US State Tax Obligations for Americans Living Abroad
Moving abroad doesn't automatically sever your US state tax obligations. Some states — most notoriously California, New York, and Virginia — aggressively assert continued tax residency even after you have physically moved overseas. Whether you still owe state income tax depends on your domicile (your true home, legally defined), your ties to the state, and the steps you took before leaving. We help you understand your state exposure and prepare any required state returns as part of your complete expat filing.
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Every situation is different. The forms below commonly apply — your specific filing may vary.
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- ✓Automatic online filing
- ✓One federal + one state return
- ✓W-2, 1099 and basic deductions
- ✓Everything in Standard
- ✓Schedule C & SE for self-employment
- ✓Multiple income sources and currencies
- ✓Everything in Premier
- ✓Foreign Earned Income Exclusion (Form 2555)
- ✓Foreign Tax Credit (Form 1116)
- ✓FBAR filing (FinCEN 114) included
Frequently asked questions about US State Tax Obligations for Americans Living Abroad
Which US states are most aggressive about taxing expats?
California, New York, and Virginia are the three states most frequently involved in residency disputes with expats. California applies a strict domicile test and can claim residency based on multiple strong ties. New York uses a 'statutory residency' test based on days in the state plus a maintained abode. Virginia requires formal written notice to abandon domicile.
I sold my house and moved abroad — am I safe from state tax?
Selling your house is a strong indicator of intent to change domicile, but it may not be sufficient on its own. States also look at whether you transferred your voter registration, changed your driver's licence, moved financial accounts, and formally notified the state of your change. Our team reviews your specific facts.
Does the FEIE protect me from state income tax?
No. The Foreign Earned Income Exclusion is a federal provision only. States have their own rules about taxing foreign-source income and do not adopt the FEIE. If a state considers you a resident, it will tax your worldwide income under state law regardless of the FEIE.
I rented out my old house in California — do I owe California tax?
Yes. California taxes California-source income for non-residents, including rental income from California property. You must file a California non-resident return (Form 540NR) to report and pay California tax on that rental income — even if you live full-time in another country.
