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How Do You Change Your State Residency for Tax Purposes?

It’s well-known that some states provide lower tax rates than others. Florida, Texas, and other states have no income tax, which makes them an attractive option for retirees and other taxpayers who want to lower their tax burden.

Georgia levies a state income tax, but provides retirement income tax breaks for taxpayers age 62 and older. If you decide to change states, keep in mind that some states may disagree with your belief that you have changed your residency. Certain states are known for being particularly aggressive when taxpayers flee to low-tax states.

How to Change Residency

There is generally not one factor that determines your residency for tax purposes. You need to establish your domicile in your new state, but doing so also involves subjective intent. You can show this intent by taking the following actions:

  • Get a driver’s license in your new state.
  • Register to vote in the new state.
  • Change your mailing address to your new address.
  • If you are keeping a home in your old state, spend more time during the year at your new home than at your old home. Keep track of the days you spend in each state.
  • Bring your family and pets with you to the new state.
  • Update your address for financial accounts and other purposes.

Reduce your ties to your old state as much as possible if you want to reduce the risk of state tax problems. Your old state does not need to agree with your opinion that you’ve changed residency if the facts and circumstances show otherwise.

Consequences of Failing to Change Residency

Your old state could come after you for several years of back taxes, penalties, and interest if it believes that you are still a resident. Non-residents may only be taxed on income they earn within a state’s boundaries, while residents may be taxed on all of their income.

If a lower tax burden is one of your reasons for moving, this would be an unfortunate outcome. You may have no choice but to dispute the tax assessment and prove that you are no longer a resident for state tax purposes.

If you have state tax problems caused by moving to a new state, contact a tax attorney for assistance.

The Gartzman Law Firm can help you with residency disputes and other state tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.