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Paying taxes while residing out of the country

Hello, 

I have several questions to ask. So hopefully I can get them all answered. I am a citizen of the United States. However I do not live there anymore. I live out of the country but I work for a company in the US. Here are my questions:

#1 How do I file my taxes at the end of the year? I know that I still have to pay federal, but what about state taxes? I last resided in the state of Maryland and I use my family's residence in Maryland to give to my employer. However, I do not reside there. Do I still have to pay taxes to the state?

#2 I'm an independent contractor, and I will get a 1099 at the end of the year. How will this affect me also because I live out of the country?

# 3 Instead of making multiple quarterly payments to the IRS for taxes, can I pay a lump sum at the end of the year or does that put me in jeopardy when I file?

Thank you for all of your help!

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1 Best answer

Accepted Solutions
PoojaT27
Employee Tax Expert

Paying taxes while residing out of the country

Hello, 

 

Thank you for participating in our event. You have some great questions. 

1. U.S. citizens and resident aliens must report the income they earn outside of the U.S. annually. Generally, most states, Maryland being one of them, only require you to file a state tax return if you lived in the state during the year and usually only tax income generated within the state Sometimes, income from sources received while living abroad may be taxed in the state, such as retirement payments or investment income (interest and dividends). Be mindful of state sourced income when planning your tax for expats, since that income could create a tax-filing requirement for you. In your situation you do not need to file a state return unless you have state specific income.

How do U.S. taxpayers living and working abroad report their income? 

2. You will complete a Schedule C for your income and expenses as an independent contractor. 

How to File Taxes with IRS Form 1099-NEC 

3.  The rule is that you must pay your taxes as you go.

If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.

Estimated Taxes: How to Determine What to Pay and When 

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2 Replies

Paying taxes while residing out of the country

If you established a new permanent home in another country, then you are no longer a Maryland resident and will not have to pay MD income tax.

 

Maryland says:

A taxpayer not only has to abandon the taxpayer’s old domicile, but the person must establish a new domicile. In order to establish a new superseding domicile, the taxpayer must be physically present in the state or foreign country that the individual intends to be the new domicile.

 

For example, a taxpayer cannot leave Maryland for an assignment in Spain, but claim Florida as their new domicile without being physically present in Florida and without taking steps to establish the new Florida domicile.

Administrative Release No. 37

 

You may be able to claim a foreign earned income exclusion if you are a resident of another country or are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

Foreign earned income exclusion

 

You can pay all your taxes due when you file your return, but you will probably pay penalty and interest. IRS expects you to pay estimated tax if you expect to owe at least $1,000 when you file your tax return.

Basics of estimated taxes for individuals

PoojaT27
Employee Tax Expert

Paying taxes while residing out of the country

Hello, 

 

Thank you for participating in our event. You have some great questions. 

1. U.S. citizens and resident aliens must report the income they earn outside of the U.S. annually. Generally, most states, Maryland being one of them, only require you to file a state tax return if you lived in the state during the year and usually only tax income generated within the state Sometimes, income from sources received while living abroad may be taxed in the state, such as retirement payments or investment income (interest and dividends). Be mindful of state sourced income when planning your tax for expats, since that income could create a tax-filing requirement for you. In your situation you do not need to file a state return unless you have state specific income.

How do U.S. taxpayers living and working abroad report their income? 

2. You will complete a Schedule C for your income and expenses as an independent contractor. 

How to File Taxes with IRS Form 1099-NEC 

3.  The rule is that you must pay your taxes as you go.

If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.

Estimated Taxes: How to Determine What to Pay and When 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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