Getting a driver's license, registering to vote and paying state income taxes begin the process of establishing new legal residence. You have to move to that state with the intention of staying there and meet the time requirements. The issue is often about proving your intent to stay.
Getting a driver's license, registering to vote and paying state income taxes begin the process of establishing new legal residence. To become a legal resident of a particular state, all you have to do is move to that state with the intention of staying there and meet the time requirements imposed by the state for residency. The issue is proving your intent to stay, as no single action can prove your intent on its own.
Importance of Legal Residence
There are various ways to establish residence for different types of institutions. Everything from school costs to welfare benefits can be affected by state legal residence. You can only vote or hold public office in your state of residence, and state colleges typically offer reduced tuition for state residents only. You might not be able to receive welfare benefits in the state where you live unless you are a legal resident. If you have a will, it can only be probated in your state of residence. If you have dual residence in two states, you may be required to pay estate or inheritance taxes in both.
Each state has its own rules for determining whether you must pay state income tax as a resident, so you should check with your state revenue department to find out the rules in the state you live in. States may require six to nine months of continual residence and/or employment to be considered a resident.
The Internal Revenue Service's home sale exclusion rules define principal residence by where you hold a driver's license, care and voter registration. Many of the actions required to establish your state of legal residence would also establish your primary residence for federal tax purposes.
Defining Legal Residence
Simply moving to a new state doesn't necessarily make it your state of legal residence. For instance, a soldier from New Hampshire may be assigned to a military base in California for 25 years, but if he plans to go back to New Hampshire as soon as he gets out of the Army, then he is legally a resident of New Hampshire even if he never visits home.
Residence is defined by your job, where you pay state taxes, where your car and driver's license are registered and where you are registered to vote. Those in the military have special rules and intention is also factored in. If you live in Maine and never intend to move from Maine, then it is your state of legal residence. If you live in Maine but plan to move back to Massachusetts after leaving the military, then Maine is not your state of legal residence.
Proving Legal Residence
Since no one other than you can know your true intentions, proving that you are a resident of a particular state can get complicated. If you are a member of the United States military, you can legally change your state of residence by filing DD Form 2058 with the finance office, but otherwise you may have to take several steps to indicate your intent. Even if you are a member of the military, it's important not to contradict yourself if you want to legally establish residence. For instance, you shouldn't vote in one state while driving on a license from another state. It is possible to have dual residency which may lead to increased state tax bills.
Actions that can help prove your intent to establish legal residence include:
- Changing your voter registration to the new state.
- Changing your driver's license or state identification card.
- Registering your car and changing the license plates.
- Changing your car insurance.
- Having your mail forwarded to your new state.
- Filing federal and state taxes in your new state.
- Buying property such as a house in the new state.
None of these actions on its own will necessarily be enough to establish residency. For example, most state universities have one year as the minimum duration to qualify for state resident tuition but you would be considered as resident for tax purposes three to six months earlier. Understanding the rules of residency allow you to accomplish your goals sooner.