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Maintaining Florida residency

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goombah
  12/4/2016 07:17 EST

Sometimes it is the simplest things I should know that throw me for a loop. I am retiring in March and moving to Sicily.

I almost made a huge mistake and was going to use my sister's address in Boston as my forwarding address.

But then I realized I was an idiot -- Florida (my current state) -- has no state income tax, where Massachusetts does.

Since I will be an expat and maintain my US citizenship, how do I keep FL as my home state of record without a physical address here?

I know this is probably simple, but it just hit me yesterday that I was about to make a huge mistake.

DoppioCittadino
  12/4/2016 09:06 EST

I have heard of people using South Dakota (pretty certain that is it) because they will give you a driver's license with nothing more than a mailbox at one of those forwarding places like UPS Store or Mail Boxes Etc.

Which is kind of cool because those same companies will also do mail scanning and forwarding, if you like. Also, like Florida, South Dakota does not have a state income tax.

Other than that, your only choice is to cut a deal with a friend or neighbor to allow you to use their address. Then, make sure you are registered to vote in Florida *and* make certain that you actually *do* vote (via absentee ballot) on a regular basis.

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Jergirl
  12/4/2016 09:10 EST

It seems to me that if you reside outside of the US, you don't file state income taxes. I never did.

goombah
  12/4/2016 09:13 EST

Thanks! But as a US citizen, don't I need to be a "citizen" of a state? I want to keep Florida as my home of record even though I have no ties here. I must be a resident of someplace to vote...

goombah
  12/4/2016 09:22 EST

Unfortunately, my 401K and other retirement income is taxable - since I will maintain US citizenship.


Sucks to be me. Oh wait, no it doesn't. I'm moving to Sicily!!! :)

DoppioCittadino
  12/4/2016 09:56 EST

Actually, the bigger risk (for those who are wealthy!) is death/estate taxes. If you've got a great deal of money, you want to make sure you cannot be claimed by a state with high estate taxes. One of the best ways to do this is to send a certified letter to the registrar of voters asking to be removed from the rolls and then to formally register (and vote) in a state with no such taxes.

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goombah
  12/4/2016 10:46 EST

I'm lucky that I am a full-time resident of such a state. My concern was when I leave here to go to Sicily -- how do I maintain that residency/citizenship status.

maluza86
  12/4/2016 11:04 EST

Your residence remains the last state you live in/voted in before departing the US. You don't need to have physical property.

rsetzer99
  12/4/2016 11:05 EST

Just a maildrop address is unlikley to make you a ,"resident". Assume you are keeping your Florida drivers license? The shows more evidence of intent of residence than a dropbox in a location you are never physically present in.

Jergirl
  12/4/2016 11:11 EST

Yes, everyone's story is a bit different. Could you tell us where exactly you are moving to?

maluza86
  12/4/2016 11:33 EST

I moved to Italy in 2014, sold everything property-wise in GA. I just voted absentee ballot using my last legal residence address in GA, no issues at all...materials were mailed directly to my Italian address.

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goombah
  12/4/2016 11:43 EST

I am moving to Pietraperzia, Sicily.

goombah
  12/4/2016 11:46 EST

Thanks, maluza86!!!

OldPro
  12/4/2016 13:03 EST

It's great to want to try and help someone but it does come with the responsibility of making sure you know what you are talking about before you suggest an answer.

Obviously, some posters here don't have a clue, it's a good thing maluza86 came along and provided what is in fact a very simple answer to the question AS asked.

However, I would suggest you may want to look into taxes more carefully in case you make some more 'mistakes'.

Italy, like many countries including the USA, taxes its residents on their Worldwide income. Note that word RESIDENTS.

The USA requires all citizens, not just those resident in the USA, to file a tax return every year. Note that word FILE. The USA is the ONLY country in the world who does this.

But again, note the word FILE. It does not necessarily require that you PAY taxes to the USA although the IRS don't go out of their way to point that out to anyone. It's amazing how many Americans just ASSUME that since they must file, they must pay taxes to the USA.


There are 2 things anyone moving to another country in retirement needs to be aware of in regard to income taxes The first is whether the country they plan to move to taxes on 'worldwide income' or not and the second is whether there is a tax treaty between the country they are moving to and the country they are leaving.

In this case, both countries tax on worldwide income and there is an existing tax treaty between the countries. Read more here:
https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z

Generally speaking, a tax treaty allows you to avoid, 'double taxation'. That is being taxed by both countries on worldwide income. How it generally works is you pay tax on your declared income in one country and then you file showing the same income, in the second country but also showing how much tax you paid in the first country on that income. That amount paid to the first country is shown as a deduction from tax owing to the second country. Got it?

