What Determines Your Residency?
Tax wise, you would be considered a resident if you spend more than half the year living in a certain state or have established your domicile there. You may also establish residency by owning a business or being gainfully employed in a state even if you do not live there all year.
The residency requirements vary for each state that levies its own income tax. If you live in a state that has an income tax, you may be required to pay this tax in addition to federal income tax. However, if you earned the income in a different state, you could owe tax to that state.
That said, you will most likely not be forced to pay income taxes to both states. This is because most states
maintain reciprocal agreements with neighboring states to ensure taxpayers’ earnings are only taxed once.
To facilitate the determination of your tax liability, you typically must provide documentation of which states you spent time in during a tax year and how long you were there. Common examples of proof of residency are as follows:
- Location of employment
- Location of business relationships and transactions
- Serving on the board of directors for a business or charity
- Voter registration
- Driver’s license or fishing/hunting permits
- Location of the school a family’s child attends
- Memberships in country clubs or social organizations
As noted above, there are situations when a taxpayer might find himself or herself navigating around the
income tax codes of two different states. In these situations, the taxpayer is considered to have dual residency status in those states.
Circumstances that can result in dual residency are as follows:
Dual Residency Scenarios
- Having a second home in another state
- Temporarily relocating to another state for a job assignment
- Living in one state but having business activities in another state
- Having cut ties to a state but failing to establish residency or domicile in another state
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How Do You Establish Your Domicile?
The term “domicile” refers to your primary residence or “home base.” Wherever you establish your domicile, that state will be the controlling jurisdiction for tax purposes.
The process for establishing your domicile varies depending on your state. In Florida, for example, you must file a Declaration of Domicile with the clerk of circuit court in the county that your home is located in.
Not all states have such formalities. For instance, California has no formal process for establishing domicile. However, the state does require that you physically reside in the locality and demonstrate that you intend on remaining there permanently or indefinitely. This can mean registering to vote in your city, opening accounts at a local bank or enrolling your child in a nearby school.
Can You Live and Work in Different States?
With the rise of remote work over the past few years, many Americans are now living in one state but have a job in another state. This can create complications during tax season, as both the state you live in and the state you work in may try to tax your wages.
However, the state you live in and the state you work in are likely to maintain a reciprocal agreement for tax purposes. This means you will only pay taxes to one of the states. Most of the time, you just need to fill out an exemption form to take advantage of the agreement.
Debra Smith, a former tax preparer at H&R Block, dealt with clients who lived and worked in different states frequently when she lived in a city near the border of two states. “Even if people have to fill out an income tax return and then calculate the tax they might owe, in every case I’ve seen, the person receives a credit for the income tax they paid for income earned in another state,” Smith told Annuity.org.
- If you live in California, Indiana, Oregon or Virginia, you are exempt from paying income tax on wages earned in Arizona.
- District of Columbia
- If you don’t live in D.C. proper, you exempt from paying income tax for the district.
- Iowa, Kentucky, Michigan and Wisconsin residents are exempt.
- Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin residents are exempt.
- Illinois residents are exempt.
- Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin residents are exempt.
- D.C., Pennsylvania, Virginia and West Virginia residents are exempt.
- Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin residents are exempt.
- Michigan and North Dakota residents are exempt.
- North Dakota residents are exempt.
- New Jersey
- Pennsylvania residents are exempt.
- North Dakota
- Minnesota and Montana residents are exempt.
- Indiana, Kentucky, Michigan, Pennsylvania and West Virginia residents are exempt.
- Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia residents are exempt.
- D.C., Kentucky, Maryland, Pennsylvania and West Virginia residents are exempt.
- West Virginia
- Kentucky, Maryland, Ohio, Pennsylvania and Virginia are exempt.
- Illinois, Indiana, Kentucky and Michigan are exempt.
States with Reciprocal Agreements
Source: Northwestern Mutual
Taxpayers living and working in states that don’t have reciprocal agreements will have to file two tax returns. You’ll file a resident tax return for your home state listing all sources of income including what you earned out of state. You’ll also have to file a nonresident tax return for your work state, but this return should only list the income you made in that state.
Fortunately, this doesn’t usually result in paying double the taxes. Your home state will usually give you a tax credit on your resident tax form for the taxes you pay to your work state.
What Is the 183-Day Rule?
Many states that collect income taxes use the 183-day rule to decide who is considered a resident of their state. According to the rule, if you spend at least 183 days of a year in a state — even if you have established your domicile in another state — you are considered a resident of the state for tax purposes.
