Planning move to lower tax jurisdiction within US, can I *technically* hold off invoicing income? Thread poster: Adieu
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Adieu 
Ukrainian to English
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I'm thinking of moving from California to Texas (no state income tax) within the next month or two. Even if I bill my clients right now, chances are I won't get paid until January 2022 anyway.
Should I just bill them from Texas in January 2022 instead?
And is this 100% legitimate, a technically questionable but common practice with no chance of issues, or potentially troublesome?
PS also, for simplicity's sake, should I make the extra effort to swap ... See more I'm thinking of moving from California to Texas (no state income tax) within the next month or two. Even if I bill my clients right now, chances are I won't get paid until January 2022 anyway.
Should I just bill them from Texas in January 2022 instead?
And is this 100% legitimate, a technically questionable but common practice with no chance of issues, or potentially troublesome?
PS also, for simplicity's sake, should I make the extra effort to swap my driver's license and vehicle registration over to Texas in December 2021 (which would be a bit of a hassle) so that I'm clearly no longer a Californian in 2022, or is that unnecessary?
Please advise. Thanks.
[Edited at 2021-11-30 09:41 GMT]
[Edited at 2021-11-30 09:43 GMT] ▲ Collapse
| | | | | Translation - art & business » Business issues » Planning move to lower tax jurisdiction within US | Nov 30, 2021 |
Adieu wrote:
I'm thinking of moving from California to Texas (no state income tax) within the next month or two. Even if I bill my clients right now, chances are I won't get paid until January 2022 anyway.
Should I just bill them from Texas in January 2022 instead?
And is this 100% legitimate, a technically questionable but common practice with no chance of issues, or potentially troublesome?
PS also, for simplicity's sake, should I make the extra effort to swap my driver's license and vehicle registration over to Texas in December 2021 (which would be a bit of a hassle) so that I'm clearly no longer a Californian in 2022, or is that unnecessary?
Please advise. Thanks.
[Edited at 2021-11-30 09:41 GMT]
[Edited at 2021-11-30 09:43 GMT]
No bro it won't be legitimate and both states have different tax policies so, it will be better to make a bill in California, and after that shift to texas. I have also shifted from California to Texas and I have started an LLC business, The rule related to Texas LLC is so strict. but if you want to start LLC you can contact me, Bye Seeya soon in Texas.
| | | | Kevin Fulton
United States
Local time: 11:15
German to English
| Taxation generally depends on accounting method | Nov 30, 2021 |
If you are using the accrual method of accounting, you might be liable for taxes on funds invoiced that year, but received the following year.
Since I use a simplified accounting method based on realized (received) revenue,
taxation in my state generally follows the procedure of tax liability occurring as of the date of receipt of the income. I send out my invoices for work completed in December at the end of that month and am taxed on the income received in January. When I still had... See more If you are using the accrual method of accounting, you might be liable for taxes on funds invoiced that year, but received the following year.
Since I use a simplified accounting method based on realized (received) revenue,
taxation in my state generally follows the procedure of tax liability occurring as of the date of receipt of the income. I send out my invoices for work completed in December at the end of that month and am taxed on the income received in January. When I still had clients paying after 60 days of invoicing, I received funds in January that I had invoiced in November.
There are a couple of financial translators on Proz located in Texas who might be able to give you more specific information regarding taxation in that state. ▲ Collapse
| | | | Jean Lachaud
United States
Local time: 11:15
English to French
+ ...
| Aren't we all "cash business"? | Nov 30, 2021 |
In NY State, I am considered a cash "business", and I file income based on the date payment is received. No one in any tax jurisdiction seems to care about my invoices.
At any rate, the best thing to be sure is to as a CPA, rather than a forum such as this one (I can't wait for the usual suspects living in Europe, who know nothing about tax or legal issues in the USA, to chime in).
J L
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RobinB
United States
Local time: 10:15
German to English
| Taxation and residence | Nov 30, 2021 |
You're taxed where you're resident, so you can only register for taxes in Texas once you're a Texas resident, i.e., you have (or about to have) a Texas driver license and you have a Texas address (check the TX DPS rules).
You can avoid state taxes entirely on your business by registering a LLC, which only costs a few hundred dollars in Texas and is a one-time fee (as opposed to, e.g., California), and making the S-Corp election, so you pay state payroll tax on part of your income, b... See more You're taxed where you're resident, so you can only register for taxes in Texas once you're a Texas resident, i.e., you have (or about to have) a Texas driver license and you have a Texas address (check the TX DPS rules).
