How to change state residency

How to change state residency

The first step to changing your state residency is to show proof of residence there. Typically, you must be in the state (working or living) for at least 183 days. You also need to update your driver’s license and vehicle registration, register to vote, file taxes in the new state, and establish legal ties.

Some states, like California and New York, require you to establish a domicile. That is, you must prove your intention to make the state your permanent home through documents such as leases, employment contracts, and utility bills. While other states, like Texas and Florida, have no state income tax but require proof of residency through documents like a driver’s license and voter registration.

How to establish residency in another state

The requirements for establishing residency vary by state, but there are common criteria used to determine your status. We have compiled these general steps to guide your journey.

1: Change your primary address

The first and most obvious step is to change your primary address. Start by updating your address with USPS. You can do this online through the USPS website or at your local post office to ensure your mail is forwarded to your new address.

Next, notify the IRS about a change of address. This ensures your federal tax records are accurate. 

Then, update your driver's license and vehicle registration. Most states require you to update your driver's license and vehicle registration within 30 to 60 days of moving. This is one of the strongest indicators of residency.

2: Establish a permanent home

To be considered a resident, you typically need to establish a permanent home in the new state. This means you are signing a lease or purchasing property to establish your permanent residence in the state. In addition, setting up utilities like electricity, water, and internet in your name at your new address supports your claim of residency.

If you have kids, register them for school in the new state to demonstrate your intent to reside permanently.

3: Spend a minimum amount of time in the new state

As we stated at the beginning, most states require that you live in the state for a minimum period to establish residency. While each state may have different rules, the general guideline is to spend at least 183 days in the state out of a year to qualify as a resident. 

4: Register to vote

Most states require new residents to register to vote within a certain period of moving, and doing so can help establish that you consider your new state your home. In many cases, voting is one of the primary ways the state determines your domicile for tax purposes.

5: File a declaration of domicile (applicable in some states)

Some states, like Florida, allow you to file a declaration of domicile with the county clerk’s office to formally declare that you intend to make the state your primary residence. This document is helpful in states where domicile status is tied to tax residency, especially if you are trying to prove you have changed your state of residence for tax reasons.

6: Update financial and legal documents

Open a bank account in your new state and transfer your primary banking activities to that account. If you work for an employer, notify them of your new address so they can withhold the correct state taxes from your paycheck.

7: Pay state taxes

Once you have established your new residency, you may need to file a part-year resident return in both your old and new states for the year of the move. This will help ensure that you properly pay taxes to both states based on the time you lived in each. You should also ensure that your withholding is adjusted to reflect your new state’s tax laws.

8: Change health insurance and other policies

Update your health insurance policy to reflect your new state of residence. If your insurance is state-specific, this may involve changing your network of doctors or providers. Additionally, update your car insurance, homeowner’s/renter’s insurance, and other policies to reflect your new address and the insurance laws of your new state.

9: Demonstrate your intent to reside permanently (applicable in some states)

Sometimes, you may need to show your intent to make the state your permanent home. This could involve getting a job or transferring a business to the new state, obtaining memberships in local organizations, like gyms, libraries, or religious institutions, and filing taxes in the new state.

Changing state residency for taxes

When you move to a new state, you need to update your address with the IRS. This ensures you stay compliant with tax laws and avoid potential issues arising from missed correspondence.

Receipt of IRS notices and penalties attached

The IRS uses your residence address on file to send tax returns, audits, and outstanding balances. If you don’t update your address, you could miss deadlines for filing or paying taxes, experience delayed or missed refunds, or fail to respond to IRS inquiries or audit requests. 

If this happens, the IRS may consider your failure to respond as non-compliance, leading to penalties, interest on any overdue amounts, or enforcement actions like liens or wage garnishments.

Avoiding identity theft and fraud

Another key reason to update your address is to protect yourself from identity theft and fraud. If someone else gains access to your IRS mail due to an outdated address, they could use your personal information for fraud, leading to serious financial and legal consequences. 

Meeting state requirements and enjoying the benefits

Your new state of residence can have significant implications for your income tax obligations. Many states require that residents spend at least 183 days in the state to be considered for income tax purposes. 

Meanwhile, nine US states do not require residents to pay state income taxes. If you relocate to one of these states, like Florida or Texas, you could see significant tax savings since you won’t be required to pay state income tax on your earnings.

However, even if you move to a state with no income tax, updating your address with the IRS is crucial. Failing to do so could lead to confusion in your tax filings, especially if your IRS records still reflect your previous state’s tax laws. 

For instance, if you don’t update your address, the IRS may continue to associate your earnings with the tax rules of your old state, potentially causing complications or penalties for not correctly reporting your income.

Changing state residency for college

States generally require that students demonstrate their intent to live in the state permanently. This means you cannot be in the state simply to attend college. You must live in the state for 12 months before enrolling in college and keep detailed residence records, such as lease agreements or utility bills.

How to change state residency in the military

As a service member, you need to declare your domicile by establishing a presence and intent to remain in the state. Update your military records to change your state of legal residence for pay. Also, update your driver’s license, vehicle registration, and state returns if you have moved to a state with income taxes.

How to change your state residency easily

Changing your state residency can be straightforward if you follow the right steps and keep things organized. Start early, plan ahead, and understand the requirements of your new state of residence.

Typically, the state’s revenue department will have the residency rules for tax purposes on its website, while the admissions pages of state universities and community colleges have the state residency rules for tuition purposes.

Set up utilities and housing in your name and keep copies of utility bills, leases, and tax returns. You will need them as evidence to show that you have established residency in the state. Lastly, write down all the tasks you need to complete or simply follow this out-of-state moving checklist we created to help you stay organized and prevent missing anything important.