Americans moving abroad realize that they have to file US expatriate returns and to report their worldwide income if they meet the tax requirements. However, some American expats living overseas might be subject to state tax filing too. Moreover, some states will even put a lien on taxpayer’s US bank accounts and other property if the state tax return is not filed and there is a state tax due. Consequently, it is essential for US taxpayers to learn the state tax filing requirements.
State Tax Return and American Expats Living Abroad
Are American expats required to file a state tax return?
Two factors determine whether Americans living overseas are required to file a state tax return.
Factor 1 – State of residency before moving abroad
Factor 2 – Ties to the last state of residency
Each state has its own set of rules. Some states do not impose a state income tax; other states will tax its former residents on the worldwide income unless they cut ties to the state. Let’s review the state rules.
Which states are favorable to Americans moving abroad?
Several states do not have a state income tax. As a result of it, its residents are not required to file state tax returns whether they live in the state or abroad. The following states are the most favorable to American expats:
- South Dakota
Two states like Tennessee and New Hampshire are also friendly to American expats because they collect taxes on interest and dividends only.
Which states are not favorable to American Expats Residing Abroad?
The most unfavorable states to Americans moving overseas are New Mexico, Virginia, South Carolina, and California. These states impose a lot of restrictions. Moreover, these states will not release a taxpayer from the state tax return requirements unless they prove that they cut ties to the state. These states look at different factors to determine the ties to the state like dependents, a driver’s license, voting card, real estate, US address, bank account, mail, library cards, memberships etc .
Which states are neutral to US citizens and green card holders moving overseas?
Other states are neutral to Americans moving abroad. As long as an American has been outside of the state for 6 months and s/he can prove residency somewhere else, s/he will be released from the state tax return filing.
Are American expats living abroad required to file a state tax return if they own a property in a state?
It is quite common among American expats to own a house or condo in the USA. If a US taxpayer owns a rental property in a state, s/he will be required to file a state tax return in a corresponding state. It is important to report all rental income and deductions.
If American expats require help with state tax returns, please contact us. Expat tax experts at Expattaxcpaservices.com will be pleased to assist with various overseas tax issues.
How can American expats get more information about each state?
For the convenience of our clients, we prepared a list of all states below.
- Alabama Alabama Department of Revenue
- Alaska Alaska Department of Revenue
- Arizona Arizona Department of Revenue
- Arkansas Arkansas Department of Finance and Administration
- California California State Board of Equalization
- California California Franchise Tax Board
- Colorado Colorado Department of Revenue
- Connecticut Connecticut Department of Revenue Services
- Delaware Delaware Division of Revenue
- Florida Florida Department of Revenue
- Georgia Georgia Department of Revenue
- Hawaii Hawaii Department of Taxation
- Idaho State Tax Commission
- Illinois Illinois Department of Revenue
- Indiana Indiana Department of Revenue
- Iowa Iowa Department of Revenue and Finance
- Kansas Kansas Department of Revenue
- Kentucky Kentucky Revenue Cabinet–Online Taxpayer Service Center
- Louisiana Louisiana Department of Revenue
- Maine Maine Revenue Services
- Maryland Maryland
- Massachusetts Massachusetts
- Michigan Michigan Department of Treasury
- Minnesota Minnesota Department of Revenue
- Mississippi Mississippi Tax Commission
- Missouri Missouri Department of Revenue
- Montana Department of Revenue
- Nebraska Nebraska
- Nevada Department of Taxation
- New Hampshire New Hampshire Department of Revenue Administration
- New Jersey New Jersey Division of Taxation
- New Mexico New Mexico Taxation and Revenue
- New York New York Department of Taxation & Finance
- North Carolina North Carolina Department of Revenue
- North Dakota North Dakota State Tax Department
- Ohio Ohio Department of Taxation
- Oklahoma Oklahoma Tax Commission
- Oregon Oregon Department of Revenue
- Pennsylvania Pennsylvania
- Rhode Island Rhode Island Division of Taxation
- South Carolina South Carolina Department of Revenue
- South Dakota South Dakota
- Tennessee Tennessee
- Texas Window on State Government–Texas Taxes
- Utah Utah State Tax Commission
- Vermont Vermont Department of Taxes
- Virginia Virginia Department of Taxation
- Washington Washington Department of Revenue
- Washington D.C. Office of Tax and Revenue
- West Virginia West Virginia Department of Revenue
- Wisconsin Wisconsin Department of Revenue
- Wyoming Wyoming Department of Revenue