Watch That U.S. Address On Your Taxes

It could trigger a love note from your state
BY: ORLANDO GOTAY

When people fill out tax returns, most are concerned with the figures in the tax return.  Few give any consideration to another subtle, and important piece of information:  the address.  This could be especially important for those who make their home outside the United States.

To be sure, one may have a stateside address, for the obvious convenience.  But that convenience may turn out to be an inconvenience.

The federal IRS and the states have” information sharing agreements.”  (Translation: The feds can and will rat you out to the state). The information reported on a federal return gets shared with the state whose address is listed on the federal return. 

You may live in Mexico full time but have that convenient stateside address, even just a P.O. Box.  I urge you to think before using it, because whatever state you list, will also run a matching program, and you could get a love letter from that state.. California is notorious for this.

I have always believed that the best plan with taxing agencies is giving them the least information required.  So, if you have an address in Mexico, using it will prevent a state from seeing your return pop up on their radar.

Of course, you may still have a filing obligation with a state, depending on the source and amount of income you have, but that’s another matter altogether. In fact, sometimes, it may even be more convenient for you to actually choose the stateside address.  It all depends.  Run the numbers, or ask someone way smarter in these things what they think you should do.

I write about this in the middle of the year, when the last thing on people’s minds is taxes.  But that’s precisely why it is convenient to work on this now. Your tax return preparer may not be swamped with work now—perhaps even bored —and knowing this now may be useful.  Besides, he or she may not look kindly if this question comes up late during the 2016 filing season.

Plan ahead and choose your address carefully.  If you are concerned about using your physical address in Mexico, consider renting a Mexico P.O. Box, they’re ridiculously cheap. And remember, it’s all in the address.

Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies.  His love of things Mexican has led him to devote part of his practice to the tax matters of U.S. expats in Mexico.  He can be reached at tax@orlandogotay.com. ,