First Tax Return Without State Residency...

Hi Helen:

You really sorted me out last year and I hope you can once again. In 2003, I lived and worked in the UK for the entire year, the only income I have from the US is some interest on some savings plus my refund from last year. I earned less than $80,000 from my jobs. I know that I can break with the state residency for the first time. Do I need to use a 1040 plus the 2555EZ or do I just use the 2555EZ? Do I need to bother with TurboTax or will it be easy enough filling out the forms long hand? Many Thanks!

You always need to file 1040. So for you it is 2555EZ + 1040. Whether you use turbo tax or complete it manually is really your choice.....

Helen

I think I will get on with Turbo Tax. For $19.99, you cant go wrong.
I let you know how I get on, I'm sure it will be fairly painless.
Thanks again!

Helen:

I'm almost done. I managed to complete my return but I didnt fill out the foreign tax exclusion. Does it matter if I count my foreign tax as an itemized deduction or should I do the exclusion? Either way, my tax liability is $0, right?

Quick question about state residency. If you believe you qualify to not pay state tax, do you just not file one or do you have to send a form saying you're cutting them off?

as a former resident of Ohio - do i need to pay state taxes...also what is turbo tax never heard of it

Shania, last year was my first tax return while living in the UK. I had to fill out a state tax return last year as I had worked in NY for part of that year, before I moved here and got some money back, to boot. Helen explained that this year I would only have to fill out a 1040 and 'break residency' with NY. I assume it would be the same for you but ask Helen.
TurboTax is software that prepares your taxes for you, all you have to do is answer a series of questions about your income, taxes paid, expenses, etc. You can do it on line. It costs $19.99 for the Federal return. I would have been lost without it last year. Their website is TurboTax.com

Hi guys

Just to clarify matters on the State front for every one, if the state you are from is not a domicile state (like MA), then you can break residency with your home State when you leave that state (Ohio and NY are not domicile states).  Therefore, in the year that you leave you need to file a part-year resident return and for the years after that you do not need to file unless you have income from those states (rental, partnership, etc....).

If whilst you are in the UK, you go back to the US for business this technically generates State source income. Therefore you need to look at the rules to see if the income that you generated in that state goes over the threshhold and whether you are required to file in that state. If this is the case, then you will need to file a non-resident return for that state and report that portion of your income on the return.

Hope this clarify things a little bit more....

Helen

Thank you helen so much for your words of wisdom...don't know what i would do without your help...Mrs kev..i am surprised that its so cheap...thanks for the info..

You are more than welcome....

Helen,

What do you do if you lived in MA (domicile state)?  I'm going to be moving to London in July...I'm guessing that I'll do the part-time resident thing with MA for next year but what about after that?