Can he reduce state tax before retiring overseas

  • Resources Discussed in the Above video
  • Oliver’s Options Trading Video:
  • Escapee Changing Your State WebPage:
  • Dan’s Packing Video:
  • The Van Life Guy Interview:

The following is an inaccurate machine translation of the above video.  Do not do anything discussed in any of our videos before talking to your lawyer.  

This Dan of Vagabond Awake. Today we have Oliver with us, and Oliver has some interesting things he went through before he left the United States in order to change his domicile from a higher tax state to a lower one and some of the things he did to do that. And so we’re excited about hearing his story.

Oliver, welcome to the channel. Thanks, Dan. Good to be here. Where are you right now? I’m in Boracay, actually in the Philippines Boraca, a beautiful place. Probably the most famous spot in the Philippines. Internationally, I would say this time I’m on the backside of the island, so there’s kind of the White Beach area that’s everybody goes to.

It’s really famous. Yeah. On the back there are these quiet little beaches that nobody really goes to and it’s really beautiful and it’s really empty, so you kind of get the beach mostly to yourself. Oh, wow. That’s a great, that’s a great tip. That’s a cherry on top of everything that you’re here to share with us today, so thank you.

Yeah, yeah, yeah. So, so you were living in Hawaii, is that right? Yeah. And you decided you wanted to, to travel, if you will, and. You didn’t wanna pay the higher state tax, so you’re hoping to get to a lower state tax. And so what was your, how does your story go? What did you do to try to get to a lower state tax?

Sure. And so it isn’t really just the tax on its own. Okay. There are a lot of reasons to change the domicile. So I was living in Hawaii. I had a job there and I wrapped things up. I wanted to spend more time traveling, but also more time with family and friends. So that was part of the motivation.

And so I had no ties to Hawaii, really left anymore. So changing domicile also means like if there’s jury duty, you know, like I’m not gonna get called for jury duty in Hawaii, which would be an absolute nightmare where you vote to the extent you know that matters. So both my parents live in Florida, so as a natural fit for me to change my domicile to Florida now I could have just made my residence like my mom’s house.

And aside from just. Not wanting to be like, you know, living with my mom as it were, even on paper. I also just like the stability of having this address system that we’ll talk about shortly and that being like a long-term thing. Like if my mom sells her house in Florida, which she probably will, I don’t have to go and change.

My address with like a hundred companies online from somewhere in Thailand. Right. For example. The other thought that I had was strongly considering doing RVing. Pretty sure I’m eventually gonna wanna do like a full-time RV thing. Like Kevin, you had on your channel, the the Van Life guy? Yeah. The service that I picked has a.

Like an RV club component kind of built into it. You get discounts on various campgrounds and all kinds of stuff like that, so that’s sort of like an added plus that may not apply to everybody. What are, what are some of the benefits that you see of being, being domiciled in Florida rather than Hawaii?

One of the, the big things to keep in mind when you do this is establishing like a real presence in, in that state, even if you’re planning to full-time travel, If you’re moving your domicile from another state to Florida, you don’t want to just show up in Florida, fill out a bunch of forms, and hop on a plane out of town and never come back to Florida again.

Because there is a small risk that your old state may come after you and say, Hey, like. You’re not really living in Florida, you’re just trying to avoid paying taxes in your real estate and wherever that is for me, that was the personal connection that I have with family. But it’s also just spending time there.

Get your doctor’s checkups and everything before you travel. Well do them in Florida if you’re choosing that as your domicile state, so that kind of thing. And the, so the one service that I’m using Escapees on their website, they have like a, a 10 point checklist of things they recommend that you do. To help make it clear to everybody that now really, you know, this is your new state you’re hinting at, is that the state, well you’ve said it, the state can come after you and try to prove you really didn’t create a new domicile.

I guess some of that has to do with intent and whatnot. And so, so in addition to checking what the. This escapees at seven, 10 point, whatever it is, it’s probably worth talking to your lawyer too, wouldn’t you think? Or, or, or No. What are your thoughts about that? I mean, it wouldn’t be a bad idea. I didn’t do that.

