The byline for this week’s blog is simply not true. As are many things you might hear on the golf course, especially as they relate to changing one’s residency for income tax purposes.
I’ve written about this topic many times before, but it can’t be repeated often enough. Spending less than 184 days in certain jurisdictions (New York, New Jersey, Connecticut, Pennsylvania, and most others) is not going to be enough in and of itself to break a long-standing taxing relationship with the jurisdiction.
The “I heard it on the golf course” approach to changing residency just doesn’t work. For those of you who don’t play golf, that approach usually consists of buying a home in a low or no tax jurisdiction, changing your voter registration and driver’s license, and going to the county clerk to declare your domicile in that new jurisdiction. Some golf buddies even go as far to suggest that it doesn’t matter if you are in the jurisdiction for more than 183 days, as long as you don’t sleep at the house or apartment.
Again, simply bad advice.
In the majority of states and localities there are two ways to be considered a resident (and thereby taxed on worldwide income) for income tax purposes. In addition to the “statutory residency test” which involves the oft-misquoted day count provisions, there is the domicile test. It’s the “touchy-feely” test of what your intentions are and where you intend your home to be. A simple trip to the County Clerk’s office and a Declaration of Domicile affidavit aren’t going to be sufficient to break your ties with the former domicile.
So, what will? I’m frequently asked for a check list to follow in order to change domicile. While these lists can be helpful, I often find them to be dangerous if someone follows them blindly without their advisor’s expertise. What works for one, may not work for all. While a few states seem to endorse a check list type approach, most are going to go well beyond where you and your cars are registered.
If you have residency concerns, contact me at WBerkowitz@BerdonLLP.com or your Berdon advisor.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, New York Accountants, advises clients on the unique requirements of governments and municipalities across the nation.