Academic journal article Journal of Accountancy

Factors in Establishing a New Domicile

Academic journal article Journal of Accountancy

Factors in Establishing a New Domicile

Article excerpt

Even in today's mobile society, individuals fail to recognize the importance of properly establishing legal domocile when they more from one state to another. Since a taxpayer's state of domicile is entitled to tax all of his or her income, failure to abandon an old domicile can cause unfavorable tax consequences. At death, the state of domicile also can tax all of an individual's intangible assets regardless of location, as well as all property located within the state. The checklist below outlines some steps individuals can take to abandon an old domicile and clearly establish a new one. (Note: Even when domicile is clearly established, some states still try to tax a former resident's income, particularly pension benefits accumulated in the state. Residency audits often begin with an extensive questionnaire that should not be completed without a CPA's advice.)

* Sell residence in old state and buy or lease a home or apartment new state.

* Apply for and obtain a homestead exemption in the new state.

* Move physical assets from the old state to the new one.

* Server business relationship in old state.

* Close bank and brokerage accounts in the old state and open accounts in the new one.

* Rent a safe deposit box in the new state. …

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