Car registration and state income tax liability

Car registration and state income tax liability

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Now I know why Texas and South Dakota are registration necessary... income taxes - or the lack thereof.

Just today, while making calls to decide how to register and insure vehicles - here and there - I found out that if I maintain car and boat registration here in Ohio, which is not that hard to do by mail and internet and there is even a way to get the environmental check waived by declaring the car out-of-state for up to 2 years and filing the right form - I would still be considered a resident of Ohio, even though we will not own any real estate here.

By not cancelling auto registration I retain residency and am therefore subject to the state - 7%, municipal - 2, and school district - new at 1.5%, income TAXES...yikes....so that means my cars get new titles in both hubby and my name in SD and registered there - daughters car goes in her name and we bite the bullet on her insurance since its waaaay less than the taxes....if we leave our name on her car we essentially still live here... also have to file a form with the BMV to declare we have registered the cars in another state otherwise they keep tacking on penalties...sounds like CA...phooey.

I am very glad I found this out now. So even if you have family for a permanent address and you think you could handle your registration needs that way, beware the tax man might come your way.

Two other things I found out that don't effect our move, but might be information for someone else - if you have a leased car the lessor may not be licensed in the state you use as a permanent address or register your car in, so even though they allow you to take the leased car to Mexico, registering it anywhere other than the point of origin may not be possible, that is why some contracts say "residency restrictions may apply" and the second was that your insurance company may not be licensed in your other state.

(This post was edited by NEOhio1 on Jun 23, 2006, 6:17 PM)

sfmacaws

Jun 23, 2006, 8:49 PM

Post #2 of 58 (12621 views)

Re: [NEOhio1] Car registration and state income tax liability

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All correct Anita, be sure to check with your auto insurance and health insurance to make sure they will cover you in SD. In addition, it is commonly believed that part of changing your domicile to another state is re-registering to vote in that state. Maybe Ohio and definitely California, don't want to relinquish their residents (they want the tax $$) and will fight you unless you change your address, your voting address and your cars.

As a fulltime RVer, I would have changed my domicile out of CA and away from the taxes except that I would lose my cheap health insurance. I wouldn't have to sell income property in CA, but I would have to change my voter registration and, unfortunately, my address for health coverage. Although I haven't really done the math I think that I'm coming out ahead staying a CA resident. I suppose I really should get an exact amount, especially now that they are hassling me about moving my address to Southern California.

Jonna - Mérida, Yucatán

Jun 24, 2006, 9:39 AM

Post #3 of 58 (12580 views)

Re: [NEOhio1] Car registration and state income tax liability

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Anita has a point. Our old 1995 Ranger is registered in California and, as a far as they know, is still in California. We found that out when we tried to sell our California plated Chrysler a couple of years ago. We need to write the DMV to let them know we left California in 2001 never to darken that state´s doors again.

One of the reasons we left California is so that we would not have to pay their exhorbitant state income taxes when we started drawing down our IRA accounts. The greedy son-a-bitches will do anything to try to prove one is still a California resident so you do not want any possibility those slimeballs will try to assert a claim over your IRA income.

One mistake I made. A couple of years ago we registered to vote in federal elections as overseas residents with the understanding that we were to register in our last state and county of registration in the U.S. We were assured that, when we registered in this fashion, we were not claiming residence in California. Just recently we received an absentee ballot from Sonoma County, California and were required to certify that we still maintained a residency status in that county. We, of course, did no such thing. Be aware. If you are registered in California as an overseas resident, do not trust them not to try to come after you for income tax payments. They will interpret your overseas residency as temporary only. Thank God we have zero assets there now.

God, I hate that state.

(This post was edited by Bubba on Jun 24, 2006, 9:41 AM)

Georgia

Jun 25, 2006, 8:20 AM

Post #4 of 58 (12517 views)

Re: [NEOhio1] Car registration and state income tax liability

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But look at the liability upside of having your daughter's car registered in her name not yours: in the event of an accident causing high liability, you escape responsibility for your daughter's actions. If the care were registered to you, the injured (physically or economically) party could go after your deeper pockets claiming you negligently entrusted the car to a minor.

We always had our children register and insure their vehicles in their own names. They NEVER drove our cars. Period. Too risky.

