Americans in Britain get used to filing a federal return every year. The state tax return is a different animal. Some people abroad never need one again. Others owe their old state more than they owe the IRS.
The difference is almost entirely residency. Income that is purely British matters to a state only if it still counts you as a resident. So the first question is never about the form. It is about whether the state thinks you left.
What is a state tax return for someone abroad?
It is the return your former state may still require, separate from the federal return. It exists only if the state treats you as a resident, part-year resident, or nonresident with income from sources in that state.
British wages are not income from a US state.
So the return hangs on residency and on any state-source income you kept.
Many people abroad therefore never file one again after the year they move.
When do you need no state return at all?
When you are genuinely a nonresident and have no income from the state. California taxes nonresidents only on California-source income, and New York says a nonresident owes tax only if there is income from New York sources. With purely British income, that usually leaves nothing to report.
Establishing nonresidency is the hard part.
Once it is settled, the state drops away.
Keep a short note on file explaining why no return was due. It answers any later question quickly.
How do you know if you are still a resident?
Apply your state's own tests, not the federal ones. California asks whether you are domiciled there and away only for a temporary or transitory purpose. New York asks about domicile and a 184-day test, with two exceptions for domiciliaries abroad.
Virginia says someone who takes a job in another country stays domiciled unless they take steps to abandon the state.
If the answer is unclear, settle it before preparing any return.
When does purely British income still get taxed?
When the state still counts you as a resident. A California resident is taxed on income from all sources, and so is a New York resident. That includes a London salary, British interest and gains on British investments.
Domicile rules can keep you resident long after you move.
California's residency guidance and New York's residency FAQs explain their tests.
Does the state return start from the federal one?
Usually, yes. Many state returns begin with federal figures and then apply state adjustments of their own. That is exactly where people abroad get caught, because those state adjustments can undo relief that the federal return already gave them.
California is the clearest example.
Its Schedule CA instructions tell you to add back the federal foreign earned income and housing exclusion as income.
Always read the state's own adjustments before assuming federal relief carries over.
What happens to excluded wages in California?
They come back. The Schedule CA instructions require the amount excluded on the federal return to be entered as a positive adjustment, so wages that carried no federal tax become fully taxable for a California resident.
Federal tax can be zero while the state bill is large.
See the Schedule CA instructions.
That is why the residency question comes before any calculation.
| Item | Federal return | California resident return |
|---|---|---|
| British salary | Reported, then excluded or credited | Taxable, exclusion added back |
| British income tax | Credit available | No credit for foreign tax |
| Treaty relief | Applies | Does not apply to state tax |
| Result for a typical salary | Often little or no tax | Full state tax on the salary |
Can British tax reduce the state bill?
Generally not. California's credit instructions exclude taxes paid to any foreign country. New York's resident credit covers other US states, their subdivisions, the District of Columbia and Canadian provinces. Virginia allows foreign credits only on foreign-source pension income.
So a resident's British wages are taxed twice.
The treaty offers no help, because it covers federal income tax only.
In our practice this is the point that surprises clients most, because the federal return taught them to expect a credit.
What about the year you move?
It is usually a part-year state tax return. You report worldwide income for the months you were resident, and only state-source income after the move date. The date itself needs support, such as a flight record, a lease and the start of your job.
Split income received around the move carefully.
Bonuses earned partly before the move are the usual trap.
A clean part-year return also marks the change of status in the state's own records.
Share awards that vest after the move can still carry a state share.
Does New York add back the exclusion too?
We have not found a New York instruction that adds the federal exclusion back the way California's Schedule CA does, and we would not assume either answer without checking your year's instructions. What is clear is that New York gives no credit for British tax.
So a New York resident abroad should still expect a meaningful state bill.
Check the current resident instructions before relying on any treatment.
How do you convert British income for the state?
The same way as for the federal return, because most state returns start from federal figures. Use a consistent exchange rate method, such as the IRS yearly average rates for income spread across the year.
Keep the state and federal figures consistent with each other.
A mismatch between the two returns invites questions from both.
Which income keeps a nonresident filing?
