Moving and Tax Time

tax formMoving to another home can have an effect come tax time. For example, if you are moving to another state, you will need to file a tax return in your new home state as well as your former home state if you earned income in both places during the same tax year.

Even if you are moving to a new home within the same state, you will need to modify your home address on your tax forms to reflect the location of your new house.

Moving Out of the Country

Things become even more complicated if you move out of the country. Some people believe that if they aren’t living or working in the US, they don’t have to pay taxes here.

Not true. The US is one of only a handful of countries that aggressively pursues tax collection for all of its residents — even if they are living in another country. In fact, you aren’t even allowed to give up your US citizenship in order to eliminate a tax obligation.

US Tax Laws

The United States has tax treaties with more than 42 countries around the world. The IRS and the foreign tax collecting agencies share data on their residents.

Many Americans living abroad think because they’re earning income in another country — and paying income tax to that nation’s government — they aren’t required to file a tax return here.

Not true. Even if you have no liability when it comes to paying US taxes, you are still required to file a tax return if you are a US citizen. It’s an important preventative measure as there because there is a statute of limitation on tax disputes.

If there is a dispute later over back taxes, if you file a return in the US you can start the clock on the statute of limitation. If you don’t, the IRS can audit you anytime they want and you will be liable if they decide against you.