The Foreign Service Journal, February 2009

F E B R U A R Y 2 0 0 9 / F O R E I G N S E R V I C E J O U R N A L 47 turns, where he or she is registered to vote or has a driver’s license, where he or she owns property, or where the person has bank accounts or other financial holdings. In the case of Foreign Service employees, the domicilemight be the state fromwhich the person joined the Service, where his or her home leave address is, or where he or she intends to return upon separation. For purposes of this article, the term domicile refers to legal residence; some states also define it as permanent residence. Residence refers to physical presence in the state. Foreign Service personnel must con- tinue to pay taxes to the state of domicile (or to the District of Columbia) while re- siding outside of the state, including dur- ing assignments abroad, unless the state of residence does not require it. A non-resident, according to most states’ definitions, is an individual who earns income sourced within the specific state but does not live there or is living there for only part of the year (usually, fewer than six months). Individuals are generally considered residents, and are thus fully liable for taxes, if they are domi- ciled 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, D.C. area are required to pay income tax to the Dis- trict of Columbia,Maryland orVirginia, in addition to paying tax to the state of their domicile. 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 states with no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. In addition, New Hampshire and Tennessee have no tax on personal in- come but do tax profits from the sale of bonds and property. There are 10 states that, under certain conditions, do not tax income earned while the taxpayer is outside of the state: California, Connecticut, Idaho,Minnesota, Missouri, New Jersey, New York, Oregon, Pennsylvania and West Virginia. The re- quirements for all except California, Idaho, Minnesota and Oregon are that the indi- vidual not have a permanent “place of abode” in the state, have a permanent “place of abode” outside the state, and not be physically present formore than 30 days during 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 from in-state sources. Foreign Service employees should be aware that states could challenge the status of government housing in the future. The following list gives a state-by-state overviewof the latest information available on tax liability, with addresses provided to write for further information or tax forms. Tax rates are provided where possible. For further information, please contact AFSA’s Labor Management Office or the individ- ual state tax authorities. As always, mem- bers are advised to double-check with their state’s tax authorities. To assist you in con- necting with your state tax office, we pro- vide the Web site address for each in the A F S A N E W S