You can avoid state taxes entirely on your business by registering a LLC, which only costs a few hundred dollars in Texas and is a one-time fee (as opposed to, e.g., California), and making the S-Corp election, so you pay state payroll tax on part of your income, but only federal taxes on the rest.
But don't forget that you have quite high property taxes to pay here in Texas. We recently moved from Austin to the coast to avoid paying almost $15k in property taxes in perpetuity.
As Jean said, best speak to a CPA who has experience in cross-border taxation.
Robin ▲ Collapse
| | | | Adieu
Ukrainian to English
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TOPIC STARTER | Is there some hidden fee element to Texas property taxes? | Nov 30, 2021 |
I was looking at Katy, Texas (Greater Houston area), which at first glance appears to have plenty of homes in the 200-300k bracket and a property tax of ~1.5%.
RobinB wrote:
You're taxed where you're resident, so you can only register for taxes in Texas once you're a Texas resident, i.e., you have (or about to have) a Texas driver license and you have a Texas address (check the TX DPS rules).
You can avoid state taxes entirely on your business by registering a LLC, which only costs a few hundred dollars in Texas and is a one-time fee (as opposed to, e.g., California), and making the S-Corp election, so you pay state payroll tax on part of your income, but only federal taxes on the rest.
But don't forget that you have quite high property taxes to pay here in Texas. We recently moved from Austin to the coast to avoid paying almost $15k in property taxes in perpetuity.
As Jean said, best speak to a CPA who has experience in cross-border taxation.
Robin
| | | | IrinaN
United States
Local time: 10:15
English to Russian
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| First things that come to mind | Dec 1, 2021 |
1. Your clients want to close their books and not go back to something they ordered last year. Think of that too if you value them. You are about to step on the shady ground. Your moving costs write-off will cover the trouble of a few taxed invoices.
2. You do not swap driver's license. You apply for a new DL in each state, and then, after you receive the license from the new state, you inform your previous state and request to null and void you CA license. If you own your car, you ... See more 1. Your clients want to close their books and not go back to something they ordered last year. Think of that too if you value them. You are about to step on the shady ground. Your moving costs write-off will cover the trouble of a few taxed invoices.
2. You do not swap driver's license. You apply for a new DL in each state, and then, after you receive the license from the new state, you inform your previous state and request to null and void you CA license. If you own your car, you may also need to change the title together with the license plates, unless you want to buy a new one in Texas. Mind it, the states do not exchange this information, there is no national DL database and you can have both of them valid until one state hits you with some surprise, like Virginia did to me once. After moving back to Texas and taking proper care of my Texas DL in January, I received an overdue note re property tax on my car in July ($105 for 6 months, something unheard of in Texas), and that's how i learned about this whole mess. My VA DL was still alive and kicking without my knowledge. Moreover, in a few months I paid off my car and received Virginia title because the bank still had VA info.
3. Personal property tax percentage in Texas does not include our school taxes. Study that one too. And add our light bills:-). You are moving to the air conditioning country.
Good luck! ▲ Collapse
| | | | | Doubtless you can | Dec 1, 2021 |
But could you live with *technically* being a tax-dodger?
[Edited at 2021-12-01 11:12 GMT]
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Adieu
Ukrainian to English
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TOPIC STARTER | What can I say | Dec 2, 2021 |
...have you seen my source language?
Ice Scream wrote:
But could you live with *technically* being a tax-dodger?
[Edited at 2021-12-01 11:12 GMT]
| | | | Daryo
United Kingdom
Local time: 16:15
Serbian to English
+ ...
| Being in good company | Jan 23, 2022 |
Ice Scream wrote:
But could you live with *technically* being a tax-dodger?
[Edited at 2021-12-01 11:12 GMT]
What is good for Google, Amazon & Co is a no-no for anyone else?
If you fancy moving around UK, you will be surely looking for the place with highest council tax?
| | | | | Just let the poor and the weak and the old and the sick suffer, why don’t we? | Jan 23, 2022 |
Daryo wrote:
What is good for Google, Amazon & Co is a no-no for anyone else?
If you fancy moving around UK, you will be surely looking for the place with highest council tax?
Even more so for everyone else. It’s at the consumer level that tax avoidance/evasion makes the real difference.
Nobody chooses where they live based on council tax levels. That wouldn’t be dodging tax either because the amount you pay ought to reflect the cost of what you get in that area.
Holding back on billing to avoid tax would be underhand even if it were not illegal.
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