Income from sources in the state. Rent from a property you kept is the common example, and a sale of that property later usually follows it. Some deferred pay and business income can also keep a link.
Purely British wages and British investments do not.
Our note on keeping your American house covers the property side.
So selling the property before you leave often ends the state tax return entirely.
What are California's filing thresholds?
For 2025, the FTB publishes thresholds by filing status, age and dependents. A single filer under 65 with no dependents must file if California gross income exceeds $22,941 or California adjusted gross income exceeds $18,353. For a California resident, gross income is worldwide.
So most residents on a British salary are well over the line.
Check the table for your own status each year, because the figures change.
The thresholds are also listed on the FTB's residency page, next to the residency tests.
When must a New York resident file?
Among other conditions, New York requires a resident return if you have to file a federal return. Since citizens abroad usually file federally, a New York resident abroad will usually have to file a New York return too.
A nonresident files only with New York-source income.
The department's FAQs list the full conditions.
Filing late does not change whether a return was due, only what it costs.
Are the deadlines the same?
Broadly they follow the federal pattern. New York, for example, recognizes the federal two-month extension for people outside the country through a condition code on its return. Check each state's own rules, because extensions and payment dates are set by the state.
Interest on state tax can run from the ordinary due date.
The IT-203 instructions show New York's codes.
Put the state date in the same diary as the federal one.
What if you missed state returns in earlier years?
Then look at the residency position for each year before filing anything. Some of those years may need no return at all, while others may need a resident or part-year return.
States have their own procedures for late filers, and they differ.
In our practice, clients often find only the year of the move was actually due, which makes the catch-up far smaller than they feared.
What about a spouse who is not American?
A spouse who has never lived in the state usually has no connection to it at all. Joint state filing may still be possible in some states, but it can bring a non-American spouse's income into a state calculation for no benefit.
Separate filing is often cleaner, and it mirrors the usual federal choice.
Check your state's rules on mixed filing status before deciding, since they vary.
Deciding whether to file, step by step
Answer these in order. The first two usually settle the question.
- Establish whether your state still treats you as a resident, using its domicile and day-count tests.
- List any income from sources in that state, such as rent or a property sale.
- If you are resident, prepare a full state tax return on worldwide income.
- Apply the state's adjustments, including any add-back of federal exclusions.
- Check whether any state credit applies, remembering most exclude foreign tax.
- If you moved this year, prepare a part-year return with a supported move date.
- If you are a nonresident with no state income, keep a note of why you did not file.
An illustrative example
Take two Americans in Leeds on similar British salaries. One cut his ties with Oregon years ago and has no Oregon income, so he files only federally.
The other remained a California domiciliary without a qualifying contract. Her federal return shows little tax, but her California return adds back the exclusion and allows no credit for British tax.
Her state bill is larger than her federal one. This example is illustrative, not advice.
Both earn the same, and both pay the same British tax. The only difference is where each of them is still resident.
Does this affect your federal return?
Only at the edges. State income tax paid can be an itemized deduction on the federal return, subject to the federal limits, but most people abroad take the standard deduction instead.
The federal return does not depend on your state residency.
The two returns therefore run side by side, and our guide to filing a US return from abroad covers the federal side.
How long should you keep state records?
For as long as the state could ask about the years involved, which in practice means several years after the move. Keep the part-year return, the evidence of the move date and any note explaining why later years needed nothing.
Records for a kept property should run for as long as you own it.
One folder, kept with your federal records, is enough.
Scan the papers so they survive another move.
Common mistakes
First, assuming no federal tax means no state tax.
Second, relying on the foreign earned income exclusion at state level.
Third, stopping state returns without deciding whether residency actually ended.
Fourth, forgetting rent from a property kept in the state.
Fifth, filing a resident return out of habit after a genuine move, which concedes residency for that year.
How US UK Tax Hub helps
We start with the residency question, then prepare the state tax return, if one is due, alongside your US federal return. Our comparison of the exclusion and the credit covers the federal choice that feeds into it.
Where no return is due, we record why.
This article is general information, not personal tax advice. Talk to us about your own state.
