Do I need to file U.S. taxes if I live abroad?

Yes. The United States taxes its citizens on their worldwide income, regardless of where they live. Even if you earn all your income overseas, you are still required to file a U.S. tax return if your income exceeds the standard filing threshold.

What is the Foreign Earned Income Exclusion (FEIE)?

The Foreign Earned Income Exclusion allows qualifying U.S. citizens and residents living abroad to exclude up to $130,000 (tax year 2025, filed in 2026) of their foreign earnings from U.S. taxation. To qualify, you must meet either the Bona Fide Residence test or the Physical Presence test.

What is the FBAR and who needs to file it?

FBAR (FinCEN Form 114) is a report of Foreign Bank and Financial Accounts. You must file an FBAR if you have a financial interest in or signature authority over foreign accounts that exceeded $10,000 at any time during the calendar year.

Can I avoid double taxation on my foreign income?

In most cases, yes. The U.S. has tax treaties with many countries, and you can claim a Foreign Tax Credit for taxes paid to foreign governments. Between the FEIE, foreign tax credits, and treaty benefits, most Americans abroad can significantly reduce or eliminate their U.S. tax liability.

What happens if I haven't filed U.S. taxes in several years?

There are IRS programs designed to help Americans abroad get back into compliance without facing severe penalties. The Streamlined Filing Compliance Procedures is one popular option for those who can certify their failure to file was non-willful.

Do I still have to pay state taxes if I move abroad?

It depends on the state. States like Texas, Florida, and Washington have no income tax. But states like California, New York, and Virginia may continue to tax you as a resident if you haven't properly severed your domicile — even years after moving abroad.

How do I break state tax residency?

You need to sever your domicile by changing your driver's license, voter registration, and mailing address to a no-tax state or surrendering them entirely. Close local bank accounts, cancel club memberships, and avoid maintaining a home in the state. Documentation matters — states look at the totality of your connections.

Does California tax expats living abroad?

California is one of the most aggressive states. It uses a 'safe harbor' rule requiring you to be outside California for at least 546 consecutive days and limit your California visits to fewer than 45 days per year. Even then, California-source income (like rental income from California property) remains taxable.

Can I change my domicile to a no-tax state before moving abroad?

Yes, and many expats do. Moving to a state like Texas, Florida, or Nevada before going abroad and establishing genuine ties there (driver's license, voter registration, bank accounts) can cleanly end your obligation to your previous high-tax state.

State Tax Obligations for Americans Abroad: Does Your State Still Tax You?

You've moved abroad and filed your federal taxes. But what about state taxes?

Here's the uncomfortable truth: some states never really let you go. Depending on where you lived before moving abroad, you may still have state tax obligations — sometimes for years after you've left.

Why State Taxes Matter for Expats

Unlike the federal government, states can't tax you on worldwide income just because you're a U.S. citizen. They need a connection — typically residency or domicile.

The problem? States define these terms differently, and some are aggressive about claiming you're still a resident.

States That Are Easy to Leave

These states have no income tax, so there's nothing to worry about:

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming

If your last state of residence was one of these, you're in the clear on state taxes.

States That Are Hard to Leave

These states are known for aggressively pursuing former residents:

California

California is notorious for taxing former residents. The Franchise Tax Board (FTB) looks at whether you've truly abandoned your California domicile — not just residency.

California considers:

Where is your "permanent home"?
Where is your family?
Where are your belongings?
Where do you vote?
Where are your bank accounts?
Where is your driver's license from?
Do you own property in California?

If you maintain significant ties to California, the FTB may argue you're still domiciled there — and owe taxes on your worldwide income.

California's "safe harbor": If you're outside California for at least 546 consecutive days for employment, you're presumed to be a nonresident. But this doesn't apply to everyone, and the presumption can be rebutted.

New York

New York uses a domicile test similar to California, plus a statutory residency test.

Statutory residency: If you maintain a permanent place of abode in New York AND spend more than 183 days there, you're a statutory resident — even if you're domiciled elsewhere.

The apartment problem: Many expats keep a New York apartment (maybe for visits or because they can't sell). This can trigger statutory residency if you spend too much time in the state.

New Mexico

New Mexico is surprisingly aggressive. The state presumes you remain a resident until you establish residency elsewhere. Simply moving abroad may not be enough — they want to see you've established domicile in your new country.

