Federal tax return with the Internal Revenue Service (IRS).
Many U.S. citizens and green card holders living in foreign countries (expats) are aware they must file a federal tax return with the Internal Revenue Service (IRS).
However, very few know the states of California, South Carolina, Virginia and New Mexico also require them to file a state income tax return, says Pesach Woznica, President of Expat Tax CPA’s which works with expats in numerous foreign countries including Canada, Israel, Britain, France and Australia.
“Similar to federal government, these states also require expats to pay tax on their worldwide income over certain amounts. Most other states have no such requirements,” he adds.
Mr. Woznica says there are numerous issues that expats are not aware of. These include questions whether one should exclude or include their spouses in filing tax returns.
“While it is not mandatory to include one’s spouse, there are many situations where it is advantageous to include the spouses’ income as it can prove beneficial for a better return both now and in the future,” he says.
Mr. Woznica says other areas of uncertainty among the expats include taxes related to self employment outside of the U.S., large investments in other companies – which could be your own company, payroll taxes taken out of your pay to the foreign country one is living in, to issues related to income from renting one’s home in the U.S. while living abroad.
