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States without Foreign Earned Income Exclusion
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Fri Sep 13, 2013 7:27 pm    Post subject: States without Foreign Earned Income Exclusion Reply with quote

Alabama, California, Hawaii, Massachusetts, New Jersey, and Pennsylvania.

Anybody know if this list is accurate?
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spiral78



Joined: 05 Apr 2004
Posts: 9133
Location: On a Short Leash

PostPosted: Fri Sep 13, 2013 7:40 pm    Post subject: Reply with quote

Hmmm. I can't help with this, but I'm curious. I haven't lived in the US since 1998. I file US taxes, but because I own nothing there, I am liable to no state to file (much less pay) anything. In what circumstances would one have to file/pay state taxes while living abroad? Is it 'only' if you own property or maintain a state address?

By the way, I vote in national elections by mail in the state where I last resided.
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Fri Sep 13, 2013 9:12 pm    Post subject: Reply with quote

You have to pay state taxes in the state where you maintain a residence, right? So do you have residency outside the USA? Where? According to this, I'm thinking of trying to get residency in Uruguay:

http://www.offshorelivingletter.com/taxes/2013-foreign-earned-income-exclusion/Page-2.html
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spiral78



Joined: 05 Apr 2004
Posts: 9133
Location: On a Short Leash

PostPosted: Sat Sep 14, 2013 6:09 am    Post subject: Reply with quote

Yes, I have residency in two other countries outside the US, and I've got no address in the US, nor have I had since 1998. But I don't think you need official residency papers elsewhere to skip the state requirements; it's all about whether you are maintaining a US address.
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johnslat



Joined: 21 Jan 2003
Posts: 12056
Location: Santa Fe, New Mexico, USA

PostPosted: Sat Sep 14, 2013 1:26 pm    Post subject: Reply with quote

Dear Sirens of Cyprus,

Found this:

"By I.J. Zemelman, EA, Taxes for Expats Jun-20-2011


As a U.S. expatriate, you may assume that you have cut ties with your U.S. home and are not obligated to file a state return alongside your federal return (as all expats still have to do). This is not always true, however. And in the case of a few states, avoiding the state tax, even after years of living abroad, may seem almost impossible. In order to escape the state tax, there are several things you must do. It’s important to complete these tasks before moving overseas.
The “Cool” Nine
Out of fifty states, there are only nine that make moving overseas and avoiding the state tax an easy task. This is due to the fact that Wyoming, Washington, Texas, South Dakota, Nevada, Florida and Alaska do not collect state income tax from their residents (and, by extension, expatriates from the state). Tennessee and New Hampshire only collect taxes on interest and dividends, so they also make life easy for expatriates.
Moving from any of these nine states is relatively easy, at least at it pertains to your federal tax return. These states allow you to move and work overseas without being taxed back home (on the state level). Because earned income is not taxed in these states, it is wise to move overseas from any of the favorable nine, whenever it is possible. Moving to one of these states before moving overseas should be considered as it will save you from having to file a state return and paying state taxes along with your federal taxes.
The 4 Unfavorable States
If your current state of residence is New Mexico, Virginia, South Carolina or California, the news is not as good. The governments of these states view their taxpayers as a needed asset. They will fight to hold on to every penny of owed tax. When leaving these states, it is up to you to prove (to the satisfaction of the state), that you will not be returning. If you cannot sufficiently prove this, you will be required to file a state return alongside your federal expatriate return.
If you are planning to return to your home state at some point, you will probably not be able to prove otherwise. South Carolina and California are the most diligent when it comes to finding ties that suggest future residency. You will most likely have to file a state tax return if the state government can locate any of the following ties:

Telephne and/or utility bills
Voter registration
Library card
Mailing address
Association memberships
In state dependents
Property mortgage or lease
State drivers license
State investments or bank accounts"

For more

http://www.taxesforexpats.com/articles/expat-tax-rules/state-taxes-expat-tax-return.html
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Sat Sep 14, 2013 2:14 pm    Post subject: Reply with quote

Having to file a state return is a different issue from having a foreign earned income exclusion for state taxes. I got the list above here:

http://palazzotax.com/irs/

(scroll down)
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johnslat



Joined: 21 Jan 2003
Posts: 12056
Location: Santa Fe, New Mexico, USA

PostPosted: Sat Sep 14, 2013 3:25 pm    Post subject: Reply with quote

Dear Sirens of Cyprus,

I'm a little slow today, apparently. Could you explain the difference between having or not having to file a state income tax return when you're living abroad having a foreign earned income exclusion for state taxes?

