Congratulations on the new move!

America is a country on the move. Each year, around 10% of the U.S. population changes homes. And of those, while 85% stay in state, 15% move to a new state (according to the U.S. Census Bureau). As moving across state lines might be on your mind, I wanted to make you aware of some important financial consideration in mind.

How will my exposure to state taxes change when I move?

• When you move to a new state, generally you will want to consider cutting ties with your old state so that you are no longer subject to income and/or estate taxes in the old state; this is especially relevant when the new state has a lower tax rate, or no tax at all
• In general, a state can tax all of the income of its residents, but can only tax the income of nonresidents to the extent that it is derived from that state
• Most states use a two-pronged test for determining residency status
  • If your domicile is in the state, you are a resident
  • If your domicile is not in the state, but you fail the statutory resident test, you are a resident

What determines where my domicile is?

• Your domicile is your principal home, the place to which you always plan to return even if you are currently living elsewhere. Said otherwise: home (i.e., domicile) is where the heart is. You may be a resident of multiple states, but you can have only one domicile at any given point in time
• You may be a statutory resident of a state if you fail the residency test prescribed by state law; for example, a common test for statutory residency requires:
  • Owning/renting a residence in the state, and
  • Spending more than 183 days/6 months in the state during the tax year
• To remove yourself from the taxing jurisdiction of your old state after your move, you generally must ensure that you do not remain a domiciliary or a statutory resident of your old state

Next Steps

Please do not hesitate to contact me in case of further questions. You can set a meeting HERE. Also, you may want to discuss details with tax and legal advisors, ideally knowledgeable in the laws and regulations of the state you are moving from and to.