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Changing State Residency for Tax Purposes: Severing Ties, Establishing Domicile, Part-Year and Nonresident Returns

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, August 31, 2023

Recorded event now available

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This course will focus on issues to consider when taxpayers relocate or consider relocating to other states. Purchasing a house in a state is not sufficient to create residency. Avoiding dual residency may be more critical than establishing residency in the new state. Listen as our experts explain how to establish domicile in a new state, sever ties with the old state, and other state taxation concerns that practitioners should be aware of to properly advise transient clients.

Description

A taxpayer who moves to a new state may assume he or she is a resident. Knowing whether a taxpayer has established domicile is a critical determination. It dictates the states where a return will need to be filed and a taxpayer's residency status in those states. The tax reform tax cap of $10,000 has provided additional impetus for questions and moves. Now, with a minimal federal deduction, these taxpayers suffer even more.

Clients living in California, New York, and other high tax states are asking if they can relocate to low-income or no-income tax states such as Nevada, Florida, or Texas. However, some states have various factors that the taxpayer has the burden to show have been met when changing domicile to another state. States continue to be reluctant to relinquish high-income taxpayers and aggressively audit these moves. The relocated taxpayer has the burden of proof in defending his residency. New York alone collected about $1 billion in residency audits from 2013-2017.

Merely considering the top tax rate in a state can be misleading. Some states offer credits that may be significant to clients; others allow exemptions. Still, others have high property and sales tax rates. Advisers must also consider the "jock tax," taxes charged on interest and dividends in "no" income tax states, and similar unique taxes that states impose.

Listen as our panel of experts explains the primary ways a taxpayer can defend his domicile, separate from his former state, and ensure other tax issues have not been overlooked when making a move to a new state.

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Outline

  1. Establishing domicile
    1. Common state methods
    2. Taxpayer steps
  2. Terminating residency
  3. Filing part-year and nonresident returns
  4. Other state taxes
  5. Other considerations when choosing a state

Benefits

The panel will review these and other important issues:

  • Severing ties with the old state
  • Establishing residency in a new state
  • Factors to consider other than the state's income tax rate
  • Common state methods for determining residency

Faculty

Brotman, Samuel
Samuel D. Brotman
Founder
Brotman Law

Mr. Brotman’s practice primarily centers on all aspects of tax litigation and criminal/civil tax controversies in...  |  Read More

Friedrich, Marisa
Marisa M. Friedrich
Senior Counsel, Tax Controversy Group
Chaves Perlowitz Luftig

Ms. Friedrich concentrates her practice on the resolution of federal and New York State tax controversies which...  |  Read More

Tenenbaum, Karen
Karen J. Tenenbaum
Partner
Tenenbaum Law

An attorney for 35 years, Ms. Tenenbaum founded Tenenbaum Law, P.C., providing legal counsel to individuals and...  |  Read More

Weinberg, Jonathan
Jonathan Weinberg, J.D., LL.M.
Principal
WithumSmith+Brown

Mr. Weinberg has extensive experience with income/franchise tax, sales and use tax, real estate transfer tax, and...  |  Read More

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