There are a few important factors to consider with this rule. The first is that any part of a day counts as a full day. That means, if you travel into the state just to meet a friend for lunch or go to a doctor’s appointment, your time there counts as a full day for residency purposes. Any day or time of day can count for this rule, too, not just time spent in the state during business hours or during the week.
If you frequently travel between states, it’s important to keep track of the number of days you spend in each state. You will automatically have to pay taxes to whichever state you establish your domicile in, but if you spend a lot of time in a second state, you may also end up paying taxes there, too.
You should also do some research into your states’ exceptions to the 183-day rule. Neighboring states may have reciprocal agreements regarding the 183-day rule, in addition to the agreements about living in one state and working in another. For example, residents of North Dakota or Michigan can spend more than 183 days in Minnesota without being charged taxes in both states.
Most states also grant exceptions to military personnel who are stationed in the state but have a permanent home in another state. Hospital treatment, not counting outpatient services, is usually not included in the 183-day count.
Tax Residency Rules by State
Each state has its own requirements to be considered a resident or part-year resident for tax purposes.
State Residency Rules by State
|State||Resident||Part-Year Resident||State Tax Website|
|Alabama||Person who is domiciled in Alabama||Person who moved to Alabama during that tax year||View Website|
|Arizona||Person who is domiciled in Arizona OR person who spends more than nine months of the tax year in Arizona.||Person who moved to Arizona or out of Arizona during the tax year||View Website|
|Arkansas||Person who is domiciled in Arkansas OR person who spends more than six months of the tax year in Arkansas||Person who moved to Arkansas or out of Arkansas during the previous calendar year||View Website|
|California||Person who is domiciled in California OR present in California for reasons other than a temporary or transitory purpose||Person who lived in California for part of the year and outside of California for part of the year||View Website|
|Colorado||Person who is domiciled in Colorado OR maintains a permanent place of abode and spends more than six months of the tax year in Colorado||Person who is domiciled in Colorado for only part of the year||View Website|
|Connecticut||Person who is domiciled in Connecticut for the entire tax year||Person who changed their legal residence to or from Connecticut during the tax year||View Website
|Delaware||Person who is domiciled in Delaware or spends more than 183 days of the tax year in Delaware||Person who maintained residency in Delaware for only part of the tax year||View Website
|District of Columbia||Person who is domiciled in D.C. or lives in D.C. for 183 days or more||Person who moves into or out of D.C. during the year||View Website
|Georgia||Person who is domiciled in Georgia for the full tax year.||Person who maintains residency in Georgia for only a portion of the tax year||View Website
|Hawaii||Person who is domiciled in Hawaii OR is present in Hawaii for more than 200 days of the tax year||Person who is in Hawaii for less than 200 days of the tax year but is in Hawaii for reasons other than temporary or transitory purposes||View Website
|Idaho||Person who is domiciled in Idaho for the entire tax year OR spends more than 270 days of the year in Idaho||Person who changes their domicile to or from Idaho during the tax year or lives in Idaho for more than one day during the tax year.||View Website
|Illinois||Person who is domiciled in Illinois for the entire tax year||Person who established residency in Illinois during the year OR was an Illinois resident but established residency in another state during the year||View Website
|Indiana||Person who maintains legal residence in Indiana for the full tax year||Person who establishes Indiana residency during the year||View Website
|Iowa||Person who is domiciled in Iowa or maintains a permanent place of abode in Iowa||Person who has not been domiciled in Iowa for the full tax year||View Website|
|Kansas||Person who is domiciled in Kansas||Person who was a Kansas resident for less than 12 months during the tax year||View Website
|Kentucky||Person who is domiciled in Kentucky OR person who lives in Kentucky for more than 183 days during the tax year||Person who moved into or out of Kentucky during the tax year||View Website|
|Louisiana||Person who is domiciled or has a permanent residence in Louisiana||Person who is a Louisiana resident for only a portion of the year||View Website|
|Maine||Person who is domiciled in Maine OR has a permanent residence and spends more than 183 days of the tax year in Maine||Person who established or relinquished Maine residency during the tax year||View Website
|Maryland||Person who is domiciled in Maryland OR maintains a place of abode for more than six months of the tax year in Maryland and is present for 183 days or more||Person who established or relinquished Maryland residency during the tax year||View Website
