state return: to file or not to file?

[Catherine]

Client lived outside the US for 2022 but is currently in the US. Almost no taxable income (divorced, still getting funds from assets held jointly with ex-spouse as they get on well and haven't gotten around to untangling a number of the financial accounts yet). 

The concern is that even though client was not resident in the state in 2022, she is using a MA address for federal return. I don't want her getting a nastygram from the state a year down the road demanding "where's the return for 2022?!" 

Any down-sides anyone can tell me about if we do, or do not, file a state return for her for 2022?  

[BulldogTom]

Where is she domiciled?   If MA, I would file just to start the statute.  Why put a potential complication out there for her in the future.   

Just my 2 cents.

Tom
Longview, TX

[Catherine]

35 minutes ago, BulldogTom said:

Where is she domiciled?

And that's the question. Ex is domiciled in MA and works there. She, since the divorce, basically lives in Argentina. But she uses his MA house as her US address (very amicable divorce; friendliest one I've ever seen and it's a bit unnerving frankly) and yes we don't want potential complications. That's why I was thinking of filing the MA return.

[BrewOne]

I ran into this with a client living in Cyprus.  When she was reporting a Florida address there were no issues, but then she changed to a Georgia address and I gave her the news she'd have to pay GA taxes (one of her payers had picked up on it and was reporting it as GA income).   Except for active duty military, can you use an address that is not your domicile? 

 

[Catherine]

31 minutes ago, BrewOne said:

Except for active duty military, can you use an address that is not your domicile? 

Especially when considering the trouble with getting postal deliveries to many countries, having friends or family in the US who will accept your mail and pass along any important items by email it should be completely acceptable. 

I do know it's fine to use a paid service for this purpose (a client who used to live in the Philippines used a Florida-based service for just this purpose) - but why should one be forced to pay, when there are friends and family available?  Another client, who is outside the US, uses her grandmother in the midwest as a mail-drop address. But we don't file a state return for her; under the filing threshold  and it's a state that is less obnoxious than MA. 

 

[BrewOne]

Thanks.  What I could dig up confirms that the address on the 1040 is primarily for correspondence.  The IRS or a State may question your domicile/residence based on the address, but then it's just a matter of explaining it to them.  

[Gail in Virginia]

I know that at least in the past, Virginia was adamant that if you were a US citizen then you had to have a US domicile even if you were "permanently" living abroad.  No amount of explanation would convince them.  I don't know if that has changed, and I don't know if they apply the same rules to permanent residents or non-residents.  My case was a young woman living in England and using her parent's address in Virginia for her federal return.  She had no income from the US and filed a return in Great Britain, but because Virginia was where she last lived before moving overseas they considered this her domicile and insisted on a Virginia return.  

[Pacun]

How much is "almost no federal income"? I would run the numbers and see how much she would have to pay to MA and then decide.

[Catherine]

10 hours ago, Pacun said:

How much is "almost no federal income"? I would run the numbers and see how much she would have to pay to MA and then decide.

Less than $3,000. MA personal exemption is over $4,000. No payment to either feds or state.

[Pacun]

56 minutes ago, Catherine said:

Less than $3,000. MA personal exemption is over $4,000. No payment to either feds or state.

I would file both.

[mircpa]

@Catherine

Are you not suppose to file MA Non resident tax return indicating whole year taxpayer was not present in MA ?

MA instruction to file ONLY if MA source income greater than 8,000

[Catherine]

On 4/28/2023 at 10:26 PM, mircpa said:

MA Non resident tax return

The domicile question is relevant, though. No, she wasn't in the US - but the house her ex and her kids live in in MA is where she stays when she is in MA (most amicable divorce I've ever seen!). And she has been here for some months now. MA would likely assert that she has never relinquished MA domicile. Since there is no tax due, we're going to file in MA as a resident and be done with it.  After this she's no longer going to be my client (foreign corporation ownership issues way above my comfort level) and the foreign tax expert person can deal with any MA complications (happy to confer with him/her once I get a Section 7216 authorization, should he/she want).

Many thanks to all for the questions, comments, advice, and thoughts on different aspects of this oddball circumstance.