Financial PlanningTaxes

Exercise caution when changing your state of residence

Changing residence is an important legal issue with financial consequences. It can also be complex in some situations. I suggest giving this matter the attention it deserves in both your personal and business financial planning.

Tax issues

If you are moving from a higher tax state to a lower tax state be aware of the legal requirements and the risks of not meeting those requirements. The State of New York, for example, challenges over 5,000 taxpayers every year. The cost of defending these state tax audits is high and the cost of failing to prove your intended domicile is even higher.

State rules about residency for tax purposes are complex and often misunderstood.

The best strategy is to talk with a tax professional to get a check on your understanding and second opinion on these complex rules.

If audited – get a tax representative BEFORE you speak with an auditor. Auditors are trained to get you to say something that will weaken your position. A “slip of the tongue” can be expensive.

Medical issues

Health care laws are moving toward more diversity among states. As the influence of federal law fades (as we’ve seen lately with ACA issues), state law on health care becomes even more important. Where you live can determine your options, your rights and your cost. Be sure or the details and plan out your options if possible.

Other legal issues

Legal residency and domicile can affect contracts, licenses and other legal issues. Be sure to consider all the relevant details.

Using our mailing address

For clients with complex, unreliable or transient mailing addresses, I typically offer the option use my business address for physical mail under an engagement agreement that extends beyond taxes and accounting. That has no bearing on their legal or tax issues but it does trigger a need for extra attention to relevant issues.

This is especially important for business clients who use a registered agent for their business entity registered in Delaware. Some are international clients without a physical presence in the United States. It helps to have a live person receiving and opening important mail on an ongoing timely basis.

I am pleased to offer a free consultation if you have concerns about domicile and residency. Please click on the blue box to plan a call.

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