Due to their shallow vertical support, remotely-sensed surface soil moisture retrievals are commonly regarded as being of limited value for water budget applications requiring the characterization of temporal variations in total terrestrial water storage (<i>S</i>). However, advances in our ability to estimate evapotranspiration remotely now allow for the direct evaluation of approaches for quantifying annual variations in <i>S</i> via water budget closure considerations. By applying an annual water budget analysis within a series of medium-scale (2,000–10,000 km<sup>2</sup>) basins within the United States, we demonstrate that, despite their clear theoretical limitations, surface soil moisture retrievals derived from passive microwave remote sensing contain significant information concerning relative inter-annual variations in <i>S</i>. This suggests the possibility of using (relatively) higher-resolution microwave remote sensing to enhance the spatial resolution of <i>S</i> estimates acquired from gravity remote sensing. However, challenging calibration issues regarding the relationship between <i>S</i> and surface soil moisture must be resolved before the approach can be used for absolute water budget closure.