What are the requirements for filing state income tax returns for Americans living abroad?

4 min

How should Americans living abroad handle their state income tax obligations? Understanding state income tax obligations can be especially complex for Americans living overseas. 

  • Determining if your state of former residence has personal income tax requirements
  • Navigating the nuances of migration year implications
  • Knowing when to continue filing
  • Keeping track of varying due dates

Individual State Income Tax Returns for Americans living abroad

Navigating the complexities of state income tax returns can be challenging for Americans living overseas. Understanding your obligations requires clarity on various factors including residency, income sources, and specific state requirements. 

Here’s an informative guide addressing four key questions to help you manage your state tax responsibilities effectively.

States with personal income tax requirements

The obligation to file state taxes while living abroad primarily depends on whether your former state of residence imposes personal income tax. While states like Alaska, Florida, and Texas have no personal income tax, others have varying requirements based on residency and sourced income. 

States with stringent “sticky” laws, such as California and New York, often require expatriates to continue filing tax returns unless they sever all residential ties. It’s crucial to determine if you still qualify as a resident for tax purposes, which can be influenced by factors such as property ownership, family location, voter registration, and even where your car is registered.

Migration year implications

The year you move abroad is particularly significant for your tax filing status. You may need to file tax returns in multiple states if you changed residences during the year. Additionally, income earned in the U.S. before moving can still be subject to state taxes. 

Expatriates from “sticky” states might find it challenging to prove a change in residency status, as these states scrutinize your ties more closely and might consider your move temporary unless you’ve clearly established a new domicile elsewhere.

When to continue filing

Continuing to file state taxes as an expat depends largely on whether you have effectively terminated your residency in the state where you lived. If you maintain significant connections, such as property, bank accounts, or dependents in that state, you may still need to file returns. 

It’s possible to mitigate these obligations by establishing residency in a state with no income tax or by fully transferring and evidencing your life’s relocation abroad, including re-registering to vote and shifting financial accounts.

Due dates vary from state to state

State tax return deadlines can vary, making it essential to stay informed about the specific due dates applicable to the states where you must file. Typically, state tax returns are due around the same time as federal tax returns — April 15th — but extensions and different filing dates can apply, especially for residents living abroad or in multiple states within the same year.

Key considerations for your individual state income tax returns

  • Residency Determination:

Thoroughly assess whether you are still considered a resident for tax purposes in your former state. This involves understanding state-specific criteria and possibly proving a change in domicile if you’ve moved to a tax-friendly state before your international relocation.   

  • Source of Income: 

Identify if your income is sourced from within a state, as this can necessitate filing a tax return regardless of your residency status.

  • Multiple State Returns: 

If applicable, prepare to manage multiple state filings, particularly if you’ve moved between states in a single year or earned income in different states.

  • Professional Advice:

Consider consulting with a tax professional who specializes in expatriate and multi-state tax issues to ensure compliance and optimize your tax situation.

  • Record Keeping:

Maintain comprehensive records of all global income, expenses, and pertinent documents to support your tax filings and residency claims.

Navigating state tax returns from abroad can be complex, but understanding your filing obligations and planning accordingly can significantly reduce potential stress and financial burden. Always keep abreast of changes in state tax laws to ensure full compliance and take advantage of any opportunities to minimize your tax liabilities.

Need more information about your individual state income tax returns

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your individual state income tax returns.

Contact us for more information