Okay. I don’t, I don’t check off all of the 10 points either. I feel like my family presence there is pretty strong. But yeah, it’s just something to keep in mind. And I have run into this before. I lived in Japan for a long time and when I moved back, my new state came after me because they assumed that I just hadn’t filed state taxes.

For the time that I was in Japan and I had to prove to them that I was living in Japan for those seven years. And you know, I, they’re not evil people, right? Like once they believe that, okay, this is actually the real, the real situation that was fine. And I think this is kind of a similar thing, you know, if you’re really just doing it as a tax dodge, you know, you’re really unfair about it.

You could have problems. Right, right. And hidden in that statement I hear is when you were in Japan. You were not filing state taxes because you were outside the United States and you had established domicile there. Is that it? I was resident, yes. So I, I met the, like, the IRS residency requirements as being resident in Japan.

So that comes along with things like foreign income credits and stuff like that. Right. So, yeah, there was no state tax at all. Okay. And does that imply that if someone moves to another country and follows the IRS’s regs on that, that they may be able to skip state tax also doing it that way?

Right? Yes. And if you’re doing that there, you wanna really read up on what the IRS rules are. There are things like if you spend more than 30 days in the us. You can get caught up in problems with that, and that includes time spent in the air regardless of where you’re going. Right. So, right.

It’s just good to be aware of that. A great point. And so what we’re trying to do is just raise issues. We’re not giving legal advice here. We’re just telling people. These are kind of the ideas and there is some fear here. It is important to get it right. So definitely see your lawyer. Don’t just rely on what we’re chatting about online here.

We’re just two guys online talking on the internet, so, so you left Hawaii, moved to Florida. And did these various things. So what did you do? Do you got, you, you got the driver’s license, what else did you do? Yep. Yeah, so I, you know, I, I left my apartment. I got rid of all my stuff. I had storage in Hawaii. I got rid of all of that stuff and I canceled my storage.

They recommend not putting your stuff in storage and the state you’re leaving behind. Right. Then I went to Florida. I had planned to do a lot of things in Florida off that checklist, but I had a, a personal thing happen in my family life. That I had to deal with. But I did do the, get the the driver’s license.

I started well ahead of time, I would say. Right? So the service that I am, I have a couple services we could talk about, but the service that I chose was this Escapee service and they, they work with mostly full-time RVs. So they have a membership that gives you some perks. And then you can subscribe to a mail service on top of that where they’ll get your mail and forward it.

And then you can subscribe to a scanning service on top of that where you can log into the website, pick mail, and say, scan this one. You know, throw this one away. Right. That sort of thing. And so if they scan it, that’s perfect. Does that mean they’re gonna email it to you and then you can log onto your email and get it there?

You don’t have to go. It’s on the website. Right? I see. Yeah, exactly. It’s on the website. So my goal is for all of my mail to just log in. Look at the scanned copy and then just have them throw everything away. That would be, you know, ideal. I signed up for the escapee service while I was in Hawaii, like months ahead of time because I knew this was the route that I wanted to take and that gave me time to get a form notarized that they need because of the federal government requirements to act as my essentially postal agent.

Once I had all of that set up, they were able to send me a letter that they told me that I could use in Florida. And this worked by the way, but they told me that I could use this letter in Florida to establish my residence being in Florida at their location, right? That they are my home. Now when you go to the dmv, if you go online in Florida, and most states are pretty similar, right?

They really have two things that they’re looking for. The first thing is they want evidence that proves that you are the person you say you are. And the second thing is they want evidence to say that that person lives in the state at a particular address. So for the first one, there’s a lot of things you can use, but one of them is a passport.

So if your goal is to travel the world, you know, you’re set. The, the second thing is usually Two bills or like financial statements, electricity bill for the residents, that kind of thing. What I would recommend is do this all in advance, long enough ahead of time that you can send two of your financial statements to the residential address in Florida for the RV place, and enough time that you can get physical copies of those forwarded on to like a location you’ll be in, you know, in the real world, so that you can then bring those with you when you go to the dmv.

That is for the second thing to prove that you were at that residence. Now the letter is supposed to be enough on its own. And for me it was when I went to the D M V I had the letter and I had two financial statements, although I used my Mom’s Florida address for that, but they were fine with just the letter.

