US State Tax Returns for People Who Have Left
IRS, Guide
Why a move to the UK does not always end a US state tax obligation, and how states decide who remains a resident.
US State Tax Returns for People Who Have Left: the short answer
The IRS does not run state income tax. Each state has its own rules, its own returns and its own view of when a resident has left. An American who moves to London can stop being a resident of their former state straight away, or can remain one for years.
When your former state still wants a return
States generally tax residents on worldwide income and non-residents on income sourced to the state.
Residence usually turns on domicile, meaning the place a person regards as their permanent home, and some states add a statutory residence test based on days and a home in the state. Domicile rules differ by state. Leaving the country does not change domicile by itself if the person keeps strong ties and an intention to return.
Some states, California and New York among them, are known for being slow to accept that a former resident has left. Keeping a house, a driving licence, voter registration or a business in the state can all point towards continuing residence. The practical work is to break ties deliberately, document the move and file a part-year return for the year of departure where the state requires one.
States do not all follow the federal treatment of foreign income. Some, California among them, do not allow the foreign earned income exclusion, and many give no credit for UK tax. The US-UK treaty is generally aimed at federal tax, and most of its relief provisions do not bind the states. A continuing state residence can therefore produce state tax on UK income that the federal return has already relieved.
At a glance
- Each state separately, not the IRS
- Run by
- Usually domicile, sometimes also a statutory test
- Residence test
- Generally aimed at federal tax, not state tax
- Treaty relief
- Often a part-year resident return
- Year of move
Figures are for the tax year stated in the official instructions linked below.
How we handle it
- Multi-State Tax Filing
State income tax returns for people who have moved abroad, earn income in several states, or run a business with a US footprint.
- Individual Tax Returns
US federal returns for Americans living in the UK and British nationals with US income, prepared with the UK figures in view.
- Cross-Border Property
US and UK tax on homes and rental property held across the two countries, including sales, currency gains, FIRPTA and UK reporting.
Where people go wrong
The misreadings we correct most often.
Who this affects
- Americans who moved to the UK from states with income tax
- Former residents keeping a home or rental property in their old state
- UK residents with income sourced to a particular US state
- People planning a move who want to leave their state cleanly
01
Assuming a federal return from abroad ends all state obligations
02
Keeping a home, licence and voter registration in the former state
03
Expecting the state to follow the federal foreign earned income exclusion
04
Overlooking state-source income such as rent after the move
Why US UK Tax Returns
Every form is prepared against the official instructions, and every position on it is one we can point to in the Code, the treaty or HMRC's guidance.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
I moved to the UK three years ago. Why is my old state still sending me letters?
Some states treat a person as domiciled there until the evidence shows otherwise, and a missing return can trigger enquiries. Ties such as a home, a licence or an address on file can support the state's view. The response depends on the state's rules and the facts of the move, and it usually means assembling evidence of when and how the connection ended.
Does the foreign earned income exclusion work on my state return?
It depends on the state. Some start from federal adjusted gross income and so pick up the exclusion automatically. Others, California among them, add it back. Many states also give no credit for UK income tax. This matters only if you remain a resident of the state, or have income sourced there, so residence is the first question.
I still rent out my house in the US. Do I file a state return?
Usually yes, as a non-resident, if the state has an income tax and the rent produces income above its filing threshold. Rental income from property in a state is generally sourced to that state. Owning the property can also be cited as a tie in any argument about residence, which is a reason to keep the rest of the move well documented.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
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