Are You Required to File a State Tax Return?
Do U.S. citizens living abroad need to file state taxes? The answer depends on the state. Some U.S. citizens and residents living abroad must file a state tax form, but not all expats are required to do so. What U.S. expats do for state taxes depends on which state they lived in before their move to another country. Each state has its own rules about who must file and most, but not all, states allow the foreign income exclusion to be used in determining taxable income.
If you can prove that you have lived elsewhere for a minimum of six months, most states allow you to end your residency and thus do not require you to file. However, some states require you to file a state return unless you can prove definitively that you are not returning (i.e., that you are “breaking residency”). These states are:
- New Mexico
- South Carolina
Of course, some states do not collect taxes from any individuals, and therefore you will probably not have to file, regardless of where you reside. These states are:
- South Dakota
And two states, Tennessee and New Hampshire, tax only income received from dividends and interest.
The states not mentioned above have minimum filing requirements. If you meet these, then you will likely have to file a state income tax form, regardless of where you reside during that tax period. The length of time you live abroad, whether you are deriving rental income from your home in the U.S., personal ties to your state and more all help to determine your state income tax filing requirements.
How Expat CPA Can Help
As you can see, figuring out whether you need to file an expat state income tax return, as well as how to file, can be quite confusing. That’s why you benefit from consulting with an experienced firm like Expat CPA. Our professionals will quickly determine if you need to file a state tax form. Our CPAs are also knowledgeable about the filing regulations within each state, so if you do have to file a state return, we will help you complete and file your return in a way that minimizes your expat state income taxes.
- State Expat Tax Return Package: $175 per state