So so yeah, the further ahead of this you can get, you know, the easier it’ll be when you show up with all of your paperwork. The other thing I would note about Florida in particular was it, it took like at least a month to get a booking for the D M V to go and see them. So I would book that long before you even leave your state to go to Florida.

You know, if, if this is the path you take so that you, you know, when you show up, there’s a booking, like, you know, a couple days a week after you arrive. And I would actually book a second booking. Like maybe a week later. So if there are any problems when you show up, you can get those handled and then you can just show up a week later and get everything taken care of.

It was a very painful process though. They were super nice and helpful when I went in. They accepted the Escapees documentation, even though you won’t see it listed as something you could use, you know, on their website. And then I got my driver’s license and I’m a Florida resident now, so that’s clarification on the financial statements. 

Those Statements that were mailed to your, so you changed your address at your bank, is that right? And they, right, so instead of the Hawaii address, it was the Florida one and they mailed it to Florida, forwarded it to you in times that you could take it to the dmv. Is that right? That’s what I recommend in, in my case, I used my mom’s address cuz she lives in Florida.

Right. So my backup plan was just to use my mom’s address as my residential address. So it wasn’t a, it wasn’t forwarded from. Your Hawaii address. In other words, the bank didn’t, no. Send a letter to the Hawaii address and then it was forward to Florida. It was, they sent, you changed it in, in, in Hawaii so that it was sent to the, it’s an actual document with the Florida address.

Right. Okay. And actually, yeah, you mentioned in one of your notes you mentioned that there’s also benefits with respect to Obamacare in Florida versus Hawaii. Right? What’s that? Maybe not so much benefits, but just that it’s different. So when you, so when you leave your job, you’re gonna have two options that you could do for healthcare, should you choose to, you know, have US healthcare.

So one of them is you can do Cobra and that’ll cover you for, I think a year at, keeps you on your employer’s plan at whatever that rate is, right? And then the other one is the Affordable Care Act, right? Obamacare and. That is one that you can have indefinitely. Now you need the life event. You’ve left your job that qualifies you to get Obamacare.

So you can apply for it and you can apply for it ahead of time, as with like an as of date, right? I’m quitting my job. My last day is gonna be a month from now. Go ahead and apply and you tell them on this date I’m unemployed and you know, would like to be covered. Now the state you use is going to be your intended domicile, so, If you’re sitting on a couch somewhere in Minnesota and you’re moving, you know, moving to Florida and doing this stuff, you use Florida as your, your state for the Obamacare, because that’s where you’ll be on that date.

Domiciled. I actually wasn’t physically in Florida quite yet, but but that’s fine. That’s where you’re gonna be. The caveat is if you. A resident of Hawaii, you qualify for Hawaii Medicare. If you qualify for state Medicare, you can’t apply for Obamacare because you have another option. And so they make you take that, right?

They won’t make you take Cobra, but they will make you take Hawaii, Medicare. And so my goal was also to get the timing rate, not hang out in Hawaii because I wanted to get the Obamacare set up so that I was just covered and I wasn’t gonna have to change this a year from now. Again from, you know, a beach in Thailand or something like that, right?

So that’s another one to start early. So you brought up Obamacare and you’re leaving the country. And so pe some people ask from time to time, should I keep my Obamacare? Because you’re not old enough yet to get the senior care in the us which is age 65. So is your idea to just keep Obamacare until you hit 65?

Is that right? Yes. Yeah. For me, that’s what I want to do. You know, some people like to self-insure. I have no problem with that. I’m just a bit risk averse. There’s also so I also have travel insurance. So I pay for insurance when I’m, you know, abroad, which most of the time I’m using, I’m using Safety Wing.

But there are a couple companies, right, and. Part of that plan is dependent upon you having coverage in your home country. Right? Because they know that their worst case scenario for a lot of conditions is to put you on a plane and send you back to the us and then it’s medevac they call it, I think. Yeah.

