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I have lived in the UK since Nov 2014 do I need to file California state taxes. I have no ties at all with California.

 
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New Member

I have lived in the UK since Nov 2014 do I need to file California state taxes. I have no ties at all with California.

If you are a US citizen now residing overseas, please remember that the United States continues to tax you on all of your worldwide income (one of the few countries that does so for expats).  Thus, as you probably know, you have to report, and pay taxes upon, your worldwide income, as long as you retain your US citizenship . . . even if you permanently live abroad in the United Kingdom.  Unless you work for the US government, however, you may have the opportunity to exclude some or all of your overseas income by claiming the Foreign Earned Income Exclusion (via IRS Form 2555).

With respect to California, we did some research on this for you.  As it turns out, by moving to a foreign country you are are able to "abandon" any prior California residency (tax domicile) for state tax purposes.  You would therefore only be taxed on your US income (by the state of California) for anything that was classified as California-source income.

Please refer to the California Franchise Tax Board Publication 1031 for details on residency.  In particular, the examples on Page 5, and the discussion on Page 9, are helpful and applicable to your present circumstances.  Here is that link:

https://www.ftb.ca.gov/forms/2016/16_1031.pdf


And please refer as well to the following California Franchise Tax Board webpage for a complete definition of how the FTB defines California-source income:

https://www.ftb.ca.gov/individuals/filertn/nonresidents-part-year-residents.shtml


Now then, unless you have specific California-source income to declare, you do not need to file a California state tax return, given your present circumstances.

Also, please don't forget any annual (federal) foreign financial account disclosures you may have to file this year.

In fact, there are two separate annual disclosure forms that may be required for US citizens with an account at a U.K. (or overseas) bank or other financial institution; each also has different reporting rules.

One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return (which you could file for free using TurboTax, if you have no taxable income).

The other is known as FinCen Form 114, which can only be filed via the internet.  The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels (called the "Reporting Threshold"):

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

 

Form 8938 is included in TurboTax, as indicated; FinCen Form 114 is not, and you would need to access that reporting webpage separately.  Note that you can get to the FinCen reporting internet site directly through the above IRS link (a link within a link, essentially).

Thank you for asking this important question, and we hope that you will enjoy living abroad.

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New Member

I have lived in the UK since Nov 2014 do I need to file California state taxes. I have no ties at all with California.

If you are a US citizen now residing overseas, please remember that the United States continues to tax you on all of your worldwide income (one of the few countries that does so for expats).  Thus, as you probably know, you have to report, and pay taxes upon, your worldwide income, as long as you retain your US citizenship . . . even if you permanently live abroad in the United Kingdom.  Unless you work for the US government, however, you may have the opportunity to exclude some or all of your overseas income by claiming the Foreign Earned Income Exclusion (via IRS Form 2555).

With respect to California, we did some research on this for you.  As it turns out, by moving to a foreign country you are are able to "abandon" any prior California residency (tax domicile) for state tax purposes.  You would therefore only be taxed on your US income (by the state of California) for anything that was classified as California-source income.

Please refer to the California Franchise Tax Board Publication 1031 for details on residency.  In particular, the examples on Page 5, and the discussion on Page 9, are helpful and applicable to your present circumstances.  Here is that link:

https://www.ftb.ca.gov/forms/2016/16_1031.pdf


And please refer as well to the following California Franchise Tax Board webpage for a complete definition of how the FTB defines California-source income:

https://www.ftb.ca.gov/individuals/filertn/nonresidents-part-year-residents.shtml


Now then, unless you have specific California-source income to declare, you do not need to file a California state tax return, given your present circumstances.

Also, please don't forget any annual (federal) foreign financial account disclosures you may have to file this year.

In fact, there are two separate annual disclosure forms that may be required for US citizens with an account at a U.K. (or overseas) bank or other financial institution; each also has different reporting rules.

One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return (which you could file for free using TurboTax, if you have no taxable income).

The other is known as FinCen Form 114, which can only be filed via the internet.  The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels (called the "Reporting Threshold"):

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

 

Form 8938 is included in TurboTax, as indicated; FinCen Form 114 is not, and you would need to access that reporting webpage separately.  Note that you can get to the FinCen reporting internet site directly through the above IRS link (a link within a link, essentially).

Thank you for asking this important question, and we hope that you will enjoy living abroad.

View solution in original post

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