State of Legal Residence - who am I supposed to file state taxes in?!

Every year I sit down to do my US Taxes and freak out about something new. This year it is State of Legal Residence.

Which state am I supposed to file state taxes in?!?

Here is my tax/residency history:

I used to be a dependent on my mom's Arizona state tax returns. Arizona has always been the address on my bank accounts for as long as I have been paying US Taxes.

Then I went to live and work in Virginia. Got driving license and registered to vote there, and filed taxes there for 2008 but also filed in Arizona.

In June 2009, I moved out of Virginia, quit job, etc. I stayed with family members in Texas and Arizona but did not work or pay bills, before moving to the UK in August 2009.
On my 2009 tax return I filed part time Virginia return for the part of the year that I lived and worked there, and Arizona for the whole year.

For 2010 I used Turbo Tax and according to the way they asked the questions and explained them, I was led to believe I was not a resident of any state (and I made no money in any state) so I did not file state tax returns for 2010. I used my UK address to file the federal return. Now I am afraid I should have filed state tax with someone. I recently read that Virginia is a domicile state and they may still think I owe them taxes. I assumed that if I filed a part year return from January to June 2009 they would think I had left Virginia, but *if* I wanted to consider Arizona as my state of legal residence, would I need to do something more specific to prove that I'm no longer a legal resident of Virginia?

So for the 2011 tax year, who do I pay?

It's so frustrating that I'm considering moving all my legal ties (banks, license, voting reg) to my father's address in Texas and just doing away with state returns altogether. Is that possible/a good idea?
I was so proud I'd figured out Federal Tax last year, so irritated that the state thing is more complicated that I thought.

Any help or opinions much appreciated!
forkandspoon

For 2010 I used Turbo Tax and according to the way they asked the questions and explained them, I was led to believe I was not a resident of any state (and I made no money in any state) so I did not file state tax returns for 2010. I used my UK address to file the federal return. Now I am afraid I should have filed state tax with someone. I recently read that Virginia is a domicile state and they may still think I owe them taxes. I assumed that if I filed a part year return from January to June 2009 they would think I had left Virginia, but *if* I wanted to consider Arizona as my state of legal residence, would I need to do something more specific to prove that I'm no longer a legal resident of Virginia?

I'd look at the residency/domicile rules for Arizona and Virginia and see if you need to file.

It sounds to me as if AZ is your domicile, is that where you were born, where your family lives and where you would return if you come back to the US?

What is your UK status? are you there temporarily and where do you intend to return if you come back to the US?

Virginia does try to 'keep' you for tax purposes, but you left VA with no (apparent) intent of returning.

Among the things VA would use to 'claim' you are:
voter registration
drivers license
vehicle registration
bank accounts/financial instruments showing a VA address
library card (go figure)
property (primarily owned)

We left VA in June, but will file a part-year resident return for 2011. I spent just over 10 years in VA, but was not born there, and would NEVER return there to live under any circumstances.

We sold our cars prior to the move, and filed the official notice with VA DMV, so no vehicle registration. When we got the 2011 personal property tax bill for Powhatan County, it included a charge for County car tax for 2012, which is payable in advance. I phoned them and got that removed.

We cancelled our VA drivers licensees via reporting a change of address to the UK - under VA law if you have a foreign address you cannot have a VA license. Reporting change of address is mandatory under VA law, and by reporting the change, a letter cancelling the license was automatically generated. (We kept the copies).

We formally cancelled the voter registration by reporting a change of address, and received a formal notification from the County Board of Elections. (Keeping that as well).

The remaining US bank accounts have a UK address for the personal accounts, and a US address in North Carolina for my business account. That account will be closed in 2012, but none of our financial stuff has had a VA address since June 2011. My IRA and SEP-IRA accounts have a UK address.

A business license is required to operate as a sole proprietor in VA, and I am not renewing that in 2012. I was also listed as a VA minority business, and I wrote to them asking to be removed from that directory, stating that I no longer maintained a business in VA.

If you have ANY *legal* ties to VA, such as voter registration or drivers license, then formally cancel, and in your letter state that you have NOT lived in VA since 2009. Then forget about it. You are a small fish in the VA pond, and if you only lived/worked there for part of a year, their 'claim' would be tenuous, particularly since you went back to AZ and filed for the entire year of 2009 as you stated.

AZ may try to claim you, and I know nothing about AZ state tax.

IMHO, your situation is likely pretty simple, and at worst you MAY need to file a non-resident AZ tax return. But if your income was below the state filing threshold, maybe not.

Good luck!

A great deal depends on your status in the UK and your intentions. Where do consider to be your permanent home in the US? Where would you return if you came back from the UK. These are all important questions. If you were resident in AZ last (a good assumption as you filed tax there as a resident) and you are in the UK temporarily and intend to return to AZ you may well still be an AZ tax resident.

http://www.azdor.gov/LinkClick.aspx?fileticket=lS4Ub6pXhRU%3D&tabid=106&mid=487

Thanks for the responses!

Vadio - I'm definitely going to cut any ties I still have to Virginia like you did and then at least that shadow of doubt is out of the way.

After answering all the personal detail questions on Turbo Tax and finishing my Federal info, it filled in a AZ Non-resident form for me.  If someone counts as a legal resident why would they fill in a non-resident form?  I think my plan at this point is to call the AZ tax department and ask them what they think I should do, about this year and last.

Just curious, what happens 'if' one decides to make the UK their permanent home and intends to stay in UK indefinitely? I read on another thread that that is a drastic step, but why?

Thanks again,
forkandspoon

Just curious, what happens 'if' one decides to make the UK their permanent home and intends to stay in UK indefinitely? I read on another thread that that is a drastic step, but why?

Thanks again,
forkandspoon

If you intend to stay in the UK permanently you'll definitely become ordinarily resident and the UK will tax you're worldwide income on an arising basis.

If you're resident but not ordinarily resident you'll pay tax on all your UK income, but won't pay tax on overseas income you don't bring into the UK.