Now here's the kicker. If one country wants say 15% tax on the income you declare and the other country wants 23% on the income, you end up paying 23% regardless of what you pay where. You cannot decide to pay at the 15% rate and avoid the 23% in other words. If you paid 15% to the one country, when you then declare your income in the second country and show that 15% paid as a deduction, you will still owe the second country the 8% difference. Got it?

So there is no financial benefit to be had by choosing to pay in one country vs. another. Keep that in find for a minute.

A tax treaty may require that you pay tax on certain income in one country specifically or it may be your choice as to which country you pay tax on that source of income. This varies according to the treaty between the two countries.

The point being, you have a CHOICE as to where you pay the tax sometimes. So the question is why you should choose one over the other?

This then becomes a bit of a moral question. What is the purpose of paying taxes? They are in fact a 2 way exchange. You pay money to be provided with services. So where are you being provided with services?

Obviously, whatever services you are receiving are being received in the country where you live. If you are paying taxes to the other country that you COULD have chosen to pay to the country you are living in, you are depriving the country you are living in of money they could use, while at the same time, using services they provide you with. You are giving money to a country that is providing you with NO services in return for your money. Does that seem fair and right to you?

If you look at the link above and the treaty between the USA and Italy, it won't take long for you to probably decide you can't understand half of what it says. Typical bureaucratic double speak and legalese make it hard if not impossible to understand how it applies to all the different kinds of income someone may have. It pretty much takes an expert to understand it all. But it does not take an expert to understand you MAY have CHOICES.

I also wonder what you mean when you write, "I will be an expat". You'll be an immigrant in Italy or you'll be an Italian returning to his home country possibly, you don't say which. But you won't be an 'expat' in the sense of it only being a temporary period of time will you? If it is a temporary plan, then that is a different story as well.

LisaC1
  12/5/2016 08:46 EST

Maluza86,

Are you still paying income taxes to the State of Georgia? Do you also have a US driver's license there? If so, how have you managed to keep it without a physical address?

Jergirl
  12/5/2016 08:50 EST

I think we understand that everyone has his own situation with a unique set of factors, including whatever clerk he ends up with. Also, what was true for one person last year many no longer be true.

maluza86
  12/5/2016 08:55 EST

No I am not paying State Income
taxes anymore. My driver's license is valid until 2021, after that it will be an issue to renew it as GA does not provide an option to change address without providing resident info, so I will have to look into another option. I have family in NY and NY does not require resident info only an address or I may just forgo a US license entirely as you really don't need one.

As a resident of taly you have 1yr to get your Italian license which is valid in the US.

DoppioCittadino
  12/5/2016 09:01 EST

OldPro, everything you say is true however I fear you miss the point under discussion which is not US federal taxes, but state taxes.

Every US state has a different tax system and some can offer up some very discomfiting surprises. Just to throw out an example, a few years ago a co-worker of mine and her husband learned that their plan to sell their lifelong home in Connecticut at a substantial profit would generate a huge tax bill if they then took the proceeds and used them to purchase their retirement home in Florida.

Yes, their profits were exempt from taxation under federal rules, but it turns out that the Connecticut exemption applied only so long as they purchased a replacement home *in Connecticut*.

LisaC1
  12/5/2016 10:14 EST

maluza86,

Thanks for you response. I knew about the one year rule for residency, just trying to find a way to keep the US license. The other issue I have is maintaining a US address for bank and investment accounts, credit cards. Not sure how to handle this.

We are moving over September 2016 and are planning on renting while we continue our house search. We initially are probably going to sign a 6 month lease.

We are dual US/Italian citizens and are trying to figure out how to buy a car without establishing fiscal residency until January of 2018. Not sure if this is possible?

rsetzer99
  12/5/2016 10:55 EST

"Technically" you have to get an Italian license after 1 year, I used the quotes because I know at least a couple of Americans who have lived in Italy for several years and still just have their US licenses, Legal? No, but...shrug.

State taxes are a hodgepoge. Still, may States have a Physical Presence test when it comes to whether you have to pay. In those States, if you were physically present zero days, you pay zero tax. How would renewing a drivers license affect that? Good question. Most States won't give drivers license's to people who don't actually live there, so that might be a tripwire. I think South Dakota was mentioned as a good absentee State.

I am using a relative as a US address for US based financial dealings. One could just as easily used one of the mail drop services. They scan the envelope, and you can have them scan the inside contents, and if necessary, they will forward to you in Italy.

