Working through all the intricacies of taxes can be difficult, especially for those who have no experience with accounting and tax laws. It can become even more challenging for those who might live part-time in Colorado but make their income in a foreign country.
If you’re wondering whether you need to pay Colorado state taxes while making a living in another country, the answer can vary based on several factors. However, keep in mind that either way, United States citizens must report their income to the IRS no matter where they work or live.
The Basics of Colorado Taxes for Foreign Income
The good news is that it’s fairly simple to determine whether you need to file Colorado state taxes, even if you live and work elsewhere. You’re going to want to ask yourself two questions. The first of them is whether you have spent any part of the tax year living in Colorado.
If you have lived in Colorado during the year, you will need to file for taxes as a part-year resident. However, for those who have not lived in the state, a second question is important. Have you earned any Colorado-sourced income throughout the tax year?
Again, answering yes means that you should file Colorado taxes, but this time, it should be done as a non-resident. Those who have answered no to both of the questions will not need to file. However, it is always recommended to consult with an accountant to make sure you are following the rules.
Important Things To Know
You should have the basic knowledge that Colorado residents are required to file a tax return if they need to file an income tax return with the IRS. This applies even to those who do not have Colorado tax liability.
In addition, income that you earn while not a part-year or full-time resident of Colorado will only be taxed in the state if it is considered to be Colorado sourced. Colorado-sourced income includes the following:
- Income Earned From Working Physically in Colorado – If you made an income, including your normal salary, while you were spending time in Colorado, the income is Colorado sourced. This applies even when working for a foreign company while on a business trip to the state.
- Income Earned From Property in Colorado – If you are making income based on a physical property in Colorado, that is also Colorado-sourced income. An example would be rental income earned from a home you own in the state.
Extra Details About Colorado Taxes on Foreign Income
If you are a non-resident of Colorado, the only income you will be taxed on is Colorado-sourced income. However, for those who are part-year residents, all income you receive while a resident is taxed. This is in addition to income from Colorado sources when not living in the state.
Choose a Top CPA To Help With Your Tax Questions
If you need help with tax questions related to foreign income, you need a top CPA in Denver. Venture CPA offers all sorts of tax services, including information about taxes and tips for minimizing your tax burden. When you need the help of a local accounting firm, reach out to us for all your accounting needs
