State income taxes

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Hi,

I'm thinking of going rv full-time. I have a remote job and I pay taxes through my employer. There are some articles about state income tax and domicile vs residence but it does not make sense to me.

Some recommend to establish "state residency" in either Florida or Texas. For me that would be a domicile, not residence. The residence, real residence that matters for income taxes, would be your real location during the year.

Example:
Just to make it easy/crazy, let's assume that in 2019 I lived exactly one month in 12 different states. One of them may or may not be Texas.
What benefits (income tax relief) would I get if I had Texas driver licence and mail address during that year?
I believe the right thing to do would be to file tax returns to 12 states claiming part-year residence regardless of your domicile.

What do you guys think?

Thanks,
Alex.
 

ARD

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Hi Alex!

I think people often incorrectly interchange the words domicile and residence - two very different things. it is necessary to establish a domicile somewhere which loosely means you intend to go back there eventually after traveling. It is necessary so you can vote, get health insurance, drivers license, vehicle registration and the like. I chose Florida because they don't have state income tax, but more importantly they are the only state to still have a PPO for individuals. As I am not of medicare age, this was a chief factor in my decision. And as you said, if you are fulltiming, your residence is your RV and it travels with you. Sorry, but the idea of filing tax returns for everywhere I visit is crazy. There are people in s & b homes that are forever traveling for business, but eventually they go home, maybe for a night or two. No difference. That's my 2 cents for what it's worth.

Renee
 
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Agree, filing tax returns for everywhere we visit is crazy, but isn't it the only legal option?
 
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Definately, you’re overthinking it.

Your domicile is where you have your DL and registration and everything else. From a tax perspective, where you are domiciled typically determines which state you are paying your taxes to.

We are full time and I am domiciled in Virginia for a whole host of reasons that I won’t get into. The point however, is that my W4 says VA. My Mailing address is in VA. My driver’s license and vehicle registrations are from VA. I pay state and local states to VA. No way would I file tax returns for every state. What I nightmare that would be and in all odds, it would probably increase your risk of audit because all of those states and the federal government would wonder why you’re filing taxes for 5, 10, 15 different states.
 
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My Mailing address is in VA. My driver’s license and vehicle registrations are from VA. I pay state and local states to VA
I think you're a fulltimer? You need to change this! This state be cray cray! And the taxes are insane!
 
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Thank you guys, I understand there are laws and real world. However, I would like to find out what are my lawful options. Living in one state and paying taxes to another doesn't seem quite legal. Especially when your domicile state has no income tax. What if you finally get audited and they find out where you actually lived full year? Wouldn't that be a bigger problem?
And I'm not worried about the audit if I've done everything right.
 

ARD

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Living in one state and paying taxes to another doesn't seem quite legal. Especially when your domicile state has no income tax.
Do you plan on traveling as a FTimer or live in another state, other than your domicile? If you are going to stay stationary in one state, I would agree with you; however, if you are traveling, you must choose a domicile that you will call "home" for the purpose of health insurance, taxes, registration, etc.

Just curious, will you be working on the road and be employed by different employers?

EDIT: Sorry, I see you have a remote job. I'm retired, but here is a link that you might find useful, even though you aren't workamping as it does discuss tax issues to consider while working on the road. Hope it helps.

 
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I have only one employer, it's a full time job and I'm planning to work from every place I visit. Not sure how long we would stay in the same state during the calendar year. I guess, real fulltimer never know :).
 
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ARD

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I have only one employer, it's a full time job and I'm planning to work from every place I visit. Not sure how long we would stay in the same state during the calendar year. I guess, real fulltimer never know :).
Sorry, I edited my post (with below information) but not before you responded. Your domicile may indeed be the state of your employer (that is sounding like home). Are you getting health insurance through your employer? You don't need to answer, but if you are then that should answer the domicle question. I'm not an accountant and I know there are some on the forum who are more knowledgable. I'd reach out to both your employer and accountant..

Sorry, I see you have a remote job. I'm retired, but here is a link that you might find useful, even though you aren't workamping as it does discuss tax issues to consider while working on the road. Hope it helps.

Workamping Tax Implications For Full-timers
Working on the road creates some unique tax implications for workampers.
www.rv-dreams.com
 
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I think you're a fulltimer? You need to change this! This state be cray cray! And the taxes are insane!
Not as crazy as the following two facts:
1. Personal Property taxes in VA are county-based and Prince William where I am domiciled has a 0% tax on RVs and Boats
2. My employer adjusts pay for remote workers based on their zip code. They call it a Geographic Differentiator. It’s a lot for me and they approved my living situation, so I’m not taking advantage of anything without their knowledge.

Those two facts together, I’d end up losing money. Changing domicile states would likely cost me more as I’d have to pay property taxes on a 2020 Ventana and my income would be lowered because very few places have a higher cost of living than Northern VA. The state taxes and local taxes in VA are a rounding error for me.
 
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My RV is "garaged" in Prince William county :) And there is talk that they are trying to do away with the 0% personal property tax exclusion, let's hope this pandemic put that nonsense on the back burner.
 
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My RV is "garaged" in Prince William county :) And there is talk that they are trying to do away with the 0% personal property tax exclusion, let's hope this pandemic put that nonsense on the back burner.
They tried. The measure failed after all the boat and RV owners (self included) went ballistic and clogged up the County Supervisors hotlines and showed up to the board meeting.
 
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Great to hear!
 
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Thank you ARD! That was helpful.
I'm on the same page with the author - I'd have to file one tax return to my domicile state and one to each state where I lived and worked during the year as a non-resident. And I should be careful and find out upfront how each state determines the residency so that other states don't count me as a resident.
 
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Thank you ARD! That was helpful.
I'm on the same page with the author - I'd have to file one tax return to my domicile state and one to each state where I lived and worked during the year as a non-resident. And I should be careful and find out upfront how each state determines the residency so that other states don't count me as a resident.
As I think you are beginning to see, what you propose is not a do-it-yourself project. You need to find an accountant (preferably a CPA) that can work with you in both the planning and tax aspects. A good CPA can provide you with a lot of very useful information to keep you out of trouble rather than to get you out of trouble after the fact. Federal income taxes are the easy part; the different state tax entities are what create the problem.

We have a pretty simple situation with a domicile in Washington state and a temporary residence (with rental property) in Montana. Since Washington has no income tax, we only have to file a state return for Montana. Our CPA has been most helpful in sorting all this out. Yes, it does cost a few bucks to have him do it, but it is money well spent and I know that if issues arise, the CPA can handle them on our behalf. And, that's the reason for a CPA; they can represent you before taxing authorities where most "accountants" cannot and you will have to do that yourself.

You probably get benefits from your employer (health insurance, etc.) but if not, consider setting up a limited liability corporation and have it contract with what is now your employer for the work you do. Payment would go to the LLC in whatever state you set it up in and that would be where it would be taxed. You would be an employee of the LLC working from various "temporary" locations. You would want to run that scenario by a CPA and/or tax attorney (which I am not) to get the details right.

Good luck.

TJ
 
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Thanks a lot TJ, I will definitely speak with a CPA. Although LLC is not an option, CPA may help just with preparing tax returns.
I'm kind of aware of what troubles I can get into preparing taxes myself. I did my taxes for 2 states last year and I had to send amended returns to both. But you know, I'm interested in getting more experienced in stuff like that. I consider it a challenge, not trouble.😎
 
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