So, just look upon the higher insurance premiums as added protection for your in your retirement years.

Jun 25, 2006, 9:48 AM

Post #5 of 58 (12500 views)

Re: [Bubba] Car registration and state income tax liability

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Last week I tried to get registration for my car in CA, so I could get insurance in CA. No deal - we have no CA address. We pay CA taxes on my retirement and on my wife's rental property. We were willing to pay registration for a car we would use no more than 20 days a year. Nevertheless, we can't get registration. Also can't avoid CA taxes as my retirement is state funded and wife's property is in CA.

Also, tried to get Citibank account as advised by several of you. Sounds like an ideal choice. They even have a bank in the barrio of Escondido, CA. No luck. We have no CA address, so due to Patriot Act, they could not open an account for us. They won't accept Laredo Mailboxes address nor our Mexican home as they "can't verify it." Will have to take our Mexican deed, phone and electric bills next time we go there if we want an account.

All in all, a very frustrating trip.

Georgia

Jun 26, 2006, 12:33 PM

Post #6 of 58 (12443 views)

Re: [dlyman6500] Car registration and state income tax liability

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OK. Your wife owns rental property in CA. You must get a tax bill. Why not claim the rental property as your CA address, using the tax bill as your proof of ownership?

Jun 26, 2006, 4:43 PM

Post #7 of 58 (12415 views)

Re: [NEOhio1] Car registration and state income tax liability

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Anita wrote:

Now I know why Texas and South Dakota are registration necessary... income taxes - or the lack thereof.

Just today, while making calls to decide how to register and insure vehicles - here and there - I found out that if I maintain car and boat registration here in Ohio, which is not that hard to do by mail and internet and there is even a way to get the environmental check waived by declaring the car out-of-state for up to 2 years and filing the right form - I would still be considered a resident of Ohio, even though we will not own any real estate here.

To me, the key to Anita´s comment regarding the decision as to whether or not to " maintain car and boat registration (in her home state)" is the word "maintain". We left California in July 2001 and the California registration on our 1995 Ford Ranger expired in March, 2002. We have never renewed that registration but know from experience that the state of California continues to maintain records that we are simply delinquent in our annual renewal obligations. However, we consider our sale of all of our property there, our subsequent purchase of property here in Mexico and our maintenance of FM-2 and FM-3 status here to be adequate evidence that we are no longer California residents. We have not set foot there since and don´t plan to do so.

I started to write a letter to the California DMV to let them know we have not lived nor even visited that state since 2001 but why open that can of worms. Those of you who haven´t dealt with the fiendish California state government may not understand my reluctance to wave a red flag at that bull but I say to hell with them. It appears we were obligated to turn in a change of address to Mexico within 10 days of moving and it´s way too late for that.

As the tax assessor´s office in Webb County (Laredo) Texas told me, the state of California has no lien on my truck no matter how many phony penalties they assess and Texas will be happy to issue me a "registration only" tag for a small fee.

All that having been said, I sure as hell wouldn´t maintain my California registration in a current status even if I could. The state FTB may try to sink its claws into you if you do that.

NEOhio1

Jun 26, 2006, 10:56 PM

Post #8 of 58 (12370 views)

Apostilles and voter registration

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Well, Bubba, you would be right in putting that pen down - it is never a good idea to be the first to talk in a conversation with the tax man....we have found out that when we have our documents Apostilled at the Sec'y of State we will sign a form stating that these are being Apostilled for use in Mexico (or whatever country) and we can also sign-up for absentee ballots (requesting national election only and sent to us c/o the consulate in Guad) and those two activities, coupled with registering our cars in another state will suffice as proof of our intent NOT to return to Ohio, and thus when we leave we are gone.

I had no idea car insurance was getting so structured and that people have an insurability rating like a credit rating. The agent explained to me that cancelling our existing policy (which we've had for 35 years with 2 medium claims) and possibly picking up a new policy in a couple of years when we know we will have a second home NoB near grandchildren could be very expensive - essentially since no US insurance for a couple of years will take us back to the highest risk category. Not acceptable. They luckily are able to re-write our existing policy so that our 19 yo daughter is the primary insured on her own titled car and our two cars we will have in Mexico as "storage" cars with a 6 month premium for both running about $120. Then when we do drive our cars, or rent a car while traveling NoB, we can call and have coverage for that time period. Sounds like a good solution all around.

