Can you live in Nevada for tax purposes and then travel elsewhere for the weather, culture and fun? (tax lien)

[Dean Trails]

Does anyone know how long you need to reside in a State to declare it as your primary residence?

I wonder if the snowbirds have this down to science?

I would spend July in Seattle, August in Oregon somewhere, December and January in Phoenix, Spring in Southern California and October in Nevada?

[tfox]

This is a tricky question. Any state (including Nevada) is happy to accept you as a resident, no questions asked. They don't really care. The ones who may care will be your current state, and so the answer to your question will really have 49 different answers. Some states are known for aggressively pursuing those who "move away" under somewhat questionable circumstances, and attempting to collect back taxes.

This situation occurs with frequency for expatriates, people who live overseas. (Another example is retired people in RVs). People in this situation often pick a no-tax state like Florida, Texas, Nevada as their "domicile", even though they may never really live there. It is their legal right to move their domicile before going overseas, but the standard is that the domicile chosen should show "intent" to make that state your long-term residence. Failure to show "intent" can get you in trouble.

Your situation becomes particularly dicey, say, if you move from your current state, let's say it is Virginia, and you "move" to Nevada, perhaps because you're working overseas, and then a few years upon your return the the US you then head directly to Virginia. That's a situation wherein Virginia would very likely come after you. (In fact, Virginia is known for aggressively pursuing its "former" residents for unpaid taxes).

For most people who work a regular W-2 job, this whole question is moot, because you will be taxed at the point of your employment. For example, People who live in Vancouver, Washington (no state income tax), but work in Portland, Oregon, will still have to pay Oregon's (relatively high) state income tax, so residing in Washington for them is of no benefit.

[jlawrence01]

I agree with tfox - to a point. If you are high income or have substantial assets, I would consult a CPA on this question.

In general, the state tax authorities are going to look at where you are actually living. For example, if you are moving to Nevada from Ohio, if you sell your house in Ohio, move all your belongings to Nevada, register your vehicles in Nevada, and the like, you are pretty safe.

If you maintain a sizeable presence in Ohio, like a residence, a part-time job, etc., then you start to run into some major problems.

You are seeing a lot of this between people who are moving between New York and Florida. There have been a number of cases where the state of New York is pursuing wealthy retirees. I believe that California is attempting to tax state pensioners who have moved to Nevada.

[Dean Trails]

Actually, i was thinking of selling everything in California. Then, buy a home in Nevada near friends then maintaining a small home in Ca parttime than travel most of the time.

[Dean Trails]

I believe that California is attempting to tax state pensioners who have moved to Nevada.[/quote]

That is a super bummer!!

[Chinga]

I dont know about you folks.. but I got more than enough "weather, culture and fun" Right here in Nevada.

[NVDave]

Originally Posted by Dean Trails

Actually, i was thinking of selling everything in California. Then, buy a home in Nevada near friends then maintaining a small home in Ca parttime than travel most of the time.

California's Franchise Tax Board has gone after many people who have tried this. The only way to prevent them from going after you is to own no titled property (ie, no real estate or vehicles) in California.

I worked with engineers who moved from CA to WA, then exercised stock options a couple years after the fact. The options were granted while they were CA residents, but the parties in question did not realize the value of them until they had not been California residents for two+ years. There was one engineer who maintained a condo in CA, but had sold everything else. Turns out this was a big mistake.

The FTB put a tax lien on their condo, claiming that they were owed taxes on the options because they had been granted while the engineer was a CA resident, and because the company was headquartered and incorporated in CA.

The case was finally decided in the engineer's favor, but it took a bunch of money for legal expenses - like about $70K.

Other engineers who did not leave assets behind that the FTB could try to seize were able to get free of the FTB more easily and cheaply.

The best way to deal with CA, especially now that they're scratching around, trying to shake everyone down for every last nickle they can get, is to leave nothing of value behind that they can seize or attach a lien to if you have substantial tax liability under California law. File a very clean last year 540 return and quietly slink away...


