Do U.S. Expats Need a Nonresident Income Tax Return? Here’s When You Might

You’d think moving abroad would simplify your tax life. File your federal return, maybe claim the Foreign Tax Credit or FEIE, and move on.

But if money is still flowing to you from the U.S.—rent, investment income, business revenue—another layer of rules can quietly step in. And sometimes, those rules look a lot like a nonresident income tax return, even though you’re very much a U.S. citizen.

Here’s when that filing requirement shows up, why it happens, and what it means for your overall tax picture.

What is a nonresident income tax return? 

A nonresident income tax return is a tax filing required when a taxpayer lives outside a particular jurisdiction but earns income sourced from it.

There are two main contexts where this applies: 

1. Federal level

A nonresident alien files a federal nonresident income tax return using Form 1040-NR to report U.S.-source taxable income. 

2. State level

U.S. citizens or residents who live outside a state (but earn income from it) may need to file a nonresident return with that state’s department of revenue. 

For U.S. expats, the confusion usually comes from mixing these two systems together. 

Do U.S. expats file a federal nonresident return?

In most cases, no. 

U.S. citizens and green card holders must file a regular federal tax return each tax year using Form 1040 to report worldwide taxable income under the U.S. tax system. 

Form 1040-NR is generally reserved for:

• Nonresident alien filers
• Foreign nationals with U.S.-source income 
• Certain dual-status taxpayers 

So if you’re a U.S. expat, your federal filing remains the same: 

• File your Form 1040 if you meet the IRS filing requirement for the year
• Report the worldwide income
• Claim the standard deduction or itemize, if eligible
• Apply credits you qualify for (such as the Child Tax Credit)
• Use the correct filing status (single, married filing jointly/separately, head of household if you qualify) based on your circumstances

Even if you receive U.S.-source income like capital gains, rental income, or self-employed earnings, those amounts still go on your standard federal return, and you calculate adjusted gross income (AGI) to determine eligibility for certain deductions and credits.  

When U.S. expats may need a nonresident state return

Where things get a bit more complicated is at the state income tax level. 

If you previously lived in a state like New York, Pennsylvania, Missouri, or Colorado and you still have income sourced there, you may need to file a state nonresident income tax return. 

Common triggers include: 

• Rental income from a property located in the state, particularly if estimated tax payments are required throughout the year.
• Business or self-employed income sourced to the state.
• Capital gains from in-state real estate.
• Wages tied to work physically performed in that state.

In these cases, you’re treated as a nonresident taxpayer for that state – even though you’re still a U.S. citizen. 

At the state level, you may: 

• File a nonresident return
• Pay state tax on state-sourced income
• Deduct eligible state and local taxes on your federal return if you itemize (subject to federal limits), and claim any credits the state allows for your situation

Nonresident vs. part-year resident returns

Some expats will need a part-year resident return rather than a full nonresident one. 

This usually happens if you: 

• Lived in a state for part of the tax year
• Moved abroad during the year 
• Changed residency status mid-year 

In that situation, you may: 

• File a part-year resident individual income tax return 
• Report income earned while you were a resident 
• Report any state-source income after you moved as required by that state’s rules (sometimes within the part-year return; sometimes via a separate nonresident filing)

Each state has its own tax laws, tax rate schedule,  due dates, and filing thresholds, so the rules vary widely. 

What happens if you skip a required resident return?

Missing a required nonresident filing can lead to: 

• Penalties and interest
• Collection notices from the state 
• Loss of refunds or tax credits 
• Ongoing tax liability tied to that state

Do you still qualify for deductions and credits? 

Knowing if you qualify for deductions and credits depends on the jurisdiction and your eligibility. 

At the federal level, U.S. citizens abroad may still qualify for: 

• Standard deductions 
• Itemized deductions 
• Child Tax Credit 
• Foreign Tax Credit 

At the state level, nonresident filers often: 

• Have limited access to credits
• Must allocate income carefully 
• May have reduced or prorated deductions and credits, depending on that state’s nonresident rules
• Rules vary by state, so it’s important to check the specific department of revenue guidance

Don’t let a state filing catch you off guard 

Living abroad doesn’t automatically end your state tax ties. If you still earn income from a specific state, you may need a separate nonresident income tax return—and missing it can mean penalties or surprise notices.

Bright!Tax helps Americans abroad handle both federal and state filings correctly the first time. Not sure if a nonresident return applies to you? Get in touch and we’ll make sure nothing slips through the cracks.

Frequently Asked Questions