LisaC1
  12/5/2016 11:36 EST

Rsetzer99,

Will you also use the relative's address to file your US federal income tax returns?

We are thinking about using our daughter's address in Massachusetts for our financial dealings once we have sold our house in Vermont. I just want to ensure that we don't then owe taxes to MA. We plan on returning to the States twice a year for a month or so each time, to visit family and friends.

It may take several years to sell our Vermont residence but after 2017 I would like to not have to pay income tax to VT. Just trying to figure out the best way to deal with all of this.

maluza86
  12/5/2016 11:41 EST

First, I used a mail forwarding service for the first 90 days when I moved to Italy.
https://www.usglobalmail.com

They were very good and reliable.

As for the Driver's license, I would just add a word of caution. Just like with the Custom's Officials, everything in Italy is being linked. Driving illegally (as a resident after 1 year, without an Italian license), is a very serious offense. I'd think twice before I consciously made a decision not to get one...what happens if you get in an accident? Do you really want to deal with that issue if it happens? Just my two cents. To me somethings are just worth doing "right".

LisaC1
  12/5/2016 11:49 EST

Maluza86,

Sorry, I wasn't clear that we do intend to get our Italian drivers' licenses. I am just trying to keep the US ones as well, if at all possible, as well as maintain US mailing addresses for our credit card, bank and investment accounts. Not sure for IRS tax purposes if we are to use our Italian mailing address once we have a permanent one?

rsetzer99
  12/5/2016 12:06 EST

No, I will use my Italian address for my income tax returns.

Looks like Mass uses mostly the physical presence test. Just having your mail sent to a relative should not trigger any alerts. Their filing requirements are based on income from Mass sources.

http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/nonresidents.html

Vermont uses the 183 day rule for residency, It is important to note that States generally do not based all their filing requirements on 'Residency', but on the occurrence of certain types of financial activity within the State. For example, you indicate you have a VT house. If you rent it out, you file a return to VT. When you sell it, you file a return to VT. You may or may not owe any tax, but that's not the point. Certain things occurred, and therefore some forms must be filled out.

http://tax.vermont.gov/individuals/income-tax-returns/who-needs-to-file/nonresident

State tax returns and matters of residency are usually not something that needs to be stressed over. I think a couple of States are kind of annoying, but for most, if your not there, not getting income from there (Qualified pension plans are almost always excluded), then you get to ignore it until some trigger event, like selling that house come into play. Then you file some forms and that's that.

LisaC1
  12/5/2016 12:44 EST

Thanks Rsetzer99 and everyone else who has been answering my questions. The help is truly appreciated!

Sergios
  12/5/2016 15:44 EST

I f I may I will ask a question related to this topic. I receive SS and my wife gets a teacher pension and SS. All government pensions. If we maintain a US address, say New York, we pay tax on the SS in the state. If we, on the other hand, make our sole residence Italy, we will not need to deal with state taxes. Does that mean we will have a lower tax liability?
Also, it not being clear from previous discussions, will we be paying our taxes in Italy or the USA. Reading the treat one way indicates that government pensions are paid in the country of origin. But then it appears that if you are a citizen of Italy your taxes are paid there. Anybody have a handle on this?

DoppioCittadino
  12/5/2016 15:57 EST

Sergios,

You have to be careful with that term, "government pensions." For example, to the best of my knowledge, social security is not what the treaty is referring to as government pension, nor are state or local government teacher's pensions or, for that matter, *any* state pensions.

In fact, I believe the only payments that are treated as "government pensions" for tax treaty purposes are military pensions and certain (or all?) pensions paid to former *federal* government employees.

DoppioCittadino
  12/5/2016 16:02 EST

PS: It is useful to keep in mind that the signers of the tax treaty are the US *federal* government and the Italian *federal* (for lack of a better term) government.

The Italian government has no dealings whatsoever with the individual US state governments. That is the primary reason that you cannot exchange your "US" driver's license for an Italian patente; unlike most other countries - the UK for example - the US does not have a single driver's license but rather 50 different state-issued licenses each with its own requirements, driver's exam, etc.

rsetzer99
  12/5/2016 16:37 EST

Assuming you meet the NY Non-Resident criteria.
https://www.tax.ny.gov/pit/file/pit_definitions.htm#nonresident

Then, no, you will not have to bother with State taxes.

"Most" teachers pensions are considered Government Pensions. Italy will not tax them. The US will.. (The most is in quotations because there are a few that may not be standard State Pensions)

Social Security is Taxable by the US and also by Italy. You get a credit on Italian tax return for tax paid to US. (If you are an Italian Citizen receiving SS, Then only Italy taxes it.)



Will you pay less taxes? All things considered, probably not. Maybe if you lived in NYC.

DoppioCittadino
  12/5/2016 18:48 EST

I would suggest that there is a great deal of confusion over the taxation of "government pensions."

For example, how does one reasonably interpret these two paragraphs?

2. Subject to the provisions of paragraph 2 of Article 18
(Pensions, Etc.):

(a) Any pension paid by, or out of funds created by, a
Contracting State or a political or administrative
subdivision or local authority thereof to an individual in
respect of services rendered to that State or subdivision
or local authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the
other Contracting State if the individual is a resident and
a national of that State.

From Article 19 (page 23) of http://www.ambwashingtondc.esteri.it/resource/2014/10/trattatodoppiaimposizione.pdf

It would seem that dual citizens would fall under paragraph 2.b, wouldn't you agree?

rsetzer99
  12/5/2016 20:16 EST

That is correct. Dual citiizens are treated differently. As the original poster was clearly not in the category, it seemed useful to mostly keep it just to their situation.

maluza86
  12/5/2016 21:13 EST

From what I understand, and according to both my US and Italian Accountants I've talked with if you are an Italian Citizen, which includes dual citizenship, Italy will tax your pensions, regardless if it's government or not. If you are only a resident of Italy and remain solely a US citizen Italy cannot tax your government pension.

SS is not a government pension. It gets taxed in Italy not in the US.

Regardless if you owe any taxes in the US, you must file a US Tax return every year.

I am a US Citizen, married to a dual citizen. The main reason I have not sought dual citizenship is the fact I mentioned above. If I do become an Italian Citizen then Italy will tax my military retirement. So for me it's a win win...no tax of my military pension in Italy, but I still get all the other benefit of NHS, etc through my wife.

nick0126
  12/5/2016 22:04 EST

stupid Question: As a dual national, if my pension, etc is paid in the US and not sent to Italy, and since I don't need to file an Italian tax return as I have no earned income in Italy, how does Italy know I even have a pension?

DoppioCittadino
  12/6/2016 08:26 EST

nick,

Data sharing among governments is becoming more and more widespread. While your proposal might have worked before - and possibly even today - the likelihood is that it will not work tomorrow (in the figurative sense).

The penalties in Italy for tax fraud are pretty severe. Are you sure you want to go down that road?

velvet
  12/7/2016 00:48 EST

The Australian Tax Office advised us they will very nicely advise the Italian Government that we would be in Ital for 12 months. That is so kind of them. They track us through the government health system if we declare that we will not be paying mandatory tax levy for Medicare while we are away, and mandatory private health cover. Also if we use the reciprocal health agreement Australia has with Italy we will have to explain why we are using it. As mentioned previously the sharing of information between countries is now becoming commonplace, and there are many ways it is achieved.

Sergios
  12/7/2016 03:22 EST

Just a note about the drivers license. Mine was stolen, along with most of my documents, in Barcelona. Since I nolonger have a physical address in NY, I applied for a replacement license by changing my mailing address to that of a relative. There was no problem getting the new license.

maluza86
  12/7/2016 03:28 EST

That's because unlike many states NY puts the onus on the individual pertaining to residence...all you need is an address. Most other states require an address and documents proving residence, gas, phone, electric etc. that is also one of the reasons soon you will no longer be able to travel Stateside with a NYS issued license.

nick0126
  12/7/2016 04:58 EST

i have never gotten real clarity on any of the issues related to taxes and taxation for dual nationals. What I do know is, if you have the personal situation to facilitate it, I suggest divesting yourself of all assets and putting them in a trust.

I was doing this anyway for estate planning purposes. My decision to live in Italy most of the year just accelerated my timetable. Because the assets live in a separate entity and it would be virtually impossible to unravel it. The trust files it's own returns in the US and distributions are tax free and so not reported on your US return.

nick0126
  12/7/2016 05:06 EST

what you say may be true, but getting a "patente" requires significant effort and pretty good Italian skills. I am planning to apply, but need to find an English version of their written test -- they exist, but you can't buy them on line. Even if you speak Italian, the semantics of the written test are often outside the standard dictionary.

