Taxpayer Domicile Change Check List
How do I establish residency in a state with lower taxes? This is the question that has become more common in recent years. The exorbitant tax burden imposed by many states and the increased ability to work from remote locations has made many of us consider making a move.
Changing Your Domicile
Some tips on what must be considered and what needs to be done to properly shift one’s domicile:
- If possible, sell your home in the old state. If you decide to keep your home it is important that you move “near and dear” items, such as family heirlooms; works of art; collectables; furniture; clothing; and any other valuable personal items to your new state.
- If you are audited by your old state they will look at many items including the number of days spent in each state. It is critical that you maintain a log or diary of the days spent in each state, making sure not to exceed 183 days in the old state in any calendar year. Make sure that more days are spent in your new state than in any other state each year and remember that any part of the day spent in a non-resident state could be considered to be a full day for tax purposes.
- State auditors can gain access to cell phone and toll records to build a case against you so it is important not to wait until you are audited to begin the process of documenting your travels. Your cell phone is periodically sending signals to local cell towers so if the state gains access to these records your personal days count will likely become useless. New York State will subpoena your telephone records if they are not made available on examination.
- You also need to register to vote and be sure to vote in your new state. Under no circumstances should you vote in the old state.
- Apply for a new driver’s license and surrender your old one. You can only have one driver’s license. You must register your cars, boats, and other vehicles in the new state, and surrender the old registrations to the old state. While you are making these changes it is important to not forget to update the address on your passport.
- In addition to speaking with your CPA you should have your attorney revise your old Will or have a new Will prepared, specifically stating that you are now domiciled in the new state. This will also ensure that your Will (or Revocable Trust) is in conformity with the laws of your new state. This also applies to Powers of Attorney, Trusts, Health Care Proxies/Directives, and other legal documents.
- States such as Florida allow you to file a “Declaration of Domicile” with the Clerk’s Office of your new county.
- When you complete your tax filings you must file a final return as a part-year resident through the day you moved from the state. It is also important to note that if you are still receiving income that is taxable in your old state you will be required to continue filing as a non-resident.
- Not only should you change your address with your banks and credit card companies you should also close bank accounts in the old state and open new accounts in the new state. If you are receiving Social Security checks or automatic deposits, the checks or deposits should be re-directed to the new bank accounts.
- If you use a brokerage firm, change to the local office or begin to use a new local firm. Any new securities purchased should use the address of the new domicile, and any securities held by a brokerage firm should be transferred to the new domicile.
- You must notify all insurance companies of the new address, and advise that the new address is the place where any automobile or other vehicles covered by insurance is located.
- If you have a safety deposit box you should close it and move the personal items to the bank in the new state.
- If possible, become active in the community or in local political organizations. Discontinue any professional or social memberships in the old state and refrain from making political contributions to candidates in the old state as well.
- Obtain the services of a local physician and dentist, and have your medical records forwarded from the old state.
- If you are a professional, or licensed by the state, and you intend to continue to work, obtain a license from the appropriate authority in the new state.
- If you belonged to a local church, synagogue or other religious institution in your old state, join in your new state. You should also resign from (or change your status to non-resident) any country clubs/dinner clubs in your old state.
As you can see changing your domicile requires a lot of planning and work. We advise all our clients to get us involved early in the process to ensure that you can successfully accomplish your goals. Please contact a member of Withum’s State or Local Tax or Tax Controversy Group with any questions.
|Barry Horowitz, CPA, MST, Partner
(212) 829 3211
|Thomas Girone, CPA
(732) 759 6829