Apparently, as she explained, the insurance industry intends in the next 3-5 years to write policies based entirely on a combination of your personal information, not just your driving record. Hummmm.

Now to just find a buyer for this house in a very soft market, but then who really wants to move to Cleveland, so its always soft here.

Jun 27, 2006, 5:39 AM

Post #9 of 58 (12356 views)

Re: [Georgia] Car registration and state income tax liability

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Don't want to have to get leasees involved. They are a major corporation out of Florida and shouldn't have to deal with our insurance problems - they won't even direct mail the rent to her bank.

Also, my thinking is that I don't want any irregularities in regard to insurance. If we should ever have a major need to use the insurance, I don't want them to have a reason to disallow the claim or to cancel the insurance.

Jun 27, 2006, 6:33 AM

Post #10 of 58 (12349 views)

Re: [NEOhio1] Apostilles and voter registration

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On the subject of absentee voter registration for national elections only, keep in mind that I cancelled my registration in Sonoma County, California after they required my oath under penalty of perjury that I was a resident of Sonoma County only temporarily residing overseas. My failure to return that paper with its completed oath would have resulted in my ballot not having been counted.This was a surprise to me since I had been assured that, under the new federal law I was only registering for overseas voting in federal elections in Sonoma County for the sake of convenience. I say take no chances with the Governator and Sacramento crooks who will do anything to take your money.

By the way, I believe Sonoma County made a mistake sending me an absentee ballot with that oath of residency attached. Overseas Americans voting in federal elections are not supposed to be "absentee" voters by definition but "overseas" voters. However, I will not get involved in a pissing contest with some California bureaucratic zealot just so I can vote for the next clown seeking the presidency or a senate seat. It´s not worth it.

I have no problem if I drive my car to the U.S. as I will take my Mexican plated Nissan which is fully insured by ING Comercial America whether I am in Mexico, the U.S. or Guatemala except for liability which I can buy at the border.I could never insure that U.S. plated pickup in the U.S. for anything but liability for less than a huge premium if at all.

(This post was edited by Bubba on Jun 27, 2006, 6:50 AM)

morgaine7

Jun 27, 2006, 8:30 AM

Post #11 of 58 (12316 views)

Re: [Bubba] Apostilles and voter registration

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Yikes. Anita, I had a similar Ohio experience once when my brother offered his car to "save me the cost of a rental" during a visit. Despite my valid and totally clear OH drivers' license, the only insurance I could get was the kind multiple DUI offenders get: expensive, restricted, minimum period six months (when I was there maybe 3-4 weeks).

Bubba, I sure hope you're right about the CA oath being a mistake. In the last presidential election, I overseas-voted in Massachusetts (where I'd last lived and voted in the US in 1980 or so). Probably the most worthless vote in the election, but no residency oath.

The IRS knows where I REALLY live ;-)

Kate

Jun 28, 2006, 5:48 AM

Post #12 of 58 (12255 views)

Re: [Bubba] Apostilles and voter registration

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The only good reason except for the one posited by someone recently that living in Mexico, we should buy Mexican and pay Mexican taxes.

For some bizarre reason, I cannot get the same insurance as Bubba with his Mexican plated car because mine is not Mexican plated. When I checked with the Auto Club in CA, they told me that there just is no demand for the type of insurance that I want - short term for use by Mexican residents who don't have Mexican plates.

esperanza

Jun 28, 2006, 6:29 AM

Post #13 of 58 (12248 views)

Re: [dlyman6500] Apostilles and voter registration

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If you cross the border at Laredo and continue as if you were heading north on I-35, get off at the second exit. You'll see an EXXON station there. They sell insurance for cars with US plates, by the day, week, month, or the length of time you need. In the past, I bought insurance there several times. It's not inexpensive, but it's available.

http://www.mexicocooks.typepad.com

Jun 28, 2006, 6:43 AM

Post #14 of 58 (12246 views)

Re: [esperanza] Apostilles and voter registration

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If I am not mistaken, the insurance Esperanza says is available for U.S. citizens who are Mexican residents driving U.S. plated cars into the United States is the required liability coverage only to the exclusion of collision, theft and comprehensive. I hope I am wrong on this but everywhere I asked in Laredo I was told I qualified for the liability coverage amount required by the state of Texas only. Insurance agents in Laredo might be willing to sell me full insurance if I could prove I resided in Texas but full coverage was prohibitively expensive.

