Expat State Taxes

State Filing

Expat state taxes can get complicated, but we’re going to simplify them for you below. As an expat, you’re consistently reminded that you need to file a Federal Tax Return each year in order to stay compliant with the IRS. However, there is an equally important requirement for some expats that can easily be overlooked – filing state taxes. Because each state has its own governing body (and with that, different laws and regulations), requirements differ based on where you lived before you moved abroad. Here are a few things you should know about expat state taxes if you’re living overseas.

When Would I Need to File a State Tax Return?

There are specific rules you’ll need to be aware of, but not all dates are consistent. This inconsistency is because rules can differ depending on your home state. Luckily, these expat state income tax tips can help you achieve some clarity. In some cases, you won’t need to file state tax for expats if you’re living abroad; in fact, a few states don’t even have state income taxes at all. Here’s how to know if you need to file:

1. Determine if you’re a resident of the state, or if the state considers you a resident for tax purposes. This would be determined by the following:

• You lived in the state at any point during the tax year.
• Your immediate family lives in the state while you’re overseas.
• You return to the state each time you return to the US to live.
• You maintain an abode in the state (a permanent place of residence).
• You keep your driver’s license or ID card or voting rights in the state.

2. Determine if you have income in the state:

• Income earned from working in the state is almost always taxable in the state.
• Other income generated from a state source – like pension/retirement income or government benefits – may be taxable if you’re a resident of the state.
• Residency requirements are determined by the individual state, but most states consider you a non-resident if you live outside the state for more than half a year. If you need additional help finding out how to start paying state taxes while living abroad, contact Accutax Business Center today to learn more.