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For the first four months of 2015 I lived in California, and earned a full time income in California, a very small part time income in Wisconsin, and rental income from an apartment in Washington DC. Then I left California and for two months I earned full time income in Wisconsin plus rental income. Then I left the US and have been traveling around the world earning occasional contract work income from various sources in the US, and rental income from apartment in DC. I have no physical residence in any state in the US, and the only property I own is in DC which is rented out.

Which state am I a resident of? I need to know this to determine where I need to pay any state tax for 2015, and going forward in 2016 especially for any consulting income that I might make from US and other sources.

I also need to determine whether or not I need to have Obamacare. Because I don't live in the US, Obamacare is going to be worthless for me, but I don't want to get penalized for not having it.

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  • You may well have to pro-rate your state taxes based on the amount of time you spent living in each. When I had that situation (minus the out-of-country complication) my employer paid for a tax accountant to deal with the computations needed to fill out both state forms. You may want to consider that kind of "hired gun"
    – keshlam
    Dec 2, 2015 at 8:34
  • When you went to Wisconsin did you do anything to establish residency there? Change your driver's license, register your car, register to vote? I think that's important - You're either a CA or a WI resident, but it's not clear to me from your description if you did or did not become a WI resident. (In any case, it looks like you are not a DC resident since you did not live there.)
    – user32479
    Dec 4, 2015 at 3:22
  • Also there's no reason that you would necessarily be a resident of just one state, especially for state taxes. You could at minimum be a part-year resident of multiple states since you moved. Under some circumstances, FYI, it's even possible to be a resident of two states simultaneously. (In your case here, it looks unlikely that you're ever simultaneously a resident of multiple states though.)
    – user32479
    Dec 4, 2015 at 3:28

1 Answer 1

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You are most likely still considered California tax resident for the full year. Generally, you're considered to continue being California tax resident as long as you cannot show that you have permanently established residence elsewhere. You have not. California, similarly to the Federal, taxes worldwide income, including the income from the DC rental or foreign consultancies. Unlike the Federal, California does not have any foreign earned income exemptions.

You will probably need to file non-resident tax return in Wisconsin for the period of your presence there, and pay tax on the income you earned while there.

Generally, it would have been wiser to establish residency in a low-tax US State prior to moving abroad. California is nasty when it comes to expats, similarly to the US Federal government.

Depending on how you lived in Wisconsin, you may attempt to claim that you established residency there (have you registered to vote there? Got a driver license? Owned a place you lived at?).

You will also pay DC taxes for the rental income, since that's where it is sourced.

Re Obamacare - you're exempt for any month for which you're qualified for FEIE by physical presence or bona fide residency test. See here.

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  • thanks for the response. A few reactions: What would it take for me to establish residency in another state? Could I do that in DC (I would like to even though DC is not a low-tax state, but simply because I have an apt there and I would eventually want to live there). Is it true that state tax is paid in the state where it was earned? If so, everyone doing cross-border consulting should be paying taxes in multiple states? Finally, I believe Obamacare doesn't apply if you spend most of your time outside the country irrespective of what insurance you have. Is that correct?
    – punkish
    Dec 2, 2015 at 9:07
  • @punkish added about establishing residency, but again - CA is especially nasty when it comes to residency issues. I wouldn't mess with them, get a professional advice if you want to try and play.
    – littleadv
    Dec 2, 2015 at 9:09
  • Re "tax is paid where it was earned" - it is earned where you do the work. If you do the work in your California home - it doesn't matter that the employer is in Wisconsin - the money is earned in California.
    – littleadv
    Dec 2, 2015 at 9:10
  • Re obamacare - see here: usexpattaxhelp.com/…
    – littleadv
    Dec 2, 2015 at 9:11
  • so, going by the "tax is paid where it is earned," that is easier to see for consulting income, but what if I am not in the US? I am doing a consulting project for a US firm but am located wherever I feel like. Where did I earn that money? And, how does that apply to rental income? If I have an apt in DC but am physically somewhere else, where is the money being earned? By the way, thanks for all these pointers.
    – punkish
    Dec 2, 2015 at 9:24

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