US State Income Taxes

[MELANIE CLARK]

If you move to Ecuador from a US state that does have State Income Taxes (such as Arizona), then the only issue after moving from Arizona to Ecuador would be paying Arizona State Income taxes for the first year, right? If I sell my home in Arizona and no longer have residence in Arizona mid-year, then I would only owe Arizona taxes for the first half of that given year? After that, Arizona is not longer in the picture, right? Just the US Income Tax would need to be filed after that?

Or do I always have to pay Arizona INcome Taxes even after I live in Ecuador?

[COUNTRY EXPERT – WENDY DECHAMBEAU]

Hi Melanie,

My understanding is that you will pay state income tax for any period of time you lived in that state. After that you will probably need to prove to your state that you are no longer residing there (some states are more adamant on this point than others). I would recommend checking with your state’s income tax department and asking them what they require.

International Living published a book – Expat Taxes Made Easy- which is designed to help expats navigate their U.S. and international tax requirements. You can find the book here.

[COUNTRY EXPERT – WENDY DECHAMBEAU]

I believe the reasoning behind moving to a non-tax state first is because then you won’t have to prove to your new home state that you’ve moved out of country. But, I’m fairly certain that the book I mentioned covers this topic more in depth.

[MELANIE CLARK]

Thanks Wendy
The reason I thought of this is because after the Vegas Conference, I saw an article in the next IL magazines about this. It said that it is best to move to an non-tax state before moving internationally?

[SUZAN HASKINS]

Melanie, it’s my understanding that you needn’t officially “move” to another state, but you establish your mail service there, get a drivers license, etc. But Wendy is correct. Once you get residency in another country and can prove that, you are no longer a resident of any state…

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