A guide to leaving a high-tax state — how have you handled “the move”?

Every year, a predictable migration of people who move from the high-taking states of New York, Maryland, California, New Jersey, Connecticut, Illinois, and Massachusetts and relocate into the nine states that currently impose no personal income tax: Florida, Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. The tax savings can be real and substantial. What is not automatic is the residency change itself. A moving truck in the driveway proves nothing to a state auditor. What proves a change of domicile, habits, lifestyle, your pattern of living — added together, either show you actually left or show you never really did. High-tax states with the most revenue at stake, New York and California chief among them, run well-developed residency audit programs built to find exactly this fact pattern: a high earner who claims a Florida or Texas address while the real life — spouse, business, doctor, country club, even the word they reach for when they say “home” — never actually moved. In most of these audits, the burden of proof runs against the taxpayer, not the state.

TWO TESTS BUT ONLY ONE RESULT: States generally use two overlapping tests. Domicile asks where you intend your one true, permanent home to be — a question of intent, inferred from conduct rather than simply declared. Statutory residency is more mechanical: many states, following New York’s model, treat you as a resident regardless of intent if maintain a permanent place of abode and spend more than 183 days in the state during the year — better to count the partial day often counts as a full one. Fail either test in two states at once or you have trouble.

⚠ CAUTION: COUNT HOW YOUR SCORE BEFORE YOU CLAIM: No single line below decides a residency case. States and courts weigh the whole pattern, and a handful of unresolved items — an old driver’s license, a spouse who stayed behind, a will that still calls the old state “my residence” — can outweigh a dozen items done right. Work through the manifest honestly, and check off only what is genuinely true today, not what’s in progress. The tally at the end is a rough read of your exposure, not a legal opinion. How do you score?

Make sure government records match your “intent”:

• Secure a new driver’s license in the new state —  actually surrender the old one, not just left to expire
• Where are your vehicles registered?  
• Make sure you switch your voter registration s
• File for your homestead exemption in the new state – abandon the old one
• If you declare any  in-state tuition benefits … where?
• Do you vote? Where? How often? Local election voting is a good barometer

Where do you sleep and spend your time?

• Which home is larger in square feet?
• Do you spend more than 183 days in the former state?
• When you land from a trip abroad, which state do you return to?

 Where are your professional, business & financial ties?

• Is your income generated in the new state?
• Where are your primary business activities? 
• Where is your financial planner located… your accountant … your attorney?
• Where are the majority of your business investments and holdings?
• Where is your “local banking branch? Do you have a safety deposit box?
• Are your estate planning documents — will, trusts — written by an attorney in the new state?

Local Contacts – Recreation:

• Are your primary physicians, dentists, and therapists located in the new state?
• If you haven’t joined a religious congregation in the new state, join one now.
• Are your activities with civic groups, and social organizations are in the new state?
• Think about converting any country club or similar memberships to out of town status
• Do you have a local recreation ID and library card?
• Where do you spend your time volunteering?

Keep a good paper trail!

• All federal and state tax returns filed from, and listing, the new address
• Make sure bills, correspondence, and financial statements use the new address
• If you renew your passport, it should be mailed to the new state
• Print return labels for envelopes with the new address – toss the old ones

Don’t forget the small stuff!

• Where are family and other keepsakes kept? Artwork?
• What is the address on luggage tags, phones, laptops, and other “if found, return to”

MAKE IT STICK! The strongest residency files aren’t built during an audit three years later; they’re built the week of the move. Keep a contemporaneous travel calendar. Keep the closing documents, the new lease or deed, the club resignation letter, proof that your old driver’s license is surrendered at the motor vehicles counter. Have attorneys in the new state actually redraft the estate plan rather than mailing a change-of-address card. None of it is glamorous, and that’s the point — it’s exactly the kind of record an auditor is trained to ask for, and exactly the kind most people forget to keep. If you’re mid-move, or already being asked questions about a move you made a year or two ago, it’s worth a conversation before more of the record gets away from you.

This guide is general information how states evaluate domicile and statutory residency; it is not legal or tax advice, and not exhaustive, because every state weighs these factors differently. The self-check above is a rough, illustrative read and is not to be considered  a legal standard, nor advice to a non-client. Always consult qualified counsel in both the origin and destination states before relying on a change of domicile for tax purposes. Contact Weiss LLP for more information.

Weiss LLP has attorneys who practice in both high taxing states and non-income taxing states