My wife is a freelance web developer, formerly residing and paying taxes in NY. She left her job in December 2011. We moved to Italy (where I am employed by the U.S. government) in January 2012.
Since arriving in Italy, she has accepted freelance work from U.S. customers, and has begun to receive payment for this income.
Obviously, we need to claim her income on Federal taxes.
The question is, does she also need to pay state taxes on this income?
- She does not physically reside in any state.
- She does not work for a business in any state.
- I continue to pay IN taxes (it is where I began my federal employment) even while overseas.
Clarification: This is concerning taxes we will pay for income earned in 2012