Overview
Changing your state tax home is a legal process, not just a move. The state that considers you a resident can tax your income, so establishing a new tax home requires both physical actions and documentary evidence that show intent to abandon your old domicile and adopt a new one. In my 15 years advising clients, the difference between a defensible move and an audit-triggering claim almost always comes down to the quality of records and the consistency of life changes (licenses, voting, utilities, employment, and financial ties).
Authoritative sources: see IRS guidance on individual income tax considerations (IRS, 2025) and general consumer protections at the Consumer Financial Protection Bureau (CFPB). For state-specific rules, consult the state tax agency website for the state you are leaving and the one you are entering.
- IRS overview: https://www.irs.gov/individuals
- CFPB: https://www.consumerfinance.gov/
I also recommend these related FinHelp articles for deeper reading: “State Residency Planning: Steps to Legitimize a Tax Move” (finhelp.io/glossary/state-residency-planning-steps-to-legitimize-a-tax-move/) and “State Residency Tests: How States Determine Your Tax Home” (finhelp.io/glossary/state-residency-tests-how-states-determine-your-tax-home/).
Step-by-step legal actions to change your tax home
- Confirm the tests your new and old states use
- Many states use a domicile test (where you intend to make a permanent home) and/or a statutory days test (commonly a 183-day or similar threshold).
- Some states have unique rules: for example, New York applies a “convenience of the employer” rule for remote workers that can cause continued New York source taxation even after you move. Always check the destination and origin state tax websites for exact wording and thresholds.
Action: Review the official guidance from both state tax departments before you move.
- Establish and document physical presence in the new state
- Spend the majority of your time in the new state if the state applies a day-count test (aim for more than 183 days / >50% of the year when feasible).
- Keep a contemporaneous travel log or digital calendar with entries that show where you were each day (save flight receipts, hotel bills, tolls, and GPS-based evidence if used).
Why this matters: States audit day-count claims. A contemporaneous record is far more persuasive than trying to recreate days months later.
- Demonstrate intent to change domicile (the legal heart of residency planning)
Documents and behaviors that support intent:
- Apply for and obtain a driver’s license or state ID in the new state promptly.
- Register to vote and vote in state/local elections.
- Update your primary mailing address across banks, credit cards, professional licensing, and investment accounts.
- Buy or lease a residence and occupy it as your primary home; transfer utilities into your name at the new address.
- Enroll children in local schools if applicable.
- Join local clubs, doctors, and service providers; cancel equivalents in the old state.
Tip from practice: I advise clients to change their driver’s license and voter registration within 30–60 days of moving where possible. The closer the timing of these changes to when you actually live in the new state, the stronger the proof of intent.
- Move financial, legal, and professional ties
- Open at least one primary bank or brokerage account in the new state and use it for regular bills.
- Transfer vehicle registration and professional licenses (if required) to the new state.
- Update estate planning documents (will, power of attorney, health directive) with the new address and, if needed, re-sign under the new state’s rules.
Why: States consider your economic and social ties when deciding domicile.
- Notify employers, payroll, and benefits administrators
- Inform your employer and payroll department of your state change so withholding reflects the new state rules. If you are a remote worker, discuss state withholding and nexus issues with HR.
- Update your address with Social Security and Medicare as needed for records (note: Medicare eligibility is federal, but your official mailing address matters for some state-administered benefits).
- File the correct tax returns for the transition year
- You may need to file a part-year resident return in both states for the year you move. Each state’s instructions will explain how to allocate income earned before and after the move.
- If you were a resident of the old state for part of the year, file the appropriate part-year resident forms and attach a clear timeline and evidence for income allocation.
Practical step: Keep copies of both states’ return instructions and the forms you filed in your records; they are useful if a state questions your claim later.
- Prepare an audit file and keep records for at least 4–7 years
What to keep:
- Travel logs, boarding passes, and GPS data
- Lease/mortgage documents and utility bills
- Bank statements showing transactions tied to the new state
- Employment records (offer letters, paystubs showing withholding changes)
- License/ID and voter registration copies
I recommend clients maintain a dedicated folder (digital and physical) labelled “Residency Change – [Year]” and retain it for at least seven years in case of a multi-year audit.
Common complications and how to avoid them
- Dual residency claims: If both states assert residency, you may face tax in both places. Preserve documentation that clearly divides days and sources of income.
- State-specific rules: Some states assert residency based on factors besides days—family ties, business operations, or property ownership can keep you tied to the old state. Review each state’s definition of domicile and statutory residency.
- Employer convenience rules: If you moved for personal reasons but continue to work remotely for an employer based in your former state, you might still generate taxable income there (New York is notable for this). Consult a tax professional.
Split-year and part-year return considerations
- The move year typically requires filing part-year resident returns. Each return will allocate taxable income to the period you were a resident.
- Keep a simple timeline in your return package showing the exact date you established your new residence and the date you severed ties with the former state.
Related FinHelp reading: “Tax Filing Considerations for Split-Year Residency” (finhelp.io/glossary/tax-filing-considerations-for-split-year-residency/).
Practical recordkeeping checklist
- Day-by-day calendar or GPS records
- Utility bills and lease/mortgage documents at new address
- Driver’s license / state ID and voter registration documents
- Bank and brokerage account statements showing a new primary address
- Employment correspondence and payroll withholding changes
- Written timeline of move and related actions
Professional tips I use with clients
- Start the sequence before or immediately upon moving: apply for state ID, register to vote, and change your address within the first 30–90 days.
- Avoid mixing ties: keep primary banking, medical care, and social memberships in the new state if you intend to be domiciled there.
- Be conservative in your day-counts: if you travel back frequently, build a clear record that supports why those trips were temporary visits rather than a maintenance of domicile.
- Get a written opinion when significant taxes are at stake: a tax attorney or CPA can prepare a residency memorandum that summarizes the facts and legal analysis; it can be valuable in an audit.
When to involve professionals
Engage a CPA or state tax attorney when:
- You face potential six-figure tax exposure from remaining a resident of a high-tax state.
- Your situation involves businesses, rentals, or professional income with nexus in the former state.
- You are a high-net-worth individual or have complex estate issues that intersect with state residency.
A professional can also help prepare a “residency memorandum” and coordinate multistate filings.
Final notes and disclaimer
Residency planning can produce meaningful tax savings, but it must be executed carefully and documented thoroughly. The guidance above is educational and reflects common legal steps and best practices as of 2025; it is not a substitute for personalized tax advice. Consult a qualified tax advisor or state tax attorney for decisions that affect your tax liability.
Authoritative sources and further reading
- IRS — Individual Income Tax (https://www.irs.gov/individuals)
- Consumer Financial Protection Bureau (https://www.consumerfinance.gov/)
- New York State Department of Taxation and Finance — guidance on residency and “convenience of the employer” rules (search your state’s tax website for current rules)
Related FinHelp articles for more detail:
- State Residency Planning: Steps to Legitimize a Tax Move — https://finhelp.io/glossary/state-residency-planning-steps-to-legitimize-a-tax-move/
- State Residency Tests: How States Determine Your Tax Home — https://finhelp.io/glossary/state-residency-tests-how-states-determine-your-tax-home/
- Tax Filing Considerations for Split-Year Residency — https://finhelp.io/glossary/tax-filing-considerations-for-split-year-residency/
Professional disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. For personalized guidance, consult a licensed tax professional or attorney.
