In addition to filing Federal expatriate tax returns, there are two different circumstances that might require you to file a state return. The first circumstance is when your former state still considers you a resident and you have to file a US expat tax return. The second situation is when you are a non-resident and receive certain kinds of income from “Virginia sources,” in which case you may have to file a Virginia state return.
Residents of Virginia are required to file and pay taxes on all sources of income. Because no tax credits are allowed for foreign income or income earned in other states, it’s important to understand how residency affects your Virginia tax obligations.
How to Determine Whether You Need to File Virginia State and Federal Expat Tax Returns
Virginia is one of a few states that make it especially difficult for you to terminate your state residency. You may think that the fact that you no longer live there is enough. However, that is not the case in the Commonwealth of Virginia. In Virginia, it is not only about where you reside, but it is a matter of your “legal domicile.”
According to the Virginia Department of Taxation, if you have not abandoned your “legal domicile in Virginia and established legal domicile in another [jurisdiction, you] remain a domiciliary resident of Virginia, even if residing in another jurisdiction for a number of years.” As an example of a domiciliary resident, Virginia cites an expat circumstance: “A resident of Virginia who accepts employment in another country is a domiciliary resident, unless appropriate steps are taken to abandon Virginia as the state of domicile.”
If you lived in Virginia before moving abroad, it is very important you are able to prove to Virginia that you abandoned your Virginia residency and that you have established permanent residency outside of Virginia. Not only do you have to live outside of Virginia, but you have to be able to prove you intend to live away from Virginia indefinitely and have established residency elsewhere. You can use the following factors to help prove you are no longer a Virginia resident:
“…sites of real and tangible property, location of savings and checking accounts, motor vehicle registration and licensing, motor vehicle operator’s license, voter registration, membership in clubs and civic groups, place of business, profession or employment, charitable contributions, location of schools attended by children, length of time of residence, place of birth and marriage, residence of family, and reason for abandoning or acquiring domicile.”
Even if you determine non-resident status, it may still be possible for you to have Virginia filing requirements, in addition to your Federal expat tax returns. If you receive any of the following kinds of income from a source located in Virginia, then you have to file a Virginia non-resident return:
- Wages received for services performed in Virginia;
- Income received from the rental or sale of Virginia real estate;
- Income, including interest, received from a partnership, S-corporation or other business that operates in Virginia;
- Prizes paid by the Virginia Lottery, and gambling winnings from wagers placed or paid at a Virginia location.
As in most other states, if you are a non-resident of Virginia and the only income you received from a Virginia source was interest from a personal account or pension or annuity payments, then you do not have to file a Virginia tax return.
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Originally published in 2012; updated March 2020.