If you are going to live down here and plan to drive to the U.S. on occasion, just buy a Mexican plated car and your Mexican insurance will cover you in the U.S. for everything but the required liability. My ING policy has 800 numbers for reporting problems in the U.S. and Canada.

Once again - I hope I am wrong on this, I went to Texas to sell my Chrysler and was unable to get anything but liability coverage. I drove that sucker to San Antonio and sold it as fast as possible since I had no collision, theft or comprehensive coverage.

(This post was edited by Bubba on Jun 28, 2006, 7:01 AM)

ignacio

Jun 28, 2006, 7:09 AM

Post #15 of 58 (12238 views)

Re: [Bubba] Apostilles and voter registration

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Bubba, you mention earlier:

"Also can't avoid CA taxes as my retirement is state funded and wife's property is in CA."

I was under the impression that the US Supreme Court lawsuit against California, won by Mr. Hughes retiring from a job in Ca., but retired actually in Nevada, clearly settled that you don't have to pay California State Income tax on your retirement income, if moving out of the state.

Anyone know for sure ?

Jun 28, 2006, 8:01 AM

Post #16 of 58 (12227 views)

Re: [ignacio] Apostilles and voter registration

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Ignacio:

That quote was not from me but another poster.

You are correct that the state of California cannot tax your income if you move out of state. The question is, what are the criteria applied to determine residency. If you live in another state or country but register to vote in California, maintain current auto registration there with a California address or meet other criteria the state may try to apply, can they, consequently, contend that you are, in fact, still a California resident living "temprarily" out of state.

The state is desperate for tax dollars and will bulldog you to the ends of the earth to get their paws on your money so I choose not to take any chances and have cut all ties, whether direct or indirect, with the state. I still maintain expired California registration on my truck but don´t see how that can be used to demonsrate California residency. If that becomes a problem, I´m off to Texas to register there.

Jun 28, 2006, 8:26 AM

Post #17 of 58 (12220 views)

Re: [ignacio] Apostilles and voter registration

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That was me. It is my understanding that I am obligated to pay taxes on my retirement as it is from the California State Teachers Retirement system and that my wife is obligated to pay taxes on the property income as a non resident. I hope you are right and I am wrong. I'll check it out.

As to the insurance in Texas, that's another screamer. It is my understanding that the insurance that you can get anywhere but the CA, Mexican borders is not good in CA. Again. Hope I'm wrong, but have been checking that one for awhile.

kwschopf

Jun 28, 2006, 8:40 AM

Post #18 of 58 (12214 views)

Re: [Bubba] Apostilles and voter registration

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I know that there are a fair number of former Oregonians who frequent these boards. When we left Oregon for Mexico, we entertained the idea of continuing to vote absentee, but changed our minds. Despite my reported enthusiasm for paying taxes, I don't want to give Oregon nine percent of my income if I am not living there and using any of their tax-supported services. I did inquire at the Department of Revenue and they assured me that if I voted in Oregon elections, I would meet the definition of full-time resident, as follows:

"Full-year Resident: You are a full-year Oregon resident if you live in Oregon all year. You are also a full-year Oregon resident, even if you live outside Oregon, if all of the following are true:

You think of Oregon as your permanent home.
Oregon is the center of your financial, social, and family life.
Oregon is the place you intend to come back to when you are away."

Obviously, this constitutes another good reason not to drive an Oregon-plated car here in Mexico. Karen

NEOhio1

Jun 28, 2006, 10:18 AM

Post #19 of 58 (12195 views)

Re: [kwschopf] Apostilles and voter registration

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As Bubba says, the tax man wants what he wants regardless of what we think he should have access to...and as a former legislative analyst I know not to call the tax department and ask personal circumstance questions, because you will be flagged. So our conversations have been with the Sec'y of State.

