Ines Zemelman, EADec-15-2015
Why you need to have a Virtual Mailbox Service if you live abroad
If you are an American living abroad you should seriously consider having a US mailing scanning / forwarding service for the following reasons:
1) You will be able to receive important pieces of mail on time (no delays due to foreign addresses) - as mail will be scanned immediately upon receipt in the continental U.S.
2) Your address can be in a tax-free state, thus avoiding potential huge problems with the IRS and State tax authorities.
3) You could have certain access to your mail within hours of it being received.
4) You would retain the ability to open and maintain US financial accounts.
5) You can store your mail in a secure location with easy online access.
That’s where a virtual mailbox service would tick all the checkboxes. Below we will give a brief explanation of how a virtual mailbox services works as well as advice for which one we recommend.
But what if your parents or friends can already receive mail for you in the US?
First, let’s consider the following potential alternative option you may have - your parents / friends / cousins who are living in the US. Here’s why using them to forward your mail is probably a bad idea:
1) Your parents or friends may live in a state with a State Tax. Then if you provide that address on your federal tax return to the IRS, you run a (very high) risk that the local state authority will demand that you file a State Return (and even send you a tax bill). You may have a reasonable chance to fight them - but it will take a lot of cost and effort to do so.
2) If you file a non-resident state tax return to report income from U.S. sources (rental income, partnership income) - then you are in a slightly better position. The non-resident return would disclose your current expat situation (living abroad, filing as a non-resident). However, if the non-resident state return is not required but the federal tax return shows a U.S. state address, then the state assumes that you are still the U.S. resident who failed to file state tax return. The burden of proof remains on you. There is no presumption of innocence when it comes to tax matters.
3) You cannot expect people who are doing you a favor to religiously scan every piece of mail you receive and email it to you within hours (or they may not even know how to do it in the first place). They may forget or lose some mail. In the end you are likely to get some of your mail months in the future after it was sent. We know this firsthand because many clients come to us with an issue that starts with ‘I did not get the mail IRS sent me for many months and I have a huge problem now, please help’.
4) At the end of the day, if your parents don’t mind forwarding you every piece of mail - it may simply get annoying for them and you would hate to nag them, particularly during tax season, to check and handle every single piece of mail that you receive. Think of it this way - just because your parents can probably wash your car, you don’t expect them to do it on a monthly basis and instead would probably go to a carwash instead.
Same way there is a professional service that can handle your incoming US mail.
How a Virtual Mailbox Service works
After a bit of setup, a virtual mailbox provides a convenient way to check your mail while you’re on the road or out of the country without bothering anybody else. Most companies use the following model:
You are given a personal mailbox number that is similar to a PO box but different in that it can also accept packages on your behalf. You will not, however, have the option to visit this location in person to pick up your mail.
Incoming mail is scanned and you can view it online from anywhere in the world. The service only scans the first page of the mail item and sends you the email to let you know that a new piece of mail is waiting.
You choose whether to discard, archive, open or forward the mail you receive in an online interface. The level of service you purchase will provide you with a certain number of mail “opens” per month (although you can always pay for more needed). If the first page of the letter looks like something you’d want to see more of, the company will scan it up to a specified number of pages. You can also request that they forward the mail on, which is handy if you’ve received a new credit card or a package.
It’s really a simple and very ingenious service for Americans living abroad! The only slight complication is that you’ll have to go through an identity verification process (further details below) in order to give the company permission to open your mail.
Which Virtual Mailbox Service We Recommend
We’ve looked far and wide and compared different companies. In the end we found that Traveling Mailbox offers the best service and value for money. You can look at their price plans and pick the one that works best for you - we believe that most US expats will find the basic $15 plan sufficient for their needs (which will actually cost $5 more because you will have to pay extra for “premium” address in a no-tax state).
What is very important is that you pick an address in a no-tax state. That leaves you the option of:
1.Las Vegas, Nevada
We secured a special deal with the company - if you sign up for a year of service, you get 2 months free. Click on this link to proceed: Traveling Mailbox.
Should You Even Provide a US Address on Your Expat Tax Return?
You are not required to provide U.S. address on your Expat Tax Return and can use a foreign address instead.
However, you might want to do so in certain cases. For example::
You reside in a country with unreliable post service
You received income sourcing from a U.S. state that levy state tax unless you provide alternative U.S. address.
You need to show a U.S. state address and file state tax return to apply for financial aid in a U.S. state college.
How to Notarize Form 1583 if You Are Currently Abroad
In order to legally allow a virtual mailbox service to open your mail on your behalf, you will need some sort of authorization. In the United States, this means filling out USPS Form 1583 and having it notarized.
Here’s the problem you may likely run ran into: if you are already living overseas and want to get this set up? Unless you live next door to a US Embassy where you can get this document notarized, you really only have one choice: an online notary. There is an online service - NotaryCam - which can perform the notary service regardless of your physical location.
Using NotaryCam is simple enough: you just upload the document I needed to sign, an official form of identification and then essentially have a Skype call with a certified notary in the U.S. All-in-all the process should take you less than half an hour.
Ines Zemelman, EA is the founder of Taxes for Expats