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Maryland domicile concerns


Colleen in MN

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Happy tax season!

Married clients are current Maryland residents.  They are purchasing home in Florida and intend to live there 183+ days, as well as change bank accounts, voter registration, etc.   They will retain their Maryland home as a vacation home. Once Florida domicile is established, they will no longer file Maryland tax returns.  (part-year return exception)

Has anyone seen Maryland revenue pursue or challenge these situations?  If so, what have been the issues and outcome?  

Thanks in advance!

Colleen Weber

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I go with the assumption most states with income tax will have at least one person looking at this issue, with the first factor being the potential profit (revenue recovery) involved.

I have seen good client type information provided by specialty groups, such as RV clubs for the retired and/or mobile types (Escapees is the best example I have seen).  Retaining current home has to be done very carefully from what I have read.  NY recently made common news about doing things such as reviewing social media, veterinary records, etc.

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1 hour ago, Medlin Software said:

  NY recently made common news about doing things such as reviewing social media, veterinary records, etc.

I read that article.  NY is checking to see where you go to the dentist, dog groomer, etc.   They are even requiring t/p allow them to visit the NY home so they can look in the refrigerator and the cupboards to see if you have food that is not expired.   If you leave for tax reasons, they are trying very hard to pull you back into their tax system.

Tom
Modesto, CA

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When I skimmed one article on the NY enforcement, I seem to remember a profit in the 6 figures for each one they went after forcefully.  (I could be off, but it was a very profitable endeavor.)  My guess is if NY, MD, etc., starts an investigation beyond in house review, they already have what they need to make a profit...

The MD document looks to be very layman friendly, and is a good guideline for anyone who is concerned with their tax domicile.  Among the mobile RV crowd, there are three states to domicile in (once medicare age is reached).  SD, TX, and FL.  If "I" know this, then the states bleeding high tax earners know this, and can easily flag the movers for further inspection... especially if real property is kept in the state being left.

So for the OP, if domicile is not your area of expertise, you might consider referring to some sort of domicile expert for advice, or having them sign off that you suggested a domicile consultation.  Whatever you may gain by handling the client could be lost in defense and bad will if they are put through a domicile audit.  I suppose claiming FL domicile but having only a MD tax preparer could be used against them.

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