As a side note, I have been stopped multiple time by the finance police, and their focus is on car taxes, inspections and insurance. Even though my residency date is clearly noted on my Carta D'identita', i have yet to find this an issue - yet. In countries outside Italy, I don;t even bother to show my EU docs -- and they never ask.

codybrandy
  12/7/2016 05:38 EST

Hello Lisa, Just a note about US addresses. We are residents/expats in Liguria but we keep a Massachusetts address (our son) for bank/US credit card/ and also Social Security reasons. If you will want to access your S.S. info on line you have to have a US address. We have our S.S. checks deposited to a US bank and then transfer what we need monthly. Also, we are keeping our US driver's license...if we let it lapse and return permanently to the US it may not be that easy to re-instate. We do have the Italian license....not easy and only in Italian..do not expect to learn in english...the written test is only in Italian and you need to be prepared. We are not fluent by any means but translated as we went thru the book and took literally 100's of practice tests on-line.

codybrandy
  12/7/2016 05:51 EST

Hello Nick, I would caution you to not look for an english version of the Driver's Book: Preparazione Globale Patenti A e B. Buy this book asap from any driving school in Italy (maybe also on-line) We are not fluent by any means but the tests are in Italian and you need to be prepared to understand the language of the road in Italian. We literally translated every page as we read using dictionary and google translator. At the end of each of the 24 chapters there is a test. Then there is a website for practice tests...we took 100's of these...they are exactly like the actual test you will take at the motorizazione. When you finding yourself passing the online tests you will be ready. Then you can go to get the 10 lessons and final test from a scuola. There was no scuola in our area who had an english speaker...you may find one in your area though. Good luck! P.S. it took us c. 1+ year, start to finish.

whidden39
  12/7/2016 06:04 EST

Good strategy, but income (not assests) such as Soc Sec can't be hidden in the trust, correct.? Likewise income via IRA distributions would accrue to your name, not the trust. I am a layman in these matters, but I hope my questions have some merit. About assets, Italy's tax rate on worldwide assets each year currently amounts to about 200 euro per 100,000 euro (converted from dollars). On 1 million in assets that's 2,000 euro. For many that may not justify the expense of setting up a trust in and of itself; although in your case it appears you have other estate planning factors to consider. There are no easy answers and there are times I get frustrated trying to do the smartest things -- all of which requires consultations, time and expense. Sometimes it's just easiest to pay up and get on with the good life in Italy. Thanks for sharing the trust route. I am sure it may be appropriate for here.

whidden39
  12/7/2016 06:37 EST

Codybrandy, I assume your are transferring funds monthly from a US financial institution to an Italian one. If so, how do you avoid the high international wire fees in the US? I tend to transfer larger amounts less frequently to lessen these charges. Thanks, Tom

codybrandy
  12/7/2016 06:59 EST

Hello Tom, I only used wire transfers for buying a car and apt. Now I use an excellent on-line US bank called Everbank (in 9 yrs never a problem, always a human to speak with when needed and very good exchange rates...try that with Bank of America (worst ever) I have Euros sent by Paypal with small fee to my Italian bank. Request on Weds=available Thurs.

whidden39
  12/7/2016 07:16 EST

Based upon my experience for over a year I feel confident to recommend Traveling Mailbox as a professional, cost-effective and easy to use mail service. Good customer service too. Find them at www.travelingmailbox.com I just checked and they do have a Florida address amongst all the addresses they offer in various states. Once I sold my house in the states, I had the USPS forward all mail to this mail service address.They scan the outside envelope and email this to you. You then decide to shred, save or have the contents scanned and emailed to you. They can forward mail anywhere stateside or international. They can accept packages. They even have a check deposit service should you have an unexpected check arrive (that happened to me once).

My goals was to get everything possible on paperless communications so that the physical mail would eventually stop. After one year, that is where I am now. I pay US bills online or through bill pay. Eventually I may decide to dispense with the mail service completely. Still reviewing that.

One caution: I wasn't concerned about the location of the address I chose since I wasn't trying to suggest residency. But when I took an IRA distribution and the FI wanted to withhold funds in anticipation of taxes, they used the mail service address of record in a state where I never lived and sent those funds to that particular state! It was less of a problem than I thought since my accountant got the funds back at tax time without undue delay. But try to think about any of these unintended consequences. I now use a legal address and a mailing address when appropriate. Another issue that I encountered: A credit card needed to be reissued due to a vendor data breach. This went to the mail service. I was able to have the mail service forward this to a friend who was due to visit me in Italy (even thought the envelope said Do Not Forward). Overall I have been served very well with this mail service -- especially for the transitional period to get established in Italy.

Sorry for the long post.

DoppioCittadino
  12/7/2016 08:56 EST

Regarding IRA distributions:

I've done some experimenting with my tax preparation software and have come up with some interesting numbers.