Right? Yeah, exactly. So having Obamacare opens the door for me to have safety wing. So while I might be more comfortable self-insuring in the US, maybe, although. Probably not not the us but it’s even nicer to be, yeah, it’s even nicer to have the insurance while I’m, you know, here in the Philippines. So the people that I’ve talked to that just, that go that direction, they just go with like a really big deductible and pray.

Is that what your short, your, your option is? I’m praying, but I do have enough money set aside that, you know, if they medivac me and I have to pay, I think it’s a $10,000 deductible on the lowest plan in Florida. Right. The Brown plan, I think it’s appropriately called, but Yeah, so it’s like 10 grand and then, you know, the cover kicks in and that’s fine.

Right. I think most people realize that Florida’s one of the lower tax states that’s another benefit. And Hawaii is maybe one of the higher ones. So that’s another benefit too. Indeed. Lowest and highest, actually. Yeah. Yeah. Oh, okay. Really? The lowest and the highest. That’s funny. Okay. There are a couple other zeros, but yeah.

Okay, so you provided a link to a to a webpage that the Escape, these RV club, I’ll put that below, but that has the seven factors or that that are considered, I guess when they’re trying to decide if you, if you really have intention to be in Florida or not. Yeah. So people can read that and they can read more about Escapees

That sounds like you put a lot of thought into this, so it’s probably a good choice. Although I still recommend people talk to their lawyer about that. About making sure they crossed their Ts and dotted their i’s. My guest, Oliver does options trading, which I’ve read a lot about, but always seem really complicated to me.

But he posted a video that I thought was very clear compared to what I’ve read before. So if you’re interested in. I don’t know, interesting ways to invest that are complicated normally, but he explains in a very uncomplicated way. Check out the link and the notes below this video and, and see his YouTube channel.

You mentioned that, that you need to book in advance for Florida with, with the driver’s license. You even mentioned two doing two. So, so if there’s a follow up meeting, you can do that. And you’ve talked about having utility bill or, or the escapees letter. Now is when you talked about the utility bill, I think you said the utility bill or the financial statements.

Is that right? Yeah. So yeah. So, so instead of a utility bill and the es escapees letter, is it just two of the three you need or how does the Es Escapees letter on its own is fine? In my experience and es Escapees claims that it’s fine. And indeed Florida honored it. I didn’t need the, the utility or bank statements at all.

Okay. But I wanted to be sure when I went in that I had like multiple backup plans. Right. For what if they don’t like the ES escapees letter? And so for me, I forwarded two bank state, two different banks statements to my mom’s address because she’s in Florida. So that for me was like a double backup because if they just didn’t like the whole thing at all, I could use my mom’s address.

And here’s the two. You know, bank statements that validate that they also register you with the tax system and they can register you to vote all at the same time offhand. Do you have any idea, have you read at all about what happens if of, of, if, if someone’s, you use the example of Minnesota, if Minnesota said, oh, we’re gonna tax you and then, and then Florida of course.

They wouldn’t be taxing you any, wouldn’t that I was gonna not come up with the idea of double taxation, but that wouldn’t happen. Right. Would you? Cause Florida doesn’t have that tax. The, the worst case scenario, if they’re prompt about it, is that you might have to pay a penalty of some kind. It’s probably not huge and mea culpa and you know, you go from there.

But I’ve only ever found one case of. This happening of somebody successfully getting hit for back taxes. And that’s the example that they give on the Escapia website. So they also give the example of the person who did most of the things on their list and then sent a letter to California when California asked them and said, well here’s, you know, here’s the evidence that I’ve truly moved.

And California said, okay. Oh nice. So I think it’s pretty safe, but yeah, again, clearly there’s at least one example of someone. Who didn’t do a good enough job, right? Yeah. Again, we’re providing information, but people need to they need to settle this themselves. We’re not guaranteeing anything for people.

So you mentioned in, in one of your notes that options where for you were for example, or that or escap are recommending not for you, but Florida, Texas, South Dakota, those seems to be three places people decide to domicile in. What are your thoughts about why Florida’s better? Or is it just convenient for you?

Cause your family’s there? I would say it’s the family. My family’s there, Florida. Makes sense. I would recommend picking a place that you expect to go back to and visit and really making it a bit your home. Right. So maybe you have like an annual trip or something like that. Maybe you wanna get like a, a physical done in the us whatever.

