Domiciliary resident

[Gail in Virginia]

I have a taxpayer who has lived out of the country for the last three years as a temporary resident of United Kingdom. She has now moved to Australia and has applied for permanent resident status for that country. While she was a resident of UK, VA considered her a domiciliary resident of Virginia and she paid Virginia taxes because she had not changed her state residence before moving. At what point, if ever, will she cease to be a domiciliary resident of Virginia? Are there any steps she can take to expedite that, or will she always be a domiciliary resident of Virginia as long as she pays US tax and does not establish residence in any other state? Is there anyplace I can learn more about state requirements for foreign income? Any help is appreciated.

[Pacun]

I am assuming that tax payer is U.S. Citizen. She will stop being a Virginian when the reliquish to any ties to VA. So if she has a house, car, boats or any other ties to VA(register to vote, driver's license, CPA license, etc), she might be considered a Virginian. If you do not have any ties to a state, you are free on the very first day you move out.

This is from the top of my head.

[kcjenkins]

She might want to seriously consider moving back briefly, and moving to TX, TN, FL, etc, a state which has no income tax, and establishing residency there. Then, move her voting registration, DL, change the address on her medical and other insurance, etc. Then when she goes back to Australia, she will go as a resident of that new, non-tax state.

Otherwise. assuming she is keeping her citizenship here, she'll be a 'resident' of the last state she lived in, until she moves to another state.

[redux]

I have a taxpayer who has lived out of the country for the last three years as a temporary resident of United Kingdom. She has now moved to Australia and has applied for permanent resident status for that country. While she was a resident of UK, VA considered her a domiciliary resident of Virginia and she paid Virginia taxes because she had not changed her state residence before moving. At what point, if ever, will she cease to be a domiciliary resident of Virginia? Are there any steps she can take to expedite that, or will she always be a domiciliary resident of Virginia as long as she pays US tax and does not establish residence in any other state? Is there anyplace I can learn more about state requirements for foreign income? Any help is appreciated.

From: http://www.tax.virginia.gov/site.cfm?alias=residencystatus

Domiciliary Residents: -- Individuals whose state of legal residence in the technical sense is Virginia are domiciliary residents. Most domiciliary residents actually live in Virginia. Examples of individuals who are domiciliary residents but who do not live in Virginia are shown below:

An individual who enters the military from Virginia (i.e., claims Virginia as his/her home of record) will remain a domiciliary resident of Virginia, unless appropriate steps are taken to abandon Virginia as the state of domicile.

A student who attends school in another state, but maintains Virginia as his/her legal state of residence, is a domiciliary resident.

A resident of Virginia who accepts employment in another country is a domiciliary resident, unless appropriate steps are taken to abandon Virginia as the state of domicile.

So it appears as though your client needs to take positive steps to NOT be a resident of VA. However, on the link I posted notice that if a client who receives income from VA is still a resident...no matter where they live. That, of course, might apply to a retirement account....I guess.

[jainen]

>>your client needs to take positive steps to NOT be a resident of VA<<

The steps to establish a new domicile are similar to a new residence. The main difference is that a domicile is the permanent place to which you intend to return even after living someplace for a long time. It isn't enough to say you haven't decided where you will go in the future, especially if you keep assets such as bank accounts or real estate in Virginia. Give up all those old ties and get permanent Australian replacements. Then you can pay tax to Australia instead of Virginia.