For the current year (in which both my wife and I are fully employed and solidly middle class), if I were to take a lump-sum distribution of $100,000 from my IRA before the end of the year, I would end up paying about 26% of it in federal tax and another 6.4% in Connecticut state income tax. A lot of money, for sure.

But, not so much more than the potential 26% tax rate I would pay in Italy. Nevertheless, for myself, not such a good idea.

However, if I were living in a different state, such as Florida, which does not have a state income tax and if my other tax situation were only slightly different, it might make sense to take a very large distribution from my IRAs in the year before I become resident in Italy and pay the potentially lower tax all at once in the US rather than the higher tax in Italy.

Under the right circumstances, even a full ROTH IRA conversion could potentially work to my advantage when fully netted out.

LisaC1
  12/7/2016 18:51 EST

Sergios,

Was the mailing address of your relative still in New York for your driver's license you were replacing?

LisaC1
  12/7/2016 18:55 EST

Codybrandy,

Do you file an income tax in the State of MA? If not, will you be able to renew your driver's license when the time comes? A

After we sell our house in VT, we would like to use our daughter's address in MA, just like you do. However, we don't want to have to pay taxes to MA and before we do anything, we need to research that.

Do you use your Italian address for your federal income taxes?

Sergios
  12/8/2016 02:27 EST

Lisac1 yes

Sergios
  12/8/2016 02:38 EST

This is my second year in Italy. Last year, using my son's address in New Jersey, we paid federal and state taxes in the USA. This year......
I am a former geologist working in the environmental field. Yesterday's appointment of an avowed enemy of the environment to head the EPA was another brick in the wall that is separating my wife and me from the former United States of America. I've started the process to have my wife get her citizenship in Italy. That means that all of our income will be taxed here. I'll be damned if my tax money is going to the Commander and Cheat. Sorry for the politics but I feel it fits here.

whidden39
  12/8/2016 05:04 EST

Thanks, Codybrandy, I'll check out Everbank. Do they have an easy, cost effective transfer process to get funds from my US bank before converting and sending funds to my Italian bank? Tom

maluza86
  12/8/2016 06:26 EST

Personally I don't think politics and name-calling is warranted here...that is purely personal speculation amd opinion, so please refrain from those comments in these forums, . There are plenty of other forums where you can vent your frustration at a publicly elected official, but this is not one of them.

Once you open pndoras box to your personal viewpoint where does it end?

codybrandy
  12/8/2016 06:45 EST

Hello Tom, I probably sound like an ad for Everbank but I've been so happy with their service...good website and you can phone and always get a pleasant and knowledgeable person. I've used their wire service only for large purchases, for monthly money I use Paypal. I go online to Paypal and request they send funds from Everbank to my Italian bank...it's fast and at a good exchange rate. Everbank does the exchange with no fee and Paypal charges c. $5 per $1K. My Italian bank then charges c. E.3 for accepting the funds. My request usually takes 1-2 days to be available in Italy.

LisaC1
  12/8/2016 09:06 EST

Thanks Sergios. Still so much to figure out and there have been conflicting answers.

LisaC1
  12/8/2016 09:13 EST

Codybrandy,

Have you checked out the services of a currency trader ie Transferwise, to see if the fees are comparable for both the exchange rate as well as fees to transfer funds to Italy?

We are looking into Everbank to also open a multi-currency account. We would like to start purchasing some euros now since the exchange rate is favorable with the US dollar.

Sergios
  12/8/2016 09:20 EST

Sorry Malluzza, I posted at a vulnerable moment, as i was getting the news. Having said that my reason was more to explain why pay one way or the other. Its not all about Legally "cheating" one country or that other. There should be real reasons to pay one way or the other, such as another poster said rightly, pay taxes where you enjoy the services. Living in Italy, using the Italian Healthcare system, roads, police, courts, etc, etc, should not be given us for free. I understand that "we" bring much money into the economy and most of us do not have children to educate. But that is not enough. Italy is in trouble financially and needs our full support to stay afloat. We the ones who are getting the best from Italy. Given the proto-fascist movement in the USA, that seals my case.

maluza86
  12/8/2016 13:32 EST

Sergio, Sergio, Sergio....I have to disagree, sorry. Your exact words were "I'll be damned if my tax money is going to the Commander and Cheat." I fail to see how that in any way, shape or form is not political in nature. And again in your response you reference a foto-fascist movement in the USA, which again is a matter of political opinion and not based on any fact. Whether I agree or disagree with either of those terms of references is irrelevant to this forum on Maintaining Florida Residency.

