What State is Interest Tax to?

Client lives overseas for 20+ years, but the client gives a random address to a bank so he can open an account there, when I prepare the return, and enter the 1099-Int with the address the client set up, the system produces a return for that state, however, should that interest-only be reported to the state? or should nothing be reported to that state?

Why are you entering the detail of the INT? Just drop the amounts on Sch. B and be done with it....no state return.

Why are you entering the detail of the INT? Just drop the amounts on Sch. B and be done with it....no state return.

I thought I had to do it as per the form. This means interest is taxed only where you live. THANK YOU!

Just because a taxpayer does not live somewhere does not necessarily mean they can wriggle out of tax residency. Mind you 20+ years is a reasonable indication that there is no stateside residency but not guaranteed.

Why would anyone use a "random address?" What happened to the mail that the bank sent?

Don't confuse domicile with residence.

The random address confuses me, too. I know there are companies that, for a fee, provide "nomads" (RVers, etc,) with a mailing address. Maybe that's it?

And the way banks vet their customers these days, hard to imagine that works....

Nilodop, in NC tax residence and domicile are pretty much the same thing and NCDOR has a, shall we say, flexible view of domicile.

No wonder I get junk email, they're being sent to random addresses.

What I mean by 'random' is a relative's address. But I will confirm with this client why he gave this address out to the bank during a couple of years. I just wanted to know beforehand the regulation about where is the interest taxed to if you did not live there. I highly doubt it is HI in this case because his W2 shows another state with zero withheld. Which is another thing I have to solve for since he did not live there either.

Don't confuse domicile with residence.

The random address confuses me, too. I know there are companies that, for a fee, provide "nomads" (RVers, etc,) with a mailing address. Maybe that's it?

If I have a domicile in one state and I don't live there for 20 years, what is the possibility of interest being taxed there, if I don't hold anything in that state whatsoever? (These are most of my case scenarios) People leave the state very young when they are hired overseas. End up making their lives overseas, and never return to the states. How long before the state stop considering they have a domicile there? I usually look at their intent at this point.

It depends. First, without citizenship or something similar to a green card, it can be fairly difficult to argue one established domicile in a foreign country. Not impossible, but difficult.

If your client has been out of the US for 20 years but hasn't stayed in any single place for more than 6 months, or even a year, the state is likely going to argue you never had the intention of living anywhere indefinitely, so you never relinquished your domicile in state X.

Don't forget to look at saving provisions though. Many states have exclusions for domiciliaries present in foreign countries as long as they meet certain day count and possibly other requirements. So even though they're still domiciled in state X, they're taxed as nonresident.

The Hawaii Tax Department continues to take an aggressive position on overseas moves and backs down only when confronted with facts and the caselaw. See Yamane v. Piper (1969) 461 P.2d 131,132-33 (concluding that "the pulling of stakes was complete" and appellee was no longer a Hawai`i resident for income tax purposes when he had moved to Wake Island with his wife and children, sold his car, TV, and household furnishings, and did not leave real or personal property or an open bank account in Hawai`i).

It depends. First, without citizenship or something similar to a green card, it can be fairly difficult to argue one established domicile in a foreign country. Not impossible, but difficult.

If your client has been out of the US for 20 years but hasn't stayed in any single place for more than 6 months, or even a year, the state is likely going to argue you never had the intention of living anywhere indefinitely, so you never relinquished your domicile in state X.

Don't forget to look at saving provisions though. Many states have exclusions for domiciliaries present in foreign countries as long as they meet certain day count and possibly other requirements. So even though they're still domiciled in state X, they're taxed as nonresident.

This is pretty interesting. Thankfully most of the clients are in one single place and work there under the same company, or just switch companies, but they don't live that country.

Also, I usually exclude their income as they don't live there, if the state allow it.

The Hawaii Tax Department continues to take an aggressive position on overseas moves and backs down only when confronted with facts and the caselaw. See Yamane v. Piper (1969) 461 P.2d 131,132-33 (concluding that "the pulling of stakes was complete" and appellee was no longer a Hawai`i resident for income tax purposes when he had moved to Wake Island with his wife and children, sold his car, TV, and household furnishings, and did not leave real or personal property or an open bank account in Hawai`i).

Thank you! This is good information.

There are states with no income tax..Like Nevada, Washington, Florida, Texas to name a few.. But I don't think that is what you are driving at. Just thought I'd throw that out there.

Still tired - still overworked - Miss my April 16th celebration.. sigh