Do I have to file a US state return if I live in Canada?
If income is sourced to a state, that state can require a return from you whatever your country of residence. Wages for work performed inside the state, rent from property located there and receipts from business carried on there are the usual sources. Each state writes its own sourcing rules and its own filing thresholds, so the question is settled state by state rather than once for the whole country. We start from where the work was physically done and where the property sits, then read the rule of each state that shows up. A federal return does not answer the state question and does not stand in for a state filing.
Does the Canada US tax treaty stop me owing state tax?
Not by itself. The treaty binds the federal government; a state is not a party to it and many states do not follow it. So a filer whose federal position is protected by a treaty article can still be a taxpayer in the state where the work was done, with a return to file and tax to pay there. This is the single most common surprise in a cross-border employment file, and it usually appears after the federal return has already been settled. Where a state does give effect to a treaty position it does so under its own law, which has to be checked in that state rather than assumed.
I only worked a few days in a US state, do I file?
Possibly. Wages are sourced to the state where the work was physically performed, so a short visit can create income in that state. What differs is the point at which the state asks for a return: some set a threshold by earnings, some by time present, some by neither. Because the tests are written state by state, the answer follows from that state's own rule rather than from a general principle. The practical work is evidential. A workday record showing which days were spent where, built from travel documents and a diary, is what supports either filing or not filing.
Do I file a state return for US rental income only?
Rent from property located in a state is income sourced to that state, so the state can require a non-resident return even though you have never lived there and your tenant pays you outside it. The return is separate from the federal one and is prepared on the state's own rules for what is taxable and what may be deducted, which do not always match the federal treatment of the same building. Depreciation and the treatment of losses are the usual points of difference. Keeping the state's own basis figures from the first year saves reconstructing them when the property is eventually sold.
My employer withheld state tax, do I still file a return?
Withholding is a payment on account, not a return. The state has been given money and a wage statement naming you, and nothing in that tells the state how much of your income it may tax. Filing is how the two are squared, and it is also the only way to recover tax withheld to a state that was not entitled to it. Two errors show up often: withholding sent to the state of the payroll office rather than the state where the work was done, and withholding continued after an employee had stopped working in that state. Both are fixed by filing in each state on its own footing.
Does my business selling into a US state make me file there?
Receipts from business carried on in a state are sourced to that state, so a return can be required from a business with no office and no staff there. The tests are the state's own, and they differ in what they count: the presence of people, the place where a service is delivered, and the destination of sales all appear in different states' rules. Because the tests differ, the same year of trading can create a filing obligation in one state and none in the neighbouring one. The starting point is a schedule of receipts by customer location and of the days people spent in each state.
Is there a California exit tax?
A wealth-and-departure tax has been proposed in California more than once and has not been enacted. What does exist is enforcement of the ordinary rules, which reaches further than people expect: California taxes its residents on everything and taxes non-residents on California-source income, so trailing items from work done there remain taxable, and a change of residence is tested against a long list of factors rather than a moving date. See state residency and domicile.
How do I get back tax withheld in another country?
By the route that country provides, and it is rarely automatic. Where an elective return is available — on rent or pension income, for instance — filing it recomputes the tax on net income and refunds the difference. Where it is not, you file a refund claim with the withholding authority, supported by evidence of your residence and entitlement to the treaty rate. Both take time, which is why fixing the rate before payment is worth more. See withholding refund and recovery.
