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I am going to be hired as a contractor while we are stationed at an overseas military base. I am a resident of Florida which has no state tax.

The state listed on my W-4 will be AE (American Forces in Europe). I will be working/teaching classes from my home in Europe. The company I will work for is in Alabama and all its other employees live/work there (Alabama).

I understand how this impacts Federal tax, but I'm unsure of state tax. Will Alabama state tax be taken out and will I have to file an Alabama state tax return? I have no other ties to Alabama and will not be in the state at all.

  • My company has relocated its official location to another state, and it doesn't effect me at all (living in FL too). According to our HR, you pay taxes in the state you are physically present while you work - if I travel to AL for a trip and go in the office there, I need to log that, and after so many days, I will need to file AL state tax; same with all other states, just the number of days changes per state. I think that applies to your case too, but I have no source/proof (except our HRs PDFs they gave me) – Aganju Sep 21 '16 at 13:51
  • Great question from the state's FAQ: "Nonresidents must file a return if Alabama income exceeds the allowable prorated personal exemption." Evidentially everyone in the world needs to file a AL state income tax return. – Pete B. Sep 21 '16 at 18:51
  • Have you asked the Base? Many times they have an office that helps with employment issues of family members. Another question for them will be are any visa issues related to your employment? – mhoran_psprep Sep 22 '16 at 11:29
  • @PeteB. I believe that "Alabama income" refers to taxable income from an Alabama source. – Nosrac Jan 18 '17 at 18:07
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When I was in the military I paid Indiana State taxes enough though I lived in the Philippines for three years. When I retired from the Corps, I stayed in northern Luzon another year. I still had to pay Indiana tax but I paid at a higher rate because Indiana gives Servicemen/women a break.

It all depends on your Home of Record (permanent address) not the State where you work.

I am going to be hired as a contractor while we are stationed at an overseas military base. I am a resident of Florida which has no state tax.

The state listed on my W-4 will be AE (American Forces in Europe). I will be working/teaching classes from my home in Europe. The company I will work for is in Alabama and all its other employees live/work there (Alabama).

I understand how this impacts Federal tax, but I'm unsure of state tax. Will Alabama state tax be taken out and will I have to file an Alabama state tax return? I have no other ties to Alabama and will not be in the state at all.

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