The Expat Exchange is about helping those wanting to move to understand the nuances of doing so and offering sound, sage advice, which you have been doing. However, once you start injecting your political views into the mix that advice becomes tarnished and suspect. So again, I'd ask you to refrain from espousing your political "one line zingers" and stick to helping those who wish to move from the USA to Italy to do so with less angst and trepidation. Thanks!

Sergios
  12/8/2016 14:41 EST

Seriously, I apologize. I should not have injected politics into the conversation.

maluza86
  12/8/2016 14:44 EST

Grazie mille!

lifelover
  12/8/2016 16:34 EST

Yes, I am looking into this. We have a trust set up but am thinking about putting my US house ( which we will keep and rent out) into it.
Unfortunately, unless the death tax laws change in Connecticut where I live, we cant keep it too long lest we croak.
An alternative is that when my kids graduate from High school, we buy an apartment in Miami and stay there half of the year. Except I don't love florida.....:)))

jaym
  12/16/2016 03:26 EST

Oh, but if he praised the Russian Agent Orange you'd be fully in agreement and would welcome his input. You see, that is what the garbage pit that was formerly the USA has become. A bunch of wannabe Nazis who do not believe anyone who doesn't agree with them deserves to speak. I cannot wait till I can flee this banana republic ruled by a madman and crook!

Sergios
  12/16/2016 05:40 EST

jayjam, I agree with your politics but really this is not the place for it. If we start with politics the purpose of the forum would quickly breakdown to bickering about whatever political issue people have in mind at the moment and the useful information that is provided would quickly be overwhelmed.

OldPro
  12/16/2016 13:49 EST

Sergios, nice to hear someone coming around to figuring out that if you choose to live in a country you should choose to pay your taxes in that country. It has nothing to do with politics as far as I am concerned. It is about where you derive benefit and therefore where you should pay for those benefits.

I really don't get this thinking that you should continue to pay taxes in a country where you no longer live. I can't help but imagine what the response would be if Italians moved to the USA and then continued to pay taxes in Italy. I'm pretty sure a whole lot of Americans would be yelling about how they should pay taxes in the USA as they were getting the benefits that tax dollars paid for in the USA.

My wife and I moved to Canada after her retirement in the UK. I was already retired. As there is a tax agreement between Canada and the UK, she had a choice of where to pay her taxes. She chose to pay her taxes in Canada as that is where she derives the benefits that tax money pays for. It makes no sense to her at all to pay taxes in the UK. It just seems to be common sense.

How then does it make sense to an American living in Italy (or anywhere else) to pay taxes in the USA when they don't live there? I find that incredibly illogical. It's a CHOICE and yet most never seem to realize it is a choice and make the choice to pay where they LIVE.

I wonder sometimes how much it has to do with how people perceive themselves in terms of nationality. I dislike the term 'expat' as it implies a separation from the country someone has chosen to move to.

An immigrant on the other hand, generally moves to a country for a better life and generally integrates into that country's culture etc. If someone retires and moves to Italy etc. in my book they have chosen to move for a better life just like any other immigrant Why else did they move to that country?

My wife does not refer to herself as British or even Scottish. She was born there and is proud of her heritage but she is now Canadian and if asked 'where are you from', which happens often due to her Scottish accent, she replies, 'I'm Canadian but I was born in Scotland'.

Nor is she just paying lip service to being Canadian. Even after having been in Canada only about 4-5 years, I noticed she had started using the possessive case when referring to anything to do with Canada. She refers to 'our government', 'our healthcare system' etc. She IS Canadian. It would make no sense at all for her to pay taxes in the UK as a Canadian.

When I was living in Greece, one of the best moments of my time there was when a local friend were discussing a local topic and he gave a grunt and said, 'you're too Rhodian.' What he meant was that I was no longer an outsider in any meaningful way and could not be thought of as such. I had become 'one of them'. I was proud as punch when he said that and I knew he meant it.

I hope your wife becomes Italian in more than just the legal sense.

velvet
  12/16/2016 18:05 EST

OldPro while some citizens can choose where they pay tax it is not true for all. Any income earned in Australia means you have to pay tax in Australia. Doesn't matter where you reside.

Sergios
  12/17/2016 03:06 EST

Oldpro
Living in Mondello is like being in a small town where everybody knows who everybody is. Although it is part of a larger city it is still a "village". We are referred to, when people speak about us to others, as the Americans. Although that sounds like it would separate us from the community, we are actually accepted warmly and have more friends here than we had in the States where, due to work and the isolation that is common there, we could spend days without seeing any friends. Yes, my wife is well on her way to being Italian. Ringo, our poodle jack russel mix, is known by everybody in town. When we walk with him we hear a chorus of "Ringo" from all directions. He is excited to greet all his admirers.

