Expat's Manual

As with the Federal Taxes, don’t assume you no longer have to pay US Expat Taxes to your previous state of residence if you have relocated abroad.

Many states, like South Carolina, California and Virginia are reluctant to allow residents to give up their taxable status, even though they longer physically live there. State tax agencies use a variety of criteria to decide if you are still a resident for tax purposes, such as;

  • Do you still keep an address there?
  • Do you still own or rent property there?
  • Where are your U.S. bank account locations?

You have to check with your individual state tax statutes for the particulars – but, in general, it’s important that you either eliminate--or reduce substantially--the number of residence “indicators” that might cause state tax authorities to determine you still have a US expat tax liability there. If you aren’t able to prove conclusively that you no longer have a “tax domicile” in the state where you lived, you may find yourself responsible for those tax payments. Taxes, penalties and interest assessed at a later date can end up being a very substantial debt.

You definitely have to continue paying taxes in a state if you are still receiving rental income or money from a trade or business there – even if you are no longer a resident of that state. Investment income, pensions and interest income, however, are not subject to state taxation unless you do still reside in the state. Again, check the specific US expat tax laws in the state in which you reside to make sure you’re aware of the latest statutes.

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