Nothing in this post is intended, nor should be construed, as legal advice.
A big question full-timers wrestle with is residency location. Which advantages accrue, are they worthwhile, and how must we best pursue these? The oft-mentioned items include income tax, property tax, vehicle tax (also spelled, “registration”,) sales tax, and insurance costs (both health and vehicle.)
We examined these and decided (1) we would gain very little by changing state residency, (2) it was very easy to remain resident of our home state of many years, (3) there really was no reason to change state of residency at this time.
We have very little taxable income. We have very little property. Our state’s vehicle registration is simple and economical. Sales tax only occurs in your physical locale, not relevant to your state of residency unless you want to go home to make major purchases like vehicles. Insurance costs are reasonable in our home state.
We maintain a mail forwarding address through Escapees (three years now, perfect results thanks to the great people in Livingston TX.) And we maintain our residency in the Tarheel state, North Carolina. We’re in NC every year sufficiently long to inspect the truck, inspect our health, verify the bank is still there (these days who would wonder?)
But what if you decide to change your residency? How hard can this be? Sell the house, move your accounts, and you’re done, right? Well, you apparently need be very mindful of what the other party thinks of this. I always thought my state took care of me, while it appears the states (at least some of them) expect you to take care of them.
A friend recently shared with us the aggressive tax collections stance declared by their former state of residency and suggested several other states are just as sincere (aggressive) about collecting their legal due from you. This seems to matter most if you have been paying income tax and assumed you were escaping from a high tax-rate state.
Your intention to change residency to another state must be matched with your well-informed, accurate, and thoroughly completed actions. Some states apparently have assiduously pursued full-timers who only thought they had loosed the binds with their former home state.
You might have studied upon this, as we did, with materials from Escapees and Trailer Life or other organizations. An attorney friend offered us this advice, “Let them try to prove your residency isn’t where you say.” Perhaps accurate, but do you really want to defend your status against an 800 pound gorilla and have the issue decided in their court?
We looked around and found a seemingly thorough set of guidelines for determining residency. These would have aided us, and we thought they might be useful for you. Again, nothing in this post is intended, nor should be construed, as legal advice.
Changing legal residence, according to one state’s regulations, requires the following:
- physical presence in a new locality, and
- intent to remain there permanently or indefinitely (see 183-day rule, below)
The state’s guidelines additionally list actions that express intent:
- changing legal documents, such as a will or insurance policies, to reflect your new legal residence
- changing your home of record with your employer
- registering to vote in your new locality
- applying for a driver’s license in your new state of residence and relinquishing your old license
- registering a car in your new state of residence
- applying for homestead status in your new state of residence
- selling your home and purchasing a home in your new state of residence
- consistently using the new permanent address on records and correspondence.
The state’s guidelines proceed to list residency qualifiers in several categories as follow:
- homestead status
- the location of your home
- your mailing address
- the amount of time you spend in state
- the location of your bank accounts
- where you qualify for unemployment insurance
- the state in which you filed previous resident tax returns
- the state where you earn your wages
Licenses and registrations:
- where you are registered to vote
- which state issued your driver’s license
- where your vehicles are registered
- the state in which you maintain professional licenses
- the location of your fraternal, social or athletic memberships
- where you maintain union memberships
- your place of worship
- where you qualify for in-state tuition
Family and dependents:
- whether you can be claimed as a dependent on another person’s federal income tax return and, if so, that person’s state of residence
- where your spouse or dependents reside
In summary, they say, no single factor will determine your state of permanent residency. Even though some factors may be more important than others, all relevant factors are evaluated together when determining residency. Charitably they add, “Furthermore, certain considerations, such as where you make charitable contributions, play no part in determining your residency.”
“When it comes to determining residency, your words and actions are both considered, but of the two, your actions carry more weight than words. For example, you may say that you consider Texas to be your home, but if you homestead real estate and maintain your primary checking account in Minnesota, these actions are inconsistent with your words. All relevant factors are evaluated together when determining permanent residency.”
And then, the 183-day rule of Minnesota:
“If you are a resident of another state, you may still be taxed as a Minnesota resident under the 183-day rule.
“The 183-day rule depends on two conditions:
- 1. You spend at least 183 days in Minnesota (any portion of a day is counted as a full day), and
2. You or your spouse own, rent or occupy an abode—a self-contained living unit, suitable for year-round use, that is equipped with its own cooking and bathing facilities—in Minnesota.
“If both conditions apply, you are a Minnesota resident for the length of time the second condition applies. If the second condition applied for the entire year, you are considered a full-year Minnesota resident for income tax purposes. If it applied for less than a full year, you are considered a part-year resident.
“If you maintain a home in Minnesota, but claim residency elsewhere, you must keep adequate records to verify that more than half of the year is spent out of state. Records confirming your whereabouts commonly include planners, calendars, plane tickets, canceled checks, credit card and other receipts. This rule does not apply to military personnel or to people covered under reciprocity.
“Example: If you rented an apartment in Minnesota for 365 days, but only spent 183 days living in the apartment, you would be a Minnesota resident for the entire year. In this case, you would be required to pay Minnesota tax on all your taxable income received from all sources, including any income you earned while working in another state.
“Remember, you are a Minnesota resident if you:
- are an active-duty military personnel and you consider Minnesota to be your home, regardless of where you were stationed during the year,
- leave Minnesota but have not established permanent residency elsewhere,
- temporarily leave Minnesota and plan to return, or
- maintained an abode in Minnesota for the entire year and you met the requirements under the 183-day rule. In this case, you are a full-year Minnesota resident for income tax purposes even though you may have been domiciled in another state. (The 183-day rule does not apply to military personnel or residents of a reciprocity state.)”
and then, one of several examples of voters rights:
Nevada voter disenfranchised, http://www.nevadanewsbureau.com/2010/09/22/full-time-rver-will-not-vote-residency-rules/#comment-3291
tax considerations for full-timers, http://www.rversonline.org/97ConfTaxes.html
Definition of Minnesota residency, http://taxes.state.mn.us/individ/pages/residency_and_filing_status_definition_residents.aspx
Nothing in this post is intended, nor should be construed, as legal advice.
Jim and Debbie