Factors to Help You Prove Your Domicile

Domicile is the place your call home for tax and official purposes
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When the Southern weather gets hot, it’s time for the snowbirds to think about their migration back north. Many folks make a great deal out of staying in one location for exactly 6 months and a day. They think that being in a state for more than half the year makes them domiciled in the state. In some cases, this might not be true. It all depends on meeting certain specific criteria.

Domicile is the homestead where a person has a fixed and permanent home that is their principal residence and establishment. This is the homestead to which—when they are absent—they intend to return. A person can have only one domicile at a time no matter how many residences or homes they own. Once a person acquires a domicile, they retain it until they establish another.

A change of domicile requires:

  1. Abandonment of a prior domicile
  2. Physically moving to and residing in the new locality
  3. Intent to remain in the new locality permanently or indefinitely

If a person moves to a new location but intends to stay there only a limited time (no matter how long), his domicile does not change.

Your State of Domicile Determines

  1. Which state you pay state income taxes
  2. Where a decedent's will is probated and where their estate will be administered
  3. Which state your estate pays inheritance and estate taxes
  4. Which state’s laws govern the enforcement of judicial orders

Since domicile depends on where you intend to return, it is a subjective concept. Nevertheless, many objective actions can give indications of your intention. 

Actions Give Evidence of Domicile

The following is a list of actions that give evidence of intention to change your domicile. You don’t have to do everything on the list. None of these things, except the requirement for physical presence in the new domicile, are absolute requirements. However, you have to do enough of them, especially the more significant ones, to convince the tax authorities that you have truly moved your domicile.

Property and Possessions

Buy or lease property in the new domicile state. You must furnish it as a permanent residence, and not as a vacation place. Keep your family heirlooms, furniture and keepsakes in the new state. Failure to move items with strong sentimental value, such as the family picture albums, away from the old state shows a lack of intent to change domicile.

 Length of Stay                     

Stay more than 183 days per year in the new state. This is the most important requirement. In some states, this is an ironclad rule for tax purposes. For example, if you maintain a residence in New York and spend more than 183 days per year there, New York considers you a resident for tax purposes regardless of your intentions

Identify Yourself

Obtain a driver’s license in the new state and register your cars. You should also register to vote in the new state. Some states will have a process to apply for a homestead.

Establish Professional and Business Relationships

Go to doctors, dentists, lawyers and other professionals in the new state and have your records moved from the old state to professionals in the new state. Move utility accounts. Keep in mind that phone bills, utility bills, and credit card bills all can provide evidence of where you were living.

Establish Social Relationships

Join organizations such as clubs, religious groups and become active with local charities in the new state. If possible, arrange for family gatherings in the new state instead of the old state. Subscribe to local newspapers in the new state and cancel subscriptions in the old state.

File Official Documents

File your federal income tax return with the appropriate IRS service center and show your new state as your address. Also, you may need to file a Declaration of Domicile if your new state has such a procedure. Change legal documents such as wills, estate plans, and trusts to reflect residency in the new state. Update the listed address on your passport to your new state of residence.

Move Money

Move bank accounts and safe deposit boxes to the new state domicile.

Tell Your Friends and Businesses

Send notifications of a change of address to family, friends, business associates, professional organizations, credit card companies, brokers, and insurance companies.

Other pointers include using the new state as a home base. When you travel, leave from and return to the new state. Also, keep a calendar so you can show when you were in the new state each year.

Leaving the Old Behind

Not only must you adopt a new domicile, but your old domicile must be abandoned. In your former state of domicile:

  • Have your name removed from the voter registration list
  • Turn in your driver’s license
  • Pay income tax as a non-resident if applicable
  • Mark your last state income tax return “FINAL” and use the new state’s address
  • Spend as little time in the old state as possible
  • Close accounts in the old state
  • Change all club membership, religious and social affiliations to “non-resident” status

Be Consistent 

If you want to be a Floridian to escape Pennsylvania income tax, don’t register your car in Pennsylvania to get lower insurance rates. Use common sense. Does your neighbor who has lived in Florida all her life have her car registered in Pennsylvania? Of course not. Does she belong to a church or synagogue in Pennsylvania? No. Just imagine yourself explaining that to a tax auditor.

NOTE: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.