Another person planing to move to the B.I. (Hilo: 2015, contractors)

[Dirty D]

whtviper1, you are assuming that I will "working"...I earn income via trading stocks....basically gambling. That's "work" for me. So how can the Hawaiian Government claim taxes from me. Uncle Sam will get his since I pay Capital Gains Tax.

[whtviper1]

Originally Posted by Dirty D

So how can the Hawaiian Government claim taxes from me.

Seriously?? So if I live in Hawaii and trade stocks I can just say, hey, I'm a Texas resident and I'll be freeloading in Hawaii and pay no tax? Heck, why don't all stock traders claim a state tax free place by your logic.

Anyway. Here are the rules and do the right thing.

http://1040abroad.net63.net/docs/sta...0residency.pdf

[Dirty D]

Thanks for the link whtviper1 and I will comb over it some more. But for now, looks like I will have to be a snowbird. I am not willing to pay an additional income tax. It will be cheaper to fly back to Texas a couple times a year than to pay taxes. Thanks for educating me.

[mdand3boys]

Originally Posted by Dirty D

Thanks for the link whtviper1 and I will comb over it some more. But for now, looks like I will have to be a snowbird. I am not willing to pay an additional income tax. It will be cheaper to fly back to Texas a couple times a year than to pay taxes. Thanks for educating me.

That is no different than former president "41" does with living in Maine, but claiming Houston, Texas as his official residence.

[whtviper1]

Originally Posted by Dirty D

Thanks for the link whtviper1 and I will comb over it some more. But for now, looks like I will have to be a snowbird. I am not willing to pay an additional income tax. It will be cheaper to fly back to Texas a couple times a year than to pay taxes. Thanks for educating me.

You are confusing residency with state tax liability.

Lets say you are a professional basketball player who plays for the Dallas Mavericks. You are a resident of Texas.

The good news - every game you play in places like Texas, Washington, etc that are state income tax free is good news for you, you save a lot of $$$'s.

But, when you have a game in California - you as the player pay California state income taxes. This is regardless of where you reside. The player would file a resident state tax return for Texas and non-resident state tax returns for each state the player played a game.

On the flip side, if the player is a resident of California, all of the income is taxable in California, and the player will get tax credits on taxes paid to other states to avoid double taxation.

The same is true for consultants - income earned in any state while they are at a client is taxable in the state where they are working.

If you snowbird, even 1 month - and you work and earn income in Hawaii, that 1 month of income is taxable in Hawaii and you can't avoid that (although many do but of course that is illegal).

Simply residing in a state income tax free state does not help you avoid taxes for states you earn income that do have taxes.

[davephan]

Originally Posted by whtviper1

You are confusing residency with state tax liability.

Lets say you are a professional basketball player who plays for the Dallas Mavericks. You are a resident of Texas.

The good news - every game you play in places like Texas, Washington, etc that are state income tax free is good news for you, you save a lot of $$$'s.

But, when you have a game in California - you as the player pay California state income taxes. This is regardless of where you reside. The player would file a resident state tax return for Texas and non-resident state tax returns for each state the player played a game.

On the flip side, if the player is a resident of California, all of the income is taxable in California, and the player will get tax credits on taxes paid to other states to avoid double taxation.

The same is true for consultants - income earned in any state while they are at a client is taxable in the state where they are working.

If you snowbird, even 1 month - and you work and earn income in Hawaii, that 1 month of income is taxable in Hawaii and you can't avoid that (although many do but of course that is illegal).

Simply residing in a state income tax free state does not help you avoid taxes for states you earn income that do have taxes.

What happens if you snowbird in Hawaii for less than 200 days a year, working remotely for a company in another state. You are actually doing work in another state and getting paid in the other state? Although you happen to be sitting in Hawaii with your computer. Are you actually considered working in Hawaii or the other state?

What happens if you snowbird in Hawaii for less than 200 days a year, are retired and living on a pension coming from another state and retirement accounts also based in another state?

[whtviper1]

Originally Posted by davephan

What happens if you snowbird in Hawaii for less than 200 days a year, working remotely for a company in another state. You are actually doing work in another state and getting paid in the other state? Although you happen to be sitting in Hawaii with your computer. Are you actually considered working in Hawaii or the other state?

What happens if you snowbird in Hawaii for less than 200 days a year, are retired and living on a pension coming from another state and retirement accounts also based in another state?

I don't know anything about pensions and retirement - so can't help you there.

It doesn't matter if you snowbird 5 days or 200 days nor where you are paid from.

It is where you earn the income.

Here is an example for you.

Joe works for a software company and codes custom programs for packaged software for various companies around the world. His company is based in Boston and paid by a bank in Boston.

Joe is a resident of Texas. But, Joe's company lets him work remotely in Hawaii 3 months of the year.

Joe files a Texas resident state tax return. Legally, Joe needs to file a non-resident return for Hawaii for the 3 months he earned income while in Hawaii. Joe can roll the dice and not do that but there is risk in doing that. Also, his company risks fines for not witholding the Hawaii tax.

I'm surprised most people don't realize wages are taxed where you work - not where you live.

[OpenD]

I'm not a real lawyer, and there's no Holiday Inn Express here, but I did get dinged once upon a time for not paying state income tax in a state that was not my legal residence, but where I worked for a few months. In my case it just never occurred to me, and it only happened once, so I got off easy, but if they had been able to show a pattern of deliberate evasion, it could have been much worse.

In the years since then the methods for the authorities to discover undeclared income have gotten a lot more sophisticated, and yes, the tax people do share a lot of information back and forth. That's one of the reasons so many states now have laws about paying taxes in the state proportional to the time spent in residence in the state, because technology now makes it practical to enforce such laws.

Hawai'i collects tax on capital gains income. If you are unwilling or unable to pay this you should move to one of the eight states which do not collect such a tax. For your convenience, those states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Then you'll only have the feds to worry about.

[Dirty D]

Thanks for all the clarification, I feel really ignorant now. I did not know all these tax laws. My short term capital gains tax is already 35%. But now I know if I want to cash out a large portion of a holding, I need to be in Texas. I never paid attention to state taxes before since I only reported taxes in Texas. And I have only been trading full time for 2years. You guys have taught me greatly. I guess I will just have to pay the "paradise tax" when I'm In Hawai'i.

[whtviper1]

Originally Posted by Dirty D

I did not know all these tax laws. My short term capital gains tax is already 35%. But now I know if I want to cash out a large portion of a holding, I need to be in Texas. I never paid attention to state taxes before since I only reported taxes in Texas.. I guess I will just have to pay the "paradise tax" when I'm In Hawai'i.

I missed the part in your earlier post that all of your income is considered capital gains and you don't have wages. I just caught that.

You should speak to your tax accountant regarding trading stocks out of state and if they are considered income in the the state you made the trade. My gut feel is nonresidents trading stocks don't have to pay Hawaii tax (but you would pay capital gains for something like real estate) - your tax accountant would know.

I'll also clarify, many neighbor states have reciprocity agreements where they agree to not tax each others residents - of course, Hawaii has no neighbor states or reciprocity agreements.