Do I need to file a State Tax Return?

Only a CPA or IRS Enrolled Agent with knowledge of your situation can advise you if you need to file a state return.

When it comes to US state tax returns, every state is different. Some states are more favorable for expats, since they have no income taxes. These states include Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee are also favorable states because they only collect taxes on dividend and interest income. Unfavorable states include California, South Carolina, and New Mexico; these states see their taxpayers as assets and will leave the burden of proof on you to prove you are no longer a resident.

You may be required to file a state return if you are tied to the state in the following ways:

  • Mortgage or lease payments on property
  • State driver’s license
  • State bank accounts or investments
  • Telephone and utility bills
  • Voter registration
  • Library cards
  • Mail correspondence
  • Association memberships
  • Dependents living within the state

As an American expat, if you have some of the above ties in one of the states that have income taxes, you may be required to submit a state return until you prove residency in another state.