The matter of taxes for expats can be tricky because each state has its own laws and regulations. Simply put, requirements differ widely based on your original U.S. residence. What is important to remember is that there are two things to keep in mind: annual Federal Tax Return and state taxes for expats.
Which Expats Need to File State Taxes?
Much depends on the U.S. state you are moving from. Basically, you should look into the following to determine what to do:
Find out whether you’re a resident of the state for tax purposes
You have state residency while abroad in the following cases:
- If you lived in the state for any duration during the tax year
- If your immediate family lives in the state while you’re abroad
- If you have a permanent place of residence in the state
- If you keep your voting rights, ID card, or driver’s license in the state
Find out whether you have income in the state
Income earned while working in the state is, as a rule, taxable in the state. If you have state residency, other income may also be taxable (e.g., pension and retirement income and other government benefits).
The following states don’t levy state income taxes:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington State
- Wyoming
In addition, New Hampshire and Tennessee only assess income tax on dividend and interest income.
If you’ve moved abroad from the “sticky” states, namely California, South Carolina, New Mexico and Virginia, you will need to pay taxes even if you didn’t live in the state during the year if you fulfill any of the following criteria:
- Own a property
- Hold an ID card, a driving license, a voter registration
- Own a bank or investments account
- Have a mailing address in the state (including relatives)
- Have dependents in the state
Overall, before you set off on your adventurous travels, make sure to cut all possible ties to your state of residency you won’t need once abroad. And, depending on your final destination, consider a little cross-cultural learning. It’s always best to know before you go!
Angela Ash is an expert writer who specializes in unique business hacks for productivity, organization, project management and other entrepreneurial topics. She also works with Flow SEO as a Digital PR Specialist.