South Carolina

South Carolina also presumes continued residency until you establish domicile elsewhere. The state looks at factors like:

Vehicle registration
Voter registration
Where you file your federal return from
Where you keep your belongings

Virginia

Virginia requires you to prove you've established domicile in another state or country. Without clear evidence of a new domicile, they may continue to claim you as a resident.

How to Properly Sever State Tax Residency

If you're leaving a sticky state, take these steps:

1. Document Your Move

Keep evidence of your departure:

Flight records
Moving company receipts
Shipping records for belongings
Lease termination in the U.S.
Lease or purchase agreement abroad

2. Sever Ties

Cancel or change as many connections as possible:

Tie to Sever	Action
Driver's license	Surrender or let expire; get foreign license
Voter registration	Cancel registration
Vehicle registration	Sell vehicle or re-register elsewhere
Bank accounts	Close accounts or move to a no-tax state
Professional licenses	Transfer to new jurisdiction if possible
Club memberships	Cancel or convert to non-resident status
Mail	Change address to foreign address

3. Establish Ties Abroad

Build evidence of your new life:

Get a long-term visa or residency permit
Sign a lease or buy property
Open local bank accounts
Get a local driver's license
Register with local authorities
Join local organizations

4. Be Consistent

Your story needs to be consistent across all documents:

Federal tax return address: foreign
Passport renewal address: foreign
Bank statements: foreign
Any official correspondence: foreign

5. File a Part-Year or Final State Return

Most states require a part-year resident return for the year you leave. This documents your departure date and final filing.

Some states also have specific forms to declare you're no longer a resident.

State Tax on Non-Residents

Even if you successfully establish non-residency, you may still owe state taxes on:

State-Source Income

If you have income sourced to a state, that state can tax it regardless of where you live:

Rental income from property in the state
Business income from activities in the state
Sale of real estate in the state
Wages for work performed in the state

Pass-Through Income

If you're a partner in a partnership or shareholder in an S-corp with state-source income, you may owe state taxes on your share.

Retirement Income

Some states tax retirement distributions paid to former residents. However, federal law (4 U.S.C. § 114) prohibits states from taxing retirement income of nonresidents, including:

Pension distributions
401(k) distributions
IRA distributions

Social Security is also generally exempt from state taxation for non-residents.

State-by-State Quick Reference

State	Difficulty	Key Issue
California	Hard	Domicile-based, aggressive audits
New York	Hard	Statutory residency if you keep a home
New Jersey	Medium	Part-year rules can be complex
Connecticut	Medium	Domicile-based
Massachusetts	Medium	Statutory residency test
Minnesota	Medium	Aggressive on former residents
New Mexico	Hard	Presumes continued residency
South Carolina	Hard	Presumes continued residency
Virginia	Medium	Must prove new domicile
Illinois	Easy	Generally respects departure
Pennsylvania	Easy	Generally respects departure
No income tax states	None	No issues

What If Your Former State Comes After You?

If you receive a notice from your former state claiming you owe taxes:

1. Don't Ignore It

States have long memories and collection powers. Ignoring a notice won't make it go away.

2. Gather Your Evidence

Collect documentation of your departure and establishment abroad. The more evidence, the better.

3. Respond Formally

Most states have a protest or appeal process. Respond in writing with your evidence.

4. Get Help If Needed

State residency disputes can be complex. Consider consulting with a tax professional who understands state tax issues.

Planning Before You Leave

If you're still planning your move abroad:

Consider Your State

If you currently live in a sticky state, consider:

Moving to a no-tax state before going abroad
Spending time establishing residency in a no-tax state first
Thoroughly documenting your departure

Clean Break Strategy

Make your departure as clean as possible:

Don't keep a home in the state
Don't keep a car registered there
Move bank accounts
Cancel voter registration
Update your address everywhere

Timing Matters

If you leave mid-year, you'll file a part-year resident return. Plan your departure date to minimize state taxes owed.

The Bottom Line

State taxes are often overlooked by expats, but they can add up — especially if you're from a state like California or New York.

Key points:

Some states are hard to leave and may claim you're still a resident
Documentation is crucial — prove you've established a new domicile
Sever ties methodically and completely
State-source income is still taxable regardless of residency
Get help if you receive a notice from your former state

Unsure about your state tax obligations while living abroad? Let's review your situation -- the rules vary significantly by state, and getting it wrong can be expensive.