Right. You know, make it there. So yeah. Yeah. Other than that I think I picked South Dakota if I had no, you know, particular affiliation, little cold maybe. I don’t know why. I really don’t. I think it’s, cuz I’ve never been to South Dakota. So it’s that travel itch just showing up again in a different way.

Yeah. Right, right. But yeah, I’ve only, and if you’re not, I’ve only been, been through there and. It might be tough in the winter compared to Florida for sure, compared to Florida. I don’t own any lock sleeve shirts anymore, so Yeah, that’d be a problem. Yeah. So so when did you, when did you leave the states and, and show up in Bohai or where did you go first?

Oh yeah, so, well I worked until the end of January. Then I went to Florida. I spent about a month there except we had this family emergency thing that came up, so that was pretty hectic. Oh, and I caught Covid in Florida. A little, a little going away gift. Wow. Then I went to Tokyo first, so since I used to live in Japan, I have a lot of friends in Japan.

So I spent a month there catching up with everybody. And that was really great. Gotta stay with a friend of mine, so that kept my costs down for a fair bit of it. And then I went to Hai, visited more sorry to Manila. I visited more friends in Manila. Then I. I’m doing about monthly stuff. So I went to Port Glare for a month.

Unfortunately, they just had that oil spill in Port Gera, so it’s not a great time for, for diving in the water. I’m sure it’ll get cleaned up pretty soon. But then back to Manila again, and then now over to Pokai. So yeah, it’s mostly Philippines. So far. I’d like to go see Thailand sometime.

I’d like to, I’m gonna check off all your places. They all look pretty amazing. So yeah, we. We certainly love what we do and we love traveling and and what you’ve seen from our films, it’s, it’s a fun life. And so do you see yourself as a slow traveler and is it temporary? Yeah. Or do you think until you find a place, or do you see yourself as continuing to do slow travel?

I think I’m gonna slow travel until RV prices come back down from the, the crazy highs they’re at now. Right. So that’s kind of the big, the big thing. Although, you know, and it depends too on some family stuff and stuff like that, but probably for a few years the way things are going. Yeah. Yeah. Not sad about it.

No, it’s, it’s great. And then you real, the nice thing about slow traveling, And, and for people that don’t know what slow travel is, it just means you stay in a part of the world or even a country and, and countries around it for long enough to amortize your international airfare over maybe six months or a year instead of just fly somewhere for a thousand dollars, stay there two weeks, fly somewhere else for a thousand dollars.

And so you move on the ground. You see what a place is really like. You really get to know places. So and so slow travel is, is is much cheaper than. What we saw growing up in the movies where there were these international jet setters that were just flying all over the place, you know every weekend and coming back home or whatever.

So it’s, it’s a, it’s economical way to see the world. So that’s what slow travel is. You mentioned a couple things that are a little bit redundant for what I teach, but but it’s worth. Speeding it into people’s heads. And you talk about having two sets of credit cards and this kinda thing. Mm-hmm.

Tell, tell us what your thinking is on that. So this is actually a tip I got from Kevin, the Vanlife guy that you interviewed. Yeah, sure. One of his later travel videos. Okay. So, so like, like Kevin I keep two sets of cards, so. That’s one ATM card one debit card. So this is one of those prepaid like revolut or Wise Cards.

You load cash onto it and then spend off it and it does currency conversion and then one regular travel credit card that, you know, gets points for things like that. And so one set stays here in the, you know, apartment or hotel or wherever. And all those cards are locked. I can lock them in my phone.

So, I don’t mind leaving ’em behind. And then the other set I have with me, and I’m using them to pay for stuff, you know, where, where appropriate. So if I get, you know, mugged somewhere, God forbid I can just make, if I make it back to the hotel, I’ve got a fresh set of cards. Like I can put my life back together pretty easily.

And by the same token, if somebody robs my apartment or whatever, I’ve lost a bunch of cards, but no one can use ’em. And I still have, you know, the set that I have all on me. Yeah. So that’s, that’s what’s working for me. I’m pretty happy with it. I like the debit cards too because I only load like a thousand dollars on them.