The apositilling of all our "very important papers" - degrees, professional licenses, marriage, birth, wills etc...and our request for absentee ballots will indicate our intention to remove our residence from Ohio and not return. This only works if we have no residential property, no cars registered here, no safety deposit box in the state, no "friend or family" permanent address for mail here, and we do not ever cast a local or state election ballot. The national election is okay, but a local election vote will re-residence you.

The key for you kwschopf, in the Oregon statute, is the Oregon local and state elections, the other things are so subjective that you can easily remedy their applicability by removing anything which might indicate your continued association with Oregon. Statue language is used for wide interpretation and in this instance the word "social" would not necessarily mean your friends, but the social life of the state, ie. voting.

I am being very careful about this because its about money and taxes, and in our early 50s its about taxes for a long time, if the ties aren't severed when you actually leave I can imagine it would be difficult to say in 3 years, "well, now I don't intend to return" and have it stick.

kwschopf

Jun 28, 2006, 10:44 AM

Post #20 of 58 (12187 views)

Re: [NEOhio1] Apostilles and voter registration

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Thanks for an astute and educated analysis. I was a registered lobbyist in Oregon for nearly 30 years.....if we'd been in the same state, we would likely have done business together. We also had all of our documents "apostilled." We have no more Oregon property or vehicles, but I am reluctant to give up my bank account, because of the automated deposits of my SS and pension checks. I may have to rethink that. Our mailing address is Laredo, TX because of Mailboxes, Etc., but I understand that will change soon to Florida....we have footprints in many places these days.

JohnnyBoy

Jun 28, 2006, 2:54 PM

Post #21 of 58 (12160 views)

Re: [NEOhio1] Car registration and state income tax liability

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The topic of this thread is very closely related to one that immediately follows it (if you see the threads the same way I do) about "Changing States." All of this is of extreme interest and importance to me. I have gone 'round and around on these inter-related topics as I contemplate and plan my own move to Mexico early next spring.

I differ from many of you in that I do not care at all about ever voting again. I got an "absentee" ballot recently for the California primaries and just threw it away. I have come to the conclusion that voting only encourages them (the politicians).

But I am very intersted in these topics: avoiding California entanglements, especially income taxes, once I leave the state; establishing a new state of legal domicile/residence; car registration; auto insurance; driver's license; and foremost: banking. I have been reading and have done a lot of research on these topics. I had hoped, when I began, to get some CLEAR and DEFINITIVE help and ideas from posters here on MexConnect, but it seems we all have slightly different situations that make it almost impossible to arrive at any clear answers or conclusions, at least for me.

I have concluded, nevertheless, that it would be dishonest and probably illegal for me to claim that I am a resident of any state when I do not live there at all, do not own land there, do not rent a dwelling there. So many of you still have houses in Ohio, California, New York, or your kids do, or you in some way have some legally justifiable connection with someone close in a US state, or perhaps a Canadian province. What about those of us who are leaving the US to live in Mexico without any of those ties and advantages?

I thought I wanted to have a US driver's license when I lived in Mexico so I could fly back to Boise in the summer, rent a car, and go fishing. Even get an in-state fishing license that way. I thought I wanted to maintain US auto insurance, primarily for the same reason, so that when I drive to Tucson (as I plan to do a couple of times a month), I will be all set with driver's license, tags, and insurance. I certainly do not want to pay taxes on my paltry investment income to any state where I do not live and do not participate and cannot benefit from the services that tax dollars pay for.

Rolly and others on this site have taught me that it is OK to go Mexican. Get a Mexican driver's license. Get my 10 year old pickup truck Mexicanized in Sonora where I will be living. Buy Mexican auto insurance. Buy Mexican health insurance. All these things I intend to do.

When I drive into the US I will have to get US liability insurance (I was amazed to hear they let people continue on into the US without liability insurance and you just pull off at an Exxon station and buy some liability insurance).