This makes my head hurt.

Regards,
John
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Sat Sep 14, 2013 9:37 pm    Post subject: Reply with quote

Just as the feds require you to file, even if all your income is excluded, states that have income taxes seem to require the same. However, some states that have income taxes will give you a foreign earned income exclusion, while others will not.
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johnslat



Joined: 21 Jan 2003
Posts: 12056
Location: Santa Fe, New Mexico, USA

PostPosted: Sat Sep 14, 2013 10:02 pm    Post subject: Reply with quote

Dear Sirens of Cyprus,

Doesn't my post above deal with exactly that? What am I missing here?

Regards,
John
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Sat Sep 14, 2013 10:53 pm    Post subject: Reply with quote

Well, let's say you were living in New Mexico when you got a job in Saudi. According to your post, New Mexico may claim you as a resident and require you to file a state return. They make you pay state taxes on dividends or something, but not being on my list, New Mexico may still give you a foreign earned income exclusion, just like the feds. Had you been living in California, however, since that state is on both lists, they would require you not only to file, but also to pay full state taxes on foreign earned income, even though the feds let you slide.
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johnslat



Joined: 21 Jan 2003
Posts: 12056
Location: Santa Fe, New Mexico, USA

PostPosted: Sat Sep 14, 2013 11:59 pm    Post subject: Reply with quote

Dear Sirens of Cyprus,

In your OP, you mentioned 6 states, but . . .

"Moving from any of these nine states is relatively easy, at least at it pertains to your federal tax return. These states allow you to move and work overseas without being taxed back home (on the state level). Because earned income is not taxed in these states, it is wise to move overseas from any of the favorable nine, whenever it is possible. Moving to one of these states before moving overseas should be considered as it will save you from having to file a state return and paying state taxes along with your federal taxes."

Moreover, New Mexico will come after you for STATE INCOME TAX. I'm not sure where you got the idea they "make you pay state taxes on dividends or something . . ."

"If your current state of residence is New Mexico, Virginia, South Carolina or California, the news is not as good. The governments of these states view their taxpayers as a needed asset. They will fight to hold on to every penny of owed tax. When leaving these states, it is up to you to prove (to the satisfaction of the state), that you will not be returning. If you cannot sufficiently prove this, you will be required to file a state return alongside your federal expatriate return.
If you are planning to return to your home state at some point, you will probably not be able to prove otherwise. South Carolina and California are the most diligent when it comes to finding ties that suggest future residency. You will most likely have to file a state tax return if the state government can locate any of the following ties:"

Believe me - I KNOW they come after you for State income tax when you're living/working abroad. Heck, NM state taxes even Social Security.

Regards,
Taxed John
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Sun Sep 15, 2013 2:45 am    Post subject: Reply with quote

New Mexico makes you FILE. Since they are not on my list, I assume they have a foreign earned income exclusion, just like the feds, but they may tax dividends, just like the feds, or, as you say, social security.

The point of my post is to ask whether the states I listed really do tax your foreign earned income, even though the feds do not. Your list is about something else: states who presume that if you are a resident when you got the job then you will be coming back and are obliged to file a return there. It may well be that such states will still give you the foreign earned income exclusion.
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johnslat



Joined: 21 Jan 2003
Posts: 12056
Location: Santa Fe, New Mexico, USA

PostPosted: Sun Sep 15, 2013 2:03 pm    Post subject: Reply with quote

Dear Sirens of Cyprus,

I repeat that I KNOW from personal experience that New Mexico will NOT give a foreign earned income exclusion.

I don't know how I can make it any clearer than that.

Regards,
John
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Sirens of Cyprus



Joined: 21 Mar 2007
Posts: 209

PostPosted: Sun Sep 15, 2013 2:41 pm    Post subject: Reply with quote

Well, why didn't you say that before?
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johnslat



Joined: 21 Jan 2003
Posts: 12056
Location: Santa Fe, New Mexico, USA

PostPosted: Sun Sep 15, 2013 2:47 pm    Post subject: Reply with quote

Dear Sirens of Cyprus,

Umm, I thought I did:

"Believe me - I KNOW they come after you for State income tax when you're living/working abroad."

Regards,
John
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