Taxpayers who move in and out of the country should fully consider the state tax consequences of living and working in another jurisdiction.
You may not be as familiar with the requirement for some expats to file state returns as well. If you thought federal expat taxes were tricky, well, the intricacies of state taxation can be even more complex! These states get their revenue from other sources, like property tax and sales tax. If you live in one of the following states, do you have to file state returns?
Effect of state domicile on expat moves: helping taxpayers determine when and how to keep or terminate state domicile
New Hampshire and Tennessee only require income tax on dividend and interest income, so your tax filing requirements are simpler in those states, also. On the opposite end of the spectrum, a of states have nitpicky requirements that can make the tax process a bit more complicated when looking at which states to file returns; these states are referred to as sticky states.
Sticky states make ending your formal residency a challenge, and often consider you a resident even if you move away permanently. Sticky states also consider moving abroad a temporary leave of absence unless you can remove the following ties you have to the state:.
Free guide: 25 things every expat needs to know about taxes
They have the most rigid residency definitions and will tax your worldwide income. The taxpayer can return to California for visits of less than 45 days during the year. While some states are more complicated, other state returns for expats are pretty simple when it comes to state filing requirementsand many only require you to file a state return if you lived in that state during the year.
These states typically tax income that is generated or earned in the state, and they may tax income received while living abroad, such as from retirement payments and investments interest and dividends. If you find that you must file a state return while living overseas, a few considerations must be made.
Unfortunately, changing your residency is not easy.
Why expats may need to file state returns
You should do a measure of planning before your final departure from the US. Planning ahead can save you a lot of time and money when it comes to state taxes. Every state has its own tax laws and regulations.
Taxpayers should be aware that not only federal tax laws could apply to their income! Greenback can help!
Tax for expats: what you should know about state taxation
Our dedicated team of expat tax professionals can help you navigate the intricacies of US expat taxes and state returns. today!
Still not sure if you need to file State Tax Returns as an expat? Not to worry. Get started on your US expat taxes with the experts at Greenback.
State Filing Requirements for Other State Returns for Expats While some states are more complicated, other state returns for expats are pretty simple when it comes to state filing requirementsand many only require you to file a state return if you lived in that state during the year. How to File a State Return as an Expat If you find that you must file a state return while living overseas, a few considerations must be made.
State Tax Planning Unfortunately, changing your residency is not easy. If you are planning on changing your residency to another state before you move overseas, try to make the change several months or a year ahead of time.
Make sure your whole family makes the change with you. Immediate family members still living inside a state indicates that you intend to return to the state and that your living circumstances overseas are temporary. Cut as many ties to the state you are leaving as you can. Originally published in ; updated January 15, I'm Living In This field is for validation purposes and should be left unchanged. Share via. Send this to a friend. Send Cancel.