The biggest and scariest thing though about not having a US state of domicile and address is banking. A recent thread about Mexican banking and credit cards is enough said on why I cannot bring my retirement money to Mexico. I suspect the Social Security Administration will insist on a US bank to direct deposit my monthly benefits. Even if they don't require it, I refer you back to the Mexican bank thing and to threads on MexConnect about the Mexican postal system. Who would cash a Social Security check for me anyway, in Mexico? I know Boeing, where I have a small retirement, won't send my check to Sonora. So, I just got back from the Citibank branch in Burlingame. So many of you have recommended the Citibank/Banamex thing. I tried to open an account there using my mail forwarding company's address in Las Vegas. They demanded proof I lived at that address: driver's license preferred. I said I lived two blocks away in San Mateo. They said they could use that address to open my new account, because it is also on my driver's license, which they required to see. But I do not want to create MORE connections to the state of California. I want FEWER connections. I did not get into that with them. Nor could I use my sister's address in Boise unless I could prove I live there, i.e. show them an Idaho driver's license with that address, or an Idaho driver's license and a rental contract or some such document. I did not try to argue. What if I don't drive and don't have a driver's license from any state or country? That would send any Californian into a mental tailspin. Don't drive??? Not possible!!!

So, I guess I am shot down. The best I can hope for is to open the Citibank account with my San Mateo address and my California driver's license and then next year when I move, change the address on ALL my credit card and bank accounts, and go through the California-specific girations of filling out declarations of non-residence in California, turnover my license plates, my driver's license, sign whatever is required.

I am not yet in a position to give advice to others here on MexConnect, certainly not about these matters. But common sense tells me that the flimsy attempts some people are proposing and possibly actually doing, of trying to create the air/illusion of state domicile/residence by opening a mailing forward account, or whatever craziness they are doing there in South Dakota, is going to blow up in someone's face when push comes to shove and you cannot prove you live and reside at the mail forwarding place. Your car insurance will not be worth squat.

Once again, I reiterate, we all have slightly to radically different situations. Mine has to be one of least complicate ones and I still cannot figure it all out. Most of you are able to solve such issues as this with money. Fly to Cleveland, drive the Range Rover to San Antonio, take Antonio the Banker on a golf trip to Cabo. Then there is me and my lack of wherewithall. So I am doing what Mamma taught me many years ago: use a little common sense.

And I do appreciate the help and advise of all you here at MexConnect.

jb

Jun 28, 2006, 3:08 PM

Post #22 of 58 (12150 views)

Re: [JohnBleazard] Car registration and state income tax liability

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When I tried to open a Citibank account in Escondido, CA last week, they insisted that I have a home address that they could verify as mine - no PMB address, no fake address of any type. They told me it had to do with the Patriot Act. I could not open an account - even with cash money. They also assured me that they could not verify my Mexican address. I will have to give them a copy of my Mexican deed, electric and phone bills to get the account.

They weren't even enthusiastic about that as they will be in Spanish and they evidently have no Spanish speaking employees in barrio Escondido. I find that hard to believe except that everyone there I talked to seemed to be some sort of Middle Easterner - no wonder the Patriot Act is after them.

Today I got the brilliant idea to open my Banamex account in Ajijic and find out if they can provide verification to their sister Citibank for me to open an account. Only time will tell.

Gringal

Jun 28, 2006, 3:35 PM

Post #23 of 58 (12140 views)

Re: [dlyman6500] Car registration and state income tax liability

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Cheer up; things will probably get worse. However, I have a suggestion that might work regarding your Citibank account situation. If you can find a bilingual notary in Barrio Escondido, you could have your Mexican deed, etc., translated and notarized for purposes of convincing the bank to open an account.

Some of this Patriot act stuff is becoming Kafkaesque.

(This post was edited by Gringal on Jun 28, 2006, 3:36 PM)

Jun 28, 2006, 3:45 PM

Post #24 of 58 (12135 views)

Re: [Gringal] Car registration and state income tax liability

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I'm sort of joking. They did make it sound as if they would have a problem translating my documents, then agreed that it is just possible that a couple of their employees - in a bank catering primarily to Spanish speakers - could probably figure out something.

The Wells Fargo Bank, in the same town on the other hand was a real treat. I heard more Spanish standing in line there than I do all day in the average day in Ajijic. I got to eavesdrop for ten minutes to a conversation between one of the employees and a customer. I explained that I wasn't trying to capture all his banking secrets, just practice my Spanish listening skills.

The Patriot Act - Just out of curiosity just what more can they do to protect us in three hours waiting for an airplane (starting July 1) than they can in two hours. Probably check out all the secret wiretaps and financial data. that they have accumulated about us

Jun 28, 2006, 4:28 PM

Post #25 of 58 (12125 views)