Overseas worker needs help with state taxes

August 12, 2011 5:48 AM

How do I accurately determine which state to claim as my 'tax' state. For example, I work/live overseas for 2 months at a time, then I get 1 month off and usually travel or go to the US, but I do not rent an apartment, own a home (have a lease or mortgage) - I usually crash on friends' couches, and I keep my belongings and car in NC (in a Public Storage unit), but my mail, driver's license and voting is registered in TX. Which state can I legally claim? I know I need to claim a domicile in a state, and was hoping it could be TX.
posted by bbhart113 to Law & Government (12 answers total)

So you have a DL for TX, and you get mail to some address in TX? I suppose that would be your address of residence. And if that car you have is legally registered then I suppose you have to listed with a home address. However, if you don't have actual things at this address then it could possibly come into question at a later date if you need to prove residency.

I assume you're asking all this for tax purposes. I recall a question on here a while back with someone living in Geogria but working in California (maybe?) and fighting every single year with their employer that they need to pay the Georgia taxes and not the Cali ones.
posted by zombieApoc at 6:08 AM on August 12, 2011

There isn't necessarily a single "tax state". Most states with income taxes have agreements worked out so that you don't double-pay, but you would still need to fill out the forms for each state in which you're a resident. Look up the residency requirements of each state.
posted by qxntpqbbbqxl at 6:13 AM on August 12, 2011

You should really talk to an accountant if you want to make sure you get this right. Some states have very complicated rules, and will demand that you pay taxes if you work there but don't live there, or if you live there but don't work there, or some other combination. You could try to work it out yourself, but an accountant would give you a more dependable answer.
posted by alms at 6:27 AM on August 12, 2011 [1 favorite]

Best answer: You do not necessarily need to claim a domicile in a state. However, spending 4 months a year in the US, you probably have one. It basically comes down to where you intend to return.

"You have only one domicile even if you have more than
one home. Your domicile is a permanent legal home that
you intend to use for an indefinite or unlimited period, and
to which, when absent, you intend to return. The question
of your domicile is mainly a matter of your intention as
indicated by your actions. You must be able to show with
facts that you intend a given place or state to be your
permanent home."

That is hardly clear for some of us. But as long as you are not working in any other state, I think you are safe picking Texas.
posted by Nothing at 6:39 AM on August 12, 2011

The question isn't which state you can pick to pay taxes in, it's how many states you can convince you don't have to pay taxes in.
posted by lockestockbarrel at 6:46 AM on August 12, 2011 [5 favorites]

What states, if any, are you making any money in? This is often more central to the issue of what state returns to file than any notion of "residency".
posted by kiltedtaco at 7:04 AM on August 12, 2011

Texas has incredibly lax rules about claiming it as a domicile, but as alms said, talk to an accountant, preferably one who deals in this sort of thing. Check around your company's HQ, or failing that, in Fayetteville in NC or Killeen in TX -- one who's familiar with military people will have a lot of experience in very nearly this sort of operation. Or, if you're in the northeast part of NC, look around for one who's used to dealing with Blackwater/Xe personnel, who have largely similar issues.
posted by Etrigan at 7:39 AM on August 12, 2011

Under somewhat similar circumstances, I was a Part Year / Non Resident in all states for about three years, with the invidious result that I had to diarize the proportion of time I spent in each throughout the year and then apportion income tax appropriately. When out of the country, it meant no state tax. But when leaving the country on a business trip, I had to pay income tax in the state I flew out of, even if I didn't live there. Ask an accountant. I had to have my company find an expert in such situations, and who could cross-deduct all the relevant taxes to each state my company had an office in where I visited for business (even for a day!).
posted by blue_wardrobe at 9:48 AM on August 12, 2011

In short, lockestockbarrel is right that it's often a matter of which states you can convince you don't owe taxes.

This is an issue that's worth being careful with, not just for declaring domicile, but for terminating your domicile as well. From various expats I know, California, Virginia and New Mexico all make it somewhat difficult to terminate your domicile, and if you don't, they'll be making you file state income taxes for eternity...
posted by kaszeta at 10:22 AM on August 12, 2011

Response by poster: Thanks everyone! I don't earn money in any state, I only earn money while delpyed in Iraq (I'm a contractor for a firm out here). I already took my name off the voting ballotts in NC, and will be turning in my license plate and NC driver's license. The tax 'professional' I hired is basically an idiot, and doesn't have any answers to any of my ?s even though I've shelled out hundreds of dollars for simple advice!
posted by bbhart113 at 7:10 AM on August 13, 2011

I don't earn money in any state, I only earn money while delpyed in Iraq (I'm a contractor for a firm out here).

That doesn't mean the state your employer is in won't think the money wasn't "earned" there, or that some other state won't think it. Don't let one bad experience turn you off all financial advisors. I assure you, there are people who are good at this sort of thing.
posted by Etrigan at 1:03 PM on August 13, 2011

Response by poster: I'm not a Full Time Employee, I'm an independent consultant, so the company doesn't handle deducting taxes from my pay check, I pay those as estimates each quarter, plus I work for a British Firm based out of Dubai.
posted by bbhart113 at 6:53 AM on August 14, 2011