The Foreign Service Journal, February 2008

F E B R U A R Y 2 0 0 8 / F OR E I GN S E R V I C E J OU R N A L 49 some states alsodefine it as permanent res- idence. Residence refers to physical pres- ence in the state. ForeignServicepersonnelmust contin- ue to pay taxes to the state of domicile (or to theDistrict of Columbia)while residing outsideof the state, includingduringassign- ments abroad, unless the state of residence does not require it. Anon-resident, according tomost states’ definitions, is an individual who earns income sourcedwithin the specific statebut does not live there or is living there for only part of the year (usually, less than six months). Individuals are generally con- sidered residents, and are thus fully liable for taxes, if they are domiciled in the state or if they are living in the state (usually at least six months of the year) but are not domiciled there. Foreign Service employees residing in the metropolitan Washington area are required to pay income tax to the District ofColumbia,MarylandorVirginia, inaddi- tion topaying tax to the stateof their domi- cile. However, most states allow a credit, so that the taxpayer pays the higher tax rate of the two states, with each state receiving a share. There are currently seven stateswithno state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. In addition, New Hampshire and Tennessee have no tax on personal income but do tax profits from the sale of bonds and property. There are 10 states that, under certain conditions, donot tax income earnedwhile the taxpayer is outside of the state: California, Connecticut, Idaho,Minnesota, Missouri, New Jersey, NewYork, Oregon, Pennsylvania and West Virginia. The requirements for all except California, Idaho,Minnesota andOregon are that the individual not have a permanent “place of abode” inthe state, haveapermanent “place of abode”outside the state, andnot bephys- ically present for more than 30 days dur- ing the tax year. California allows up to 45 days in the state during a tax year. These 10 states require the filing of non-resident returns for all income earned fromin-state sources. ForeignService employees should be aware that states couldchallenge the sta- tus of government housing in the future. The following list gives a state-by-state overviewof the latest informationavailable on tax liability, with addresses provided to write for further informationor tax forms. Tax rates are providedwhere possible. For further information, please contact AFSA’s LaborManagement Office or the individ- ual state tax authorities. As always, mem- bers are advised todouble-checkwith their state’s tax authorities. To assist you incon- necting with your state tax office, we pro- vide the Web site addresses for each and e-mail addresses or links where available. Some states do not offer e-mail customer service. TheFederationof TaxAdministra- tors Web site, at www.taxadmin.org , also providesmuchuseful informationon indi- vidual state income taxes. James Yorke (yorkej@state.gov) , who compiled the tax guide, would like to thank M. Bruce Hirshorn, Foreign Service tax counsel, for his help in preparing this article. A F S A N E W S