What Does Residency Mean?
For tax purposes, residency usually falls under two categories:
- Domicile– an address that serves as a permanent home and is one where the resident intends to return to after some absence.
- Statutory Residency– A state that has a physical presence requirement, often based on the number of days spent in the state, around 183 days or more.
Can You Claim Residency Without Living There?
For legal purposes, residency cannot be established without meeting the required conditions and as such there is no legal residency without actually living in the state. For example:
- Simply owning property does not make you a resident.
- In the same way, using a friend’s address or renting a P.O. box doesn’t qualify.
- Working and living in a given state, voting, registering a car, or having a driver’s license will prove residency.
Nevertheless, you can make a new state of your domicile if you plan on moving there and take measures to make it a permanent home like purchasing or leasing a home, moving your family there, and updating legal documents.
Why People Try to Do This
Some of the common reasons are:
- Zero or lower state income tax (Florida and Texas).
- In-state tuition for college.
- Legal benefits in some states are also a common reason.
Bottom Line
Creating genuine bonds to a state is a must if you wish to claim it as your residence. States actively audit residency claims, and fraudulent attempts can lead to penalties and back taxes. Reach out to Dimov NYC CPA today for 360-degree guidance on residency planning and multistate tax strategies.
