State taxes after you move abroad: how to really leave
Moving abroad ends your state taxes only if your state agrees you've left. Most states that tax income keep you as a resident until you've clearly set up home somewhere else, and a few are known for holding on.
The short version
- States tax their residents, and moving abroad doesn't end your residency by itself.
- Most states look at your domicile: the place you intend to come back to as home.
- California, New York and Virginia are among the states known for keeping expats as residents.
- The Streamlined procedures cover federal returns only. States have their own rules for catching up.
1How states decide
States with an income tax tax their residents on all their income, wherever it's earned. Most decide residency by domicile: your true, fixed home, the place you intend to return to. You keep your domicile until you clearly set up a new one.
So moving abroad for a few years while keeping a house, a car or a driver's license can leave your old domicile, and your state tax, exactly where it was. Some states also treat you as a resident if you keep a home there and spend enough days in the state.
2States that hold on
| State | What to know | |
|---|---|---|
| California | Looks at where your closest ties are. People abroad on an employment contract for at least 546 days in a row can be treated as nonresidents, if they meet the other conditions, such as short visits back. | Holds on |
| New York | A New Yorker who keeps a home there generally stays a resident. One exception: at least 450 days in foreign countries during 548 days in a row, with no more than 90 days in New York, among other conditions. | Holds on |
| Virginia | Follows your domicile, and expects you to show you've set up home somewhere else. | Holds on |
| No tax on wages | Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Washington does tax some large capital gains. | Easy |
3How to leave cleanly
- Change or give up your driver's license and car registration.
- Sell or rent out your home, rather than keeping it ready for your own use.
- Move your bank and mailing addresses where you can.
- File a part-year return for the year you leave.
- Keep proof of your life abroad: your lease, residence permit and local tax registration.
Voting from abroad in federal elections, using your last state address, doesn't by itself make you a resident for that state's taxes. Federal law says so.
Leaving is something you show, not just something you do.
4If you owe state returns
The IRS's Streamlined procedures cover federal returns only. States have their own catch-up programs, usually called voluntary disclosure, and their own rules on how far back to file. For the federal side, see every IRS catch-up option for expats.
Many states don't allow the foreign earned income exclusion or a credit for foreign taxes, so state tax can be due even when your federal tax is zero. California is one. We can file your state return too, if one is required.
Common questions
I moved abroad years ago. Am I still a resident of my old state?
Possibly, if you kept a home or other strong ties there. It depends on the state and your facts, so it's worth checking before you file anything.
Can I just pick a state with no income tax?
Not on paper alone. A state you never really lived in isn't your domicile. But if you lived in one of them before moving abroad, leaving from there is simple.
Does my state get the same information the IRS gets?
Many states can see your federal return through information-sharing with the IRS, so it's best to get the state side right at the same time.
Worried about your old state? We'll check it for you.
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Reviewed by Lewis Grunfeld, CPA. Based on the residency rules published by California, New York and Virginia. General information, not advice for your specific situation.