NY? If yes, then you're not going to be a resident of NY for tax purposes, since you will be a resident of Bangalore. So the year you move, you'll file as a part year resident and then you won't need to file in future years unless you have NY-based income (from a job or business, not investments). If you're getting deferred compensation income, trust income from NY, etc. it gets a bit more complicated. Some experts recommend filing as a non-resident just to provide continuity in returns if you end up returning to the state.

If you do maintain your domicile in NY, then you'll need to meet the exceptions in either group A or group B -- which have to do with the amount of time in/out of NY or in a foreign country/countries. It's pretty straightforward.

Since you're not in a "sticky" state, you don't need to worry much about DL and mailing address. Just make sure you can prove that you were a Bangalore resident for the time you are there (passport stamps, lease, visas, etc.).
« Last Edit: January 06, 2019, 08:04:09 PM by RyaninLA »

FatFI2025

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Re: Moving to India – Need help in understand state residency and taxes
« Reply #2 on: January 06, 2019, 07:56:29 PM »
Oh one more important thing is that in the year you move, it's likely that all of your income will be subject to NY taxes unless you're generating earned income in India. Keep that in mind for tax optimization to defer dividends and cap gains until a year where you're 100% Bangalorian.

movingtobangalore

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Re: Moving to India – Need help in understand state residency and taxes
« Reply #3 on: January 07, 2019, 05:28:35 PM »
I realized this and posted this under taxes. I also got some good suggestions also over there. Thanks so much.

1. Reading from the link you suggested, it looks like I maybe part of  Group B to prove as a non-residency in NY.
2. I'll still setup a traveling mailbox in NY.
3. You brought up a great point related to deferred comp. My wife works for the state and has 454b worth <$75K. So i need to work with a CPA to strengthen that out.