|Massachusetts||Person who is domiciled in Massachusetts OR maintains a permanent place of abode in Massachusetts and spends more than 183 days of the tax year in the state||Person who moves to or moves out of Massachusetts during the tax year||View Website|
|Michigan||Person who is domiciled in Michigan OR lives in Michigan for at least 183 days of the tax year||Person who moves to or moves out of Michigan during the tax year||View Website
|Minnesota||Person who is domiciled in Minnesota OR spends at least 183 days in Minnesota during the year.||Person who moves to or from Minnesota during the tax year||View Website
|Mississippi||Person who maintains a home in Mississippi or exercises the rights of citizenship in Mississippi||Person who moves into or out of Mississippi during the tax year||View Website
|Missouri||Person who is domiciled in Missouri or maintains a permanent place of residence in Missouri and spends more than 183 days in the state||A person who is domiciled elsewhere prior to moving to Missouri or established domicile elsewhere after moving from Missouri||View Website
|Montana||Person who is domiciled or maintains a permanent place of abode in Montana||Person who established residency in another state after leaving Montana during the tax year or established residency in Montana after leaving another state during the tax year||View Website
|Nebraska||Person who is domiciled in Nebraska or maintains a permanent place of abode in Nebraska and spends at least 183 days in the state||Person who changes domicile during the year either moving to or out of Nebraska||View Website|
|New Hampshire||Person who maintains a home, spends a greater percentage of time in New Hampshire than elsewhere, has a New Hampshire driver’s license or is registered to vote in New Hampshire||Person who has permanently established residency in New Hampshire during the year or who has permanently abandoned residency in New Hampshire during the year||View Website
|New Jersey||Person who establishes domicile in New Jersey||Person who moves into or out of New Jersey for part of the year||View Website|
|New Mexico||Person who is domiciled in New Mexico for the entire year or is physically present in New Mexico for 185 days or more during the tax year||Person who is a New Mexico resident for part of the year, is not physically present in the state for more than 185 days, and is no longer domiciled in New Mexico on Dec 31||View Website|
|New York||Person who is domiciled in New York or maintains a permanent place of abode in New York and spends 184 days or more in the state||Person who meets the definition of resident for only part of the year||View Website
|North Carolina||Person who is domiciled in North Carolina for the entire tax year||Person who moves their domicile into or out of North Carolina during the tax year||View Website
|North Dakota||Person who lives in North Dakota full time or maintains a home and spends more than seven months of the tax year in North Dakota.||Person who moves into or out of North Dakota during the tax year||View Website|
|Ohio||Person who is domiciled in Ohio||Person who moves into or out of Ohio during the tax year||View Website|
|Oklahoma||Person who is domiciled in Oklahoma for the entire tax year||Person whose domicile is in Oklahoma for less than 12 months during the tax year||View Website
|Oregon||Person who is domiciled in Oregon or maintains a permanent place of abode in Oregon and spends more than 200 days of the tax year in the state||Person who is domiciled in Oregon for part of the year and domiciled somewhere else for part of the year||View Website|
|Pennsylvania||Person who is domiciled in Pennsylvania or spends 181 days or more in Pennsylvania||Person who moves to or from Pennsylvania with the intent of establishing a new domicile||View Website|
|Rhode Island||Person who is domiciled in Rhode Island or maintains a permanent place of abode in Rhode Island and spend more than 183 days of the tax year in the state||Person who changes their legal residence by moving into or out of Rhode Island during the tax year||View Website|
|South Carolina||Person who is domiciled in South Carolina or have the intention to maintain South Carolina as your permanent home||Person who is a South Carolina resident for only a portion of the tax year||View Website|
|Utah||Person who maintains a place of abode in Utah and spends 183 or more days of the tax year in Utah||Person who established or ended residency in Utah during the tax year||View Website|
|Vermont||Person who is domiciled in Vermont or maintains a permanent home in Vermont and is present in the state for more than 183 days of the tax year||Person who is a Vermont resident for only part of the tax year||View Website|
|Virginia||Person who lives in Virginia or maintains a place of abode here for more than 183 days during the year||Person who moves into or out of Virginia during the tax year||View Website
|West Virginia||Person who spends more than 30 days in West Virginia with the intent of making West Virginia their permanent residence, or is a domiciliary resident of Pennsylvania or Virginia and maintains a physical presence in West Virginia for more than 183 days of the tax year||Person who moves into or out of West Virginia during the tax year||View Website
|Wisconsin||Person who is domiciled in Wisconsin||Person who maintained Wisconsin residency for only part of the tax year||View Website|