My spouse and I worked overseas for a year but before leaving we redirected our mailing addresses to family in 2 different states . Do we have to file for those states?

[jnpanda]

We were residents of  California but gave up our apartment and stored our things in order to take jobs overseas long enough to qualify for the Foreign Earned Income Exclusion. Before leaving he redirected his mail to Arizona with family and mine stayed in California with family for the entire time. Upon job completion, we moved to Nevada. Because of "consistent use of address on all correspondence" would he be considered Arizona resident or still California while overseas?

[GeoffreyG · Accepted solution]

The answer to your question is that you (both) would still be considered full-year California residents while you were living and working abroad.  The use of an out-of-state mailing address (i.e., Arizona) for receiving various correspondence is only one of many factors used to determine residency (actually "legal domicile" in the colorful language of the tax law).

Other such factors determining legal domicile are registering to vote, obtaining a drivers license, buying a house or renting an apartment, establishing banking and financial accounts in a new state or country, etc.   From the details given in your question, it seems doubtful that you ever took any of these additional steps to establish legal domicile in Arizona, correct?  If so, then your California domicile remains attached to you, for income tax purposes, while you were overseas.

You do not need to file an income tax return in Arizona (because you were never domiciled there and had no Arizona-source income).  Neither will you ever have to file a personal income tax return in Nevada, because Nevada has no income tax.  However, you should still file a California state return, to cover the period of time that you were overseas, and before your permanent move to Nevada.  In a manner similar to the federal earned income exclusion, you will probably be able exclude all (or most) of your taxable income from California as well.  Still, you should file a (final) tax return there.

Thank you for asking this important question.