[freehunter]

And god forbid you're a US citizen living and working overseas. You still have to fill out US tax forms for both state and federal tax. The federal government won't charge taxes on anything under ~$90,000, but the states sure will expect you to pay your share of their taxes, even though none of that money was earned or spent in the US.

[mahyarm]

Wouldn't you not be resident in any state in that case then? Or could pretend to just be in a non income tax state?

[freehunter]

I hear a lot of ex-pats who move to a non-income-tax state (like Texas) just before they move overseas. If your US residence is still in a state with income tax, even though you don't live there you still get taxed on your overseas income because as a US citizen you still have residence in your state even if you don't live there. It doesn't matter if you're physically there or not.

The only other alternative is to renounce your US citizenship if you never plan on coming back.