How To Establish Residency In A New State

Military mover packing.

Active duty military members, and their spouses, have some special protections when it comes to changing their domicile (state of legal residence) each time they move.  However, there are often situations in which the active duty member may choose to change their domicile, or the military spouse may choose or be required to change their domicile.  (For more information, you might want to see Tax Filing As A Military Spouse.)

How do you change your state of legal residence?  I have some easy steps, but please remember this important concept:  Domicile, or state of legal residence, is not proven or disproven by any single thing.  It is proven or disproven by the intent demonstrated by many small actions.  However, some actions are given more weight than other actions.  Generally speaking, actions that show that you intend to live somewhere after leaving the military are deemed more indicative of your intent.

Note:  Generally speaking, you can not legally establish residence in a state where you do not physically reside.  There are some loopholes and grey areas that can be exploited in certain situations, but that is unusual.  It’s a pain, but it is true.

Don’t Take Any Sort Of Resident’s Exemption On Real Estate Taxes In Another State

In most states, legal residents of that state are permitted to take certain exemptions that result in lower real estate tax bills on property that they own and occupy.  Taking a homestead exemption is a declarative action that supersedes nearly all other demonstrations of intent.

The homestead exemption can be tricky because, in years past, it was common for those exemptions to be applied automatically to properties that are being occupied as a primary residence.  This can have the unintended consequence of changing a person’s domicile without their taking any action nor intending to change their domicile.  There has been a trend for states to ask homeowner’s to apply for homestead exemptions, which can help military families handle the situation correctly.  As tempting as it is to accept a tax break, don’t do it unless you intend to change your domicile to the state in which you are accepting the break.

Change Your Voter Registration

Voter registration, and actually voting, is generally considered to be one of the biggest indicators of domicile.  The logic behind this is that you care the most about voting in the locality where you consider yourself to be a resident and where you intend to live when you leave the military.  It is almost impossible to prove that you are domiciled somewhere without being registered to vote there (unless you’ve accepted a homestead exemption.)

Once you’ve registered to vote in your state of legal residence, actually vote.  When you move away, keep your physical address up-to-date with the department that handles voter registration.  Request absentee ballots, and use them.

Change Your Driver’s License

When establishing residency in a new state, change your driver’s license to that state, and surrender your license from the old state.  Even though a driver’s license is lower on the list of things that establish domicile, I recommend you maintain your driver’s license in your state of legal residence whenever it is legal and practical.  (There are a few situations in which spouses are not permitted to keep the driver’s license from their state of residence, but they are blessedly few.)

Change Your Vehicle Title and Registration

Once you’ve change your driver’s license, you can then change the title and registration for your vehicles.  Once again, I recommend that you maintain your vehicle title and registration in your state of legal residence whenever it is legal and practical.

From a practical standpoint, you may find it easier to maintain vehicle registration in solely the name of the active duty member.  Many states, but not all, offer the same non-resident registration privileges to spouses of military members.  However, when you find yourself stationed in a state that does not, it can be expensive and/or a pain.  If possible in your state, you do want to maintain the vehicle’s title in both names to decrease the paperwork in case of the death of either party.

Paying Taxes

If the state in which you are declaring residence has an income tax, personal property taxes, or any other types of taxes that are typically levied upon its residents, then you need to pay these taxes unless you are otherwise exempted.  For example, if you maintain your state of legal residence in Maryland, you need to declare all your income to Maryland and pay the appropriate taxes to Maryland, even if you physically live and work in Nebraska.

I have noticed that some military spouses think that they are tax exempt because they don’t have to pay in the state where they work and they don’t file in their state of legal residence.  That’s not how it works.

Declare Your Change of Domicile

If you have any inkling that your situation might be complicated, it doesn’t hurt to create an affidavit declaring yourself a resident of the new state and declaring that you are no longer a resident of the old state.  It won’t help if you haven’t taken the other steps, but it is an addition piece of information to be considered if your domicile is ever challenged.

Thankfully, domicile for military service members and their spouses is rarely challenged as strongly as it is for civilians.  I have seen civilian court cases where the courts ask questions about where the parties celebrate Christmas, where they go to the doctors, and where they physically keep their most treasured possessions.  I am glad those questions aren’t asked of military families, because it could get complicated.

Again, the primary factor in domicile is intent as demonstrated by many small actions.  Be thoughtful of what you’re saying when you take certain actions, and you’re likely to demonstrate your true intent with regard to your domicile.

Hat tip to my imaginary friend Juliana for giving me the idea for this post!

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • osburnltd

    I would recommend sitting down with a CPA or EA who is familiar with military situations, not all of us are! Ask questions, take notes and lay out your plan of action. Be ready to submit lots of documentation because state revenue departments often lose first submissions.
    Jim Osburn CPA

    • Kate

      Jim, that is great advice. Can you tell us the best way to find a CPA or an EA? Finding good service providers is one of the hardest parts of moving around so frequently.

      • osburnltd

        I would take a two pronged approach-CPA’s are licensed by the state and each state has a society or association with websites and referral lists (you can also call and speak with real people, too). Pick some names (hint: smaller firms usually charge smaller fees) and call to screen them to see if they have dealt with multi-state situations and if they even want your business. The second prong is to speak with other people on base to see what they have experienced, remember that a big refund is no indicator of quality tax advice! This time of year is great for this advance planning, so make a formal appointment, bring data they want to review and expect a one to two hour session and a written plan to follow.
        EA’s (Enrolled Agents) are licensed by the IRS and are especially well versed in tax matters, the IRS website has a listing of these people and they usually have local associations with names such as, Independent Accountants, etc.
        Fees-this is how they (we) stay in business, this also biases our duty to YOU, we do not get commissions from departments of revenue, we work hard to earn what we charge. Also, every preparer that I have dealt with has a fondness for our military families and really try to do a bang up job for you folks.
        Jim Osburn CPA