Breaking State Residency: Tax Tips for U.S. Expats
- burakgenc6
- Jan 21
- 1 min read
Many U.S. expats overlook state taxes when moving abroad. Breaking state residency can save you thousands in taxes, but it’s not always straightforward. Here’s what you need to know.
Why Break State Residency?
Most states tax global income if you’re considered a resident. Breaking residency reduces your overall tax burden.
Key Steps to Break Residency
Cut Ties:
Sell your home or terminate your lease.
Close local bank accounts.
Update voter and vehicle registration.
Establish Residency Abroad:
Secure a lease or purchase property in your new country.
Obtain foreign voter registration or other local documentation.
Understand State-Specific Rules:
Domicile states like California and New York make it harder to break residency.
Mike moved from New York to London for a three-year work assignment. By selling his New York home and documenting his move abroad, he successfully broke state residency, saving over $10,000 annually in state taxes.
Challenges to Watch For
Some states may challenge your non-residency status, especially if you maintain strong ties (e.g., family, property).
Certain states don’t recognize the Foreign Earned Income Exclusion, complicating tax filings.
How Arc&Ledger Can Help Navigating state residency rules can be tricky, but we’re here to guide you. Contact us to ensure your move abroad is tax-efficient.
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