So if the number gets stolen or something, or if you use ’em in an atm, you know, that sniffs your number or whatever. The damage is pretty limited, so that’s been pretty good too. Yeah, we’re, as, as Americans, we’re kind of lucky because we, and it might be true in Europe too, I haven’t studied their laws about this, but when money gets stolen off a card it happened to me once when I was in Mexico for about two weeks long, long ago.

Before I even left the US I was just vacationing and I someone my American Express card for like eight furniture money. Then so, And I called American Express and I said, I didn’t buy this furniture. And they did a little research and they agreed and they took it off the card. And I guess the law requires that.

So again, I’m not, not, I’m not a financial lawyer. But this is just common knowledge you can read about online and dirt by yourself. And so you also mentioned what. This idea of using these NFC phone wallets, tell us what an NFC phone wallet is and, and, and how you use it or what, which ones do you use?

Where, or whatever you know about it that can help people. I have my phone handy, but a lot of phones have these apps now. Like Apple Pay or Google Wallet, that kind of thing where you can just tap the phone. Just like the credit cards that have the wireless feature. Yeah. Your phone has this wireless feature.

You configure it with some set of cards ahead of time and pick which one you want to use when you pay. And Samsung Pay is another one I would add. Now the cool thing about this technology is it generates a random credit card number at the time of transaction. So it never gives out your credit card number through the vendor system.

And it’s a one use card number, so if it gets stolen, no one can use it to go and buy a bunch of furniture, for example. Yeah, so I really like this. They don’t all, they’re not all accepted everywhere. So for example, in the Philippines, only Samsung Pay is accepted and it only works on Samsung phones.

But if you have the opportunity to set up that’s another way to protect yourself. Right, right. And then finally and great, great point. Thanks for sharing that. And then a lot of expats and slow travelers. Advocate the Charles Schwab atm because it rebates ATM P. Is that one of your cards you use or do you It is Dan.

I, I got that advice from you. Okay, great. Well, you’re, it sounds like you’re, you’re ready for warfare. You’re fully equipped to attack the world. Well, that’s great. Oliver, it’s nice. Really appreciate you coming on the. When people first hear about this, they’re, they’re not very steady footed. And, and just seeing more people tell more similar stories and give such great advice like this is really appreciated.

And it’s, it’s it’s great. This idea of the two i, the two main ideas, this idea that when you were in Japan, because you could prove residency over there, you weren’t just visiting there, you established your. Residency that you didn’t have to pay any state tax in the US and that, and that and that you can change your domicile in the us.

And if you follow the right rules in the right order and, and get that done. So that’s great news for people. And one piece of advice I would give myself some months ago is instead of, instead of trying to scale your life down to the one suitcase or whatever, Yeah, I would just go watch a video of somebody whose style you like, like Dan and, and watch his packing video and just see what’s his packing list.

And just start there. Cause I, I feel like there’s a lot of wisdom in those videos that you can’t necessarily verbalize and it’s it just simplifies agonizing over, you know, what you need to bring with you kind of questions. So did you end up did you end up storing anything in Florida or did you really just get rid of everything?

Well, it’s everything, but I’ve got an oversized bag sticker on my, on my luggage. So I did sheet, but I do have a small duffle bag at my mom’s place with things like you know, tax documents, that kind of stuff that obviously I don’t wanna haul around the world with me. Right. But yeah, other than that, well, that’s admirable the case.

That’s admirable. I wasn’t able to get that small. I, I ended up storing stuff in the basement when I left for the first three years. And I, and most of it is, is been sold in garage sales since, but there’s still a few things left in there. The sentimental stuff, like some final records, some masks I collected before I was traveling.

Three-dimensional art kinda stuff and still down there, but you know, it’s at some point I’m gonna have to say, what’s the point of this? Give it away or something. But anyway, thanks so much. Really appreciate it Oliver. Really appreciate you coming on the channel and sharing that with everyone. So, Thank you, Dan, for, for all your videos that you guys share.

And get in touch with us, you know, in three, six months. Let us know how things are going on your slow travel. We’d like to hear what goes next for you, Oliver. Thanks, Dan. Take care.