United States: Home is Where the Heart Is….Or Is It? Establishing Residency In A New State

Last Updated: January 28 2014
Article by Ellen O. Bonito and Chris Carreira

With the hassle of planning an out-of-state move, taxpayers often overlook an important aspect—changing residency for state tax purposes.

Incorrectly or incompletely transferring residency can result in an audit or filing requirement in the taxpayer's former resident state. Properly establishing residence in a new state helps a taxpayer avoid these issues after moving.

States may tax the worldwide income of their residents. Generally, states determine residency by:

  1. statute (a permanent abode coupled with a minimum number of state days for any purpose); or
  2. domicile, a legal concept.

Statutory residency is an objective standard, and its determination can be relatively mechanical. For purposes of this article, we focus on domiciliary residency.

Domicile focuses on the individual's intent to make a permanent home, a subjective standard. Confusion arises when a taxpayer is considered a legal domiciliary of multiple states. In situations where a taxpayer moves from a high- to a low- or no-income tax jurisdiction, a former resident state may attempt to claim the taxpayer as a resident. A taxpayer often discovers, to his/her tax detriment, that once domicile is established in a state, changing it is difficult.

To establish domicile in a new state, a taxpayer must show he/she physically moved out-of-state, maintains a place of abode in a new state, and intends to remain in the new state permanently or indefinitely. States use a facts and circumstances test composed of several factors to determine whether a taxpayer is a resident domiciliary. None of these factors are determinative in and of themselves; instead, the focus is on a comparison and a weighting of the level and types of activities engaged in by a taxpayer in the two jurisdictions in question.

States give primary importance to five factors when evaluating domicile: home, active business involvement, time, items "near and dear," and family connections. States will consider other factors if the primary factors do not resolve the issue.

Primary Factors

The location of a taxpayer's "home" is harder to determine when a taxpayer retains the old residence as a vacation home or hotel-substitute after moving to a new state. In these situations, states compare the original residence with the new residence to determine domicile. Whether the homes are owned or rented is not important. Aspects of the home that are important in this comparison are size, value, and nature of use. Size and value, especially, must be viewed in the context of the geographic area where the residences are located.

Domicile is more likely to remain with the original state if a taxpayer continues employment or active participation in a business located in the original state. A taxpayer may claim active participation in a business on his/her Federal income tax return in order to avoid passive activity loss limitations. However, if the active business is located in a taxpayer's former resident state, a state could argue the taxpayer never changed domicile. This can be mitigated if a taxpayer can show that most or all of the taxpayer's business efforts are performed in the new state. Passive investment in a business, though, located in a former resident state does not support an argument for or against domicile.

"Time" is a quantitative analysis of where a taxpayer spends time during the tax year. If the statutory threshold mentioned above is not met, "time" requires a subjective analysis. A comparison is made between where a taxpayer is required to spend time (i.e., work) and where a taxpayer chooses to spend time (i.e., vacation, leisure activities).

Items "near and dear" are those items with sentimental value, including book and art collections, family heirlooms, pets, and other personal items. Moving these items to the new state strengthens a taxpayer's claim of domicile in the new state. All the facts and circumstances must be considered. Thus, a taxpayer should account for "near and dear" items' sentimental and monetary values to the extent these items will be split amongst different abodes.

The final primary factor, family connections, focuses on the location of a taxpayer, a taxpayer's spouse or partner, and a taxpayer's minor children. In some cases, the definition of family expands to include adult children or elderly parents.

Cumulatively, a significant adjustment in a taxpayer's lifestyle clearly evidences domicile change. For example, spending an additional month in Florida every year is not as dispositive as moving to Florida with family heirlooms, buying a bigger home, and giving up active participation in a business in the former resident state.

Other Factors

Besides the primary factors discussed above, other factors that support domicile in a state include:

  • Address where bank statements and bills are received;
  • Location of safe deposit boxes;
  • Location of vehicle registrations;
  • Location of voter registration and participation in local elections;
  • Public library cards;
  • Social and athletic club memberships;
  • Updating will to new state; and
  • Use of professional services.

In their residency analyses, most states do not include charitable or political activities/contributions to organizations located in the taxpayer's former resident state.

Given the stagnation of the economy, and states' insatiable desire to grow their tax revenue bases, simply moving to another state may not change residency for state tax purposes. Without proper planning, a taxpayer may have two states claiming residency. However, with knowledge of the above factors, along with appropriate actions and detailed records, the residency transition can be painless.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions