Ask HN: Taxes while living abroad as a US citizen

5 pointsposted 10 hours ago
by wnolens

Item id: 49706870

4 Comments

sillystuff

9 hours ago

Depending on which state you are currently a resident of, you will likely owe state income tax too while you are away. If you were moving overseas as part of your salaried job, most states have safe harbor exemptions that can protect you. But, these might not apply for self employed (CA's definitely does not apply if living off passive income; i.e., you are taxed).

Changing your domicile to a no income tax state like FL, TX or SD will prevent this, if your old state agrees that your domicile changed. States will argue that you never really intended to live in the new state, that it was just an attempt to dodge taxes and they will still collect state tax (burden of proof is on you, not your old state). There is not a magic time of 6 months or 1 year in new state that automatically is accepted by old state as changing domicile. And, it does not matter if you have satisfied your new state's residency requirements. Everything depends on you convincing your old state that your domicile actually changed.

There are a ton of tax / attorney sites with articles about changing domicile properly, to reduce this risk. Horror stories like folks overseas, even for an extended period, owing state back taxes when they return are also easy to find. High income tax states like CA, NY, HI, MN, SC, VA and NM seem to show up in these horror stories more often.

vunderba

9 hours ago

When I lived overseas (Asia), I applied for FEIE every year which lets you exclude ~120k of earned income from the year. Made having to pay taxes in two countries far less painful.

Unless you intend on making very little (such that the standard deduction would be the better option), I'd think this would be your best bet.

https://www.irs.gov/individuals/international-taxpayers/fore...

rfarley04

10 hours ago

I have lived in Thailand for 13 years and taxes have been a huge pain. When I worked for a local company, I had to pay taxes in both places, for example. I have since started a US-based S Corp for my contract/freelance work and have payments arrive in family's US bank account, where I tend to keep them in savings while living off my wife's local salary. I use an expact-specific tax service (Greenback) that typically costs ~$650 for me to just give them all my paperwork and they do up the taxes for me. Absolutely worth it to just not have to worry about everything.