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Client working and living abroad files federal returns; no major assets left in the USA, will he have to file state returns?

  
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Client working and living abroad files federal returns; no major assets left in the USA, will he have to file state returns? caj111 10-10-2008
Posted by caj111 on October 10, 2008, 2:30 pm
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Okay,

Here's how the situation played out for my client for 2005, 2006 and
2007. While I know he will have to continue filing federal returns,
I'm trying to figure out if he will need to continue filing state
returns as I don't think he has a "tax home" in the USA anymore.

In 2005, he lived in Maryland for much of the year, paid Maryland and
Federal taxes but moved to Europe in the early fall and claimed a
partial foreign income exclusion for the time he lived in Europe (he
passed the 330-day test because he continue to live in Europe for all
of 2006).

In 2006, he lived in Europe all year long, his wife and children
joined him at the end of the summer. He rented out his home that he
left behind at the end of the year and paid Maryland taxes just like
the year before. He filed a federal return but the foreign income
exclusion, standard deduction and exemptions zeroed out his federal
taxable income (Maryland taxes were considerably less than the year
before but he still owed a few hundred dollars).

In 2007, all of the family lived in Europe all year but he he
continued to rent out his home in Maryland for most of the year while
also putting it up for sale. The property sold in August and he had
no more rental income in Maryland after that. He filed both Federal
and Maryland returns but he had zero taxable income for both.

He is well aware that he will still be filing Federal tax returns like
normal and claiming the foreign income exclusion. Unless his job
gives him a huge raise, his federal taxable income will probably be
zero for the foreseeable future.

Now he no longer has any real estate in Maryland, and the only asset
he has in Maryland, or the entire United States for that matter, is a
bank account.

Does this mean his tax home is still Maryland?

Does he still need to keep filing a Maryland return?

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Posted by Dick Adams on October 10, 2008, 5:49 pm
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>Here's how the situation played out for my client for 2005, 2006 and
>2007. While I know he will have to continue filing federal returns,
>I'm trying to figure out if he will need to continue filing state
>returns as I don't think he has a "tax home" in the USA anymore.
>
>In 2005, he lived in Maryland for much of the year, paid Maryland and
>Federal taxes but moved to Europe in the early fall and claimed a
>partial foreign income exclusion for the time he lived in Europe (he
>passed the 330-day test because he continue to live in Europe for all
>of 2006).
>
>In 2006, he lived in Europe all year long, his wife and children
>joined him at the end of the summer. He rented out his home that he
>left behind at the end of the year and paid Maryland taxes just like
>the year before. He filed a federal return but the foreign income
>exclusion, standard deduction and exemptions zeroed out his federal
>taxable income (Maryland taxes were considerably less than the year
>before but he still owed a few hundred dollars).
>
>In 2007, all of the family lived in Europe all year but he he
>continued to rent out his home in Maryland for most of the year while
>also putting it up for sale. The property sold in August and he had
>no more rental income in Maryland after that. He filed both Federal
>and Maryland returns but he had zero taxable income for both.
> ....

The Court of Appeals of Maryland resolved this some years
back. Because he still owns property in Maryland, he owes
Maryland taxes.

How did he have zero taxable income in Maryland?

Dick

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by D. Stussy on October 10, 2008, 7:19 pm
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>
> >Here's how the situation played out for my client for 2005, 2006 and
> >2007. While I know he will have to continue filing federal returns,
> >I'm trying to figure out if he will need to continue filing state
> >returns as I don't think he has a "tax home" in the USA anymore.
> >
> >In 2005, he lived in Maryland for much of the year, paid Maryland and
> >Federal taxes but moved to Europe in the early fall and claimed a
> >partial foreign income exclusion for the time he lived in Europe (he
> >passed the 330-day test because he continue to live in Europe for all
> >of 2006).
> >
> >In 2006, he lived in Europe all year long, his wife and children
> >joined him at the end of the summer. He rented out his home that he
> >left behind at the end of the year and paid Maryland taxes just like
> >the year before. He filed a federal return but the foreign income
> >exclusion, standard deduction and exemptions zeroed out his federal
> >taxable income (Maryland taxes were considerably less than the year
> >before but he still owed a few hundred dollars).
> >
> >In 2007, all of the family lived in Europe all year but he he
> >continued to rent out his home in Maryland for most of the year while
> >also putting it up for sale. The property sold in August and he had
> >no more rental income in Maryland after that. He filed both Federal
> >and Maryland returns but he had zero taxable income for both.
> > ....
>
> The Court of Appeals of Maryland resolved this some years
> back. Because he still owns property in Maryland, he owes
> Maryland taxes.

Read carefully: Not in 2008 (and after) - he sold it in 2007.

Although he may not have holdings in MD anymore, has he abandoned ALL ties?
Driver's license? Voter's registration? Storage?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Dick Adams on October 10, 2008, 8:38 pm
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>>> Here's how the situation played out for my client for 2005, 2006 and
>>> 2007. While I know he will have to continue filing federal returns,
>>> I'm trying to figure out if he will need to continue filing state
>>> returns as I don't think he has a "tax home" in the USA anymore.

>> The Court of Appeals of Maryland resolved this some years
>> back. Because he still owns property in Maryland, he owes
>> Maryland taxes.

> Read carefully: Not in 2008 (and after) - he sold it in 2007.
> Although he may not have holdings in MD anymore, has he
> abandoned ALL ties? Driver's license? Voter's registration?
> Storage?

I would have typed "If" instead of "While". Maryland property
includes bank accounts, investments which, in addition to property
include CD's and IRA's held in Maryland banks as well as Maryland
brokerage accounts, and the list gets longer. Make certain that
he is receiving no 1099's at a Maryland address.

When I leave Maryland, I will make it clear that I have no
intention of returning.

Dick

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by removeps-groups@yahoo.com on October 10, 2008, 7:37 pm
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On Oct 10, 2:49 pm, rdad...@panix.com (Dick Adams) wrote:

> The Court of Appeals of Maryland resolved this some years
> back. Because he still owns property in Maryland, he owes
> Maryland taxes.

So if a random foreign person buys property in Maryland, do they owe
Maryland income taxes? I know that the owe Maryland taxes on the
capital gain when they sell their property, but it seems strange that
there should be an income tax. What about other states, like
California?

> How did he have zero taxable income in Maryland?

A good question.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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