OldPro
  12/17/2016 12:06 EST

Sergios, I have experienced much the same but it is as you say, not used to separate you from them but more as a nickname that quickly identifies who is being spoken of. It could as easily be Giorgio from Naples'.

Velvet, every 2 countries have a specific relationship when it comes to taxes. The first thing anyone moving to another country and having income derived in the country they are moving from (or any other country) needs to do is find out if a tax treaty exists between the two countries.

In the case of Italy and Australia, there is a tax treaty. You make the statement, "Any income earned in Australia means you have to pay tax in Australia. Doesn't matter where you reside."

If you read the tax treaty you will find that you are incorrect. You will find for example that dividends from stock shares MAY be taxed in the other country. Interest earned MAY be taxed in the other country. In regards to pensions, here is a direct quote from the agreement.

"1. Pensions (including government pensions) and annuities paid to a resident of one of the
Contracting States shall be taxable only in that State."

As I read that, there is no choice, you must pay tax on pensions in the country where you are RESIDENT, regardless of which country the pension is derived in.

Here is the tax agreement in full:

http://www.finanze.gov.it/export/sites/finanze/it/.content/Documenti/dipartimento_pol_fisc/aus-en.pdf

These agreements are never easy to read and some things can be quite confusing which means it is always a good idea to consult with a professional who understands such agreements. But I think you will have to agree that there obviously seems to be some CHOICE at least that can be made.

Often, people THINK they 'have to' pay tax on income in the country where they derive that income from. Often, they are incorrect. They are making an ASSUMPTION based on commonly held beliefs. But just because something is commonly believed, does not make it correct.

Most Americans believe they have to pay tax in the USA and yet Sergios has made it clear that he and his wife are following a path to avoid doing just that.

You may or may not be able to avoid paying any tax at all in a country but you may at least be able to pay on less than you thought you had to. The point is, you should determine for a FACT what choice is available to you if any, not act on an ASSUMPTION.

velvet
  12/17/2016 14:40 EST

OldPro
Advice from the Australian Tax Office is "any income earnt in Australia will liable to Australian Taxation."
We spent the majority of last year trying to understand the tax treaty and with the help of the ATO and professionals were able to work out what our tax debt would be and to who we would have to pay.
It was a very frustrating experience and in the end decided against going through the process.
We don't mind paying tax here because we do anyway and Australia's tax rate is lower than the Italian tax rate. It is the wealth tax that is annoying.

OldPro
  12/18/2016 13:34 EST

I'm not sure what you mean by "'and in the end decided against going through the process".

What process?

Regarding, "Advice from the Australian Tax Office is "any income earnt in Australia will liable to Australian Taxation." , that is the kind of comment often heard and often misunderstood.

Let's say you pay tax in Italy on some income earned in Australia. Let's say stock dividend or interest income.. That income is indeed 'liable to Australian Taxation' as you were advised. But being LIABLE doesn't mean you have to pay it in Australia. If you paid tax on it in Italy, then when you file your Australian tax return, you show that payment as a deduction against tax owing. That is what the tax treaty allows you to do, avoid double taxation. If you paid in one country it is an allowed deduction in the other country.

Your income may be 'liable to taxation' in BOTH countries but being liable doesn't mean you will have to pay tax in both countries or MUST pay it in either country. Often there is a CHOICE of where you can pay tax on it and to what extent.

When you ask for an answer, what you get is an answer written by a lawyer and given to everyone who asks the question. It is not an answer to ' do I, as in ME, velvet, have to pay tax in Australia on this income and do I have no other choice?' It is an answer to 'is this income LIABLE to tax in Australia?' Those are not the same thing.

Regarding Australian tax being lower. Again, a tax treaty avoids double taxation but it does NOT mean you can pay less tax on income that is taxable in BOTH countries.

If one country wants 15% and the other wants 20% and the income is 'liable to taxation' in BOTH countries, then you can either pay 15% in the first country and the other 5% in the second country or pay all 20% in the second country.

Just what is 'liable to taxation' in both countries depends on the tax treaty between the two countries. Sometimes some income is not taxable in both, only in one or the other and sometimes some income IS taxable in both. That is what you need to know as an individual based on how your individual income is derived.

It is for this reason that it may be beneficial for someone to move capital from one place to another to change how and where the income derived from it is taxed. This includes moving capital to avoid the 'wealth tax' that annoys you.

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