A domicile is a homestead that an individual has established as a fixed and permanent home. It's their principal residence, and it's the place to which they intend to return after any absences.
Here, you'll learn how to establish or change your domicile, and why you might want to.
Definition and Examples of a Domicile
The Internal Revenue Service uses "domicile" as another way to refer to where you live. For many people, this is a straightforward definition—it's the home, apartment, or other living space you reside in.
However, others have more complicated situations that involve multiple homes and splitting time between different regions. For these individuals, a domicile is the one place they have chosen as their primary residence for tax and legal purposes. You can not have more than one domicile.
Differentiating between a home and a domicile can be somewhat subjective, but objective actions can indicate your intention. Your domicile is:
- The state to which you pay state income taxes
- The state and county where your will would be probated and your estate would be administered
- The state to which your estate would pay any estate and inheritance taxes
- The state whose laws govern the enforcement of judicial orders
How a Domicile Works
Establishing a domicile depends on meeting specific criteria. Certain actions can give evidence of an intention to change your domicile. None is an absolute requirement, other than the one for physical presence. You have to commit to enough of them, however, to convince state authorities that you have truly moved your domicile.
You can have only one domicile at a time, no matter how many residences or homes you own. You retain your domicile until you legally establish another.
Requirements for Changing Your Domicile
A change of domicile requires:
- Abandonment of a prior domicile
- Physically moving to, and residing in, the new locality
- Intent to remain in the new locality permanently or indefinitely
Your domicile doesn't change if you move to a new location on a temporary basis.
Move Your Property and Possessions
One step toward establishing a domicile would be to purchase or lease property in the new state. You must furnish it as a permanent residence, as opposed to 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, suggests a lack of intent to change domicile.
Stay for an Extended Time
You must stay in the new state for at least 183 days per year (50% of the year). This is the most important requirement, and it's an ironclad rule for tax purposes in some states. For example, New York considers you to be a resident for tax purposes, regardless of your intentions, if you maintain a residence there and spend more than 183 days per year there.
Keep a calendar so you can show when you were in the new state each year.
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 have processes in place to apply for a homestead.
Establish Professional Relationships
Go to doctors, dentists, lawyers, and other professionals in the new state, and have your records moved there from the old state. Phone bills, utility bills, and credit card bills can all provide evidence of where you're living (and where you were living). Move bank accounts and safe deposit boxes to your new state domicile.
Establish Social Relationships
Join organizations such as clubs and religious groups in your domicile state. Become active with local charities. Arrange for family gatherings in the new state instead of your old state if possible. Subscribe to local newspapers, and cancel subscriptions in your 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. You might also have 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 address on your passport to your new state of residence.
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.
Use your new state as a home base. When you travel, leave from and return to your new state.
Cut Ties With Your Old State
Not only must you adopt a new domicile, but you must abandon your old domicile. A lot of this is common sense when you're moving from one place to another. Don’t register your car in Pennsylvania to get lower insurance rates, for example, if you want to be a resident of Florida to escape Pennsylvania's income tax.
Some other steps to consider taking in your former state of domicile include:
- Having your name removed from the voter registration list
- Turning in your driver’s license
- Paying income tax as a non-resident (if applicable)
- Marking your last state income tax return “FINAL” (and using the new state’s address)
- Spending as little time in the old state as possible
- Closing accounts in the old state
- Changing all club membership, religious affiliations, and social affiliations to “non-resident” status
- A domicile is a permanent residence for the purposes of taxes and other legal issues.
- You can only have one domicile at a time, and you don't lose a domicile until you establish a new one.
- There is a subjective element to determining your domicile, but you can influence the judgement through steps like registering to vote, getting a new driver's license, and storing sentimental items in your new domicile.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.