In general, the answer to your question has to be answered for the specific situation you're looking at. While California is filled with rapacious pickpocket bureaucrats, other states are sometimes no cakewalk either. Some states with income taxes merely require that you be in the state 'X' number of days, and then they claim they want you to file a return for all income, earned and passive, you might have made even in other states, for the pro-rated portion of that year you lived in their state, even if you had not established a domicile.

For those who are not familiar with the concept, "establishing a domicile" is a legal definition of where you call "home" -- and is defined by such things as:

- where do you receive your mail?
- where are you registered to vote?
- where is your drivers' license issued?
- where are your cars registered?
- in which state have you applied for professional licenses (eg, doctor, lawyer, engineer, etc)
- in which state have you applied as a resident for hunting/fishing/boating licenses?
- in which state do you receive your bank statements?
- in which state are your cars/home/life/health insurance policies written?
- in which state are your children enrolled in school? College? Did your kids claim in-state tuition rates on their applications?
- in which state do you have your physician? Your childrens' doctor?

And so on.

In some states, even if you are clearly, unequivocally domiciled in another state and you're merely living out in a mancamp or you're living out of a hotel room, and you're in the state for the specified number of days, the state wants you to file or pay their state income taxes. ie, there might be no requirement that you set up any kind of domicile in the state where you were staying - you were merely in the state for a minimum number of days, and whammo, you need to file a return, even if you have only passive income reported in your home state.

[KevK]

You can do it but it will require some calculation on your part to see if it is worth it. Yes, Nevada has no state income tax but if you own property in the "former" state, you will certainly lose your homestead exemption which could be worth alot of money. Also you will have to register your cars and your driver's license in Nevada and your insurance may go up or down as well as your car taxes. Also you have to be careful you don't get caught. If you have a job in one state but claim residence in another, sometimes they might investigate. But there are people here in Georgia that have "residence" in Florida and have for years and nobody says anything. This is especially true of OTR truck drivers. All from "Florida".

[KevK]

Originally Posted by NVDave

California's Franchise Tax Board has gone after many people who have tried this. The only way to prevent them from going after you is to own no titled property (ie, no real estate or vehicles) in California.

I worked with engineers who moved from CA to WA, then exercised stock options a couple years after the fact. The options were granted while they were CA residents, but the parties in question did not realize the value of them until they had not been California residents for two+ years. There was one engineer who maintained a condo in CA, but had sold everything else. Turns out this was a big mistake.

The FTB put a tax lien on their condo, claiming that they were owed taxes on the options because they had been granted while the engineer was a CA resident, and because the company was headquartered and incorporated in CA.

The case was finally decided in the engineer's favor, but it took a bunch of money for legal expenses - like about $70K.

Other engineers who did not leave assets behind that the FTB could try to seize were able to get free of the FTB more easily and cheaply.

The best way to deal with CA, especially now that they're scratching around, trying to shake everyone down for every last nickle they can get, is to leave nothing of value behind that they can seize or attach a lien to if you have substantial tax liability under California law. File a very clean last year 540 return and quietly slink away...


In general, the answer to your question has to be answered for the specific situation you're looking at. While California is filled with rapacious pickpocket bureaucrats, other states are sometimes no cakewalk either. Some states with income taxes merely require that you be in the state 'X' number of days, and then they claim they want you to file a return for all income, earned and passive, you might have made even in other states, for the pro-rated portion of that year you lived in their state, even if you had not established a domicile.

For those who are not familiar with the concept, "establishing a domicile" is a legal definition of where you call "home" -- and is defined by such things as:

- where do you receive your mail?
- where are you registered to vote?
- where is your drivers' license issued?
- where are your cars registered?
- in which state have you applied for professional licenses (eg, doctor, lawyer, engineer, etc)
- in which state have you applied as a resident for hunting/fishing/boating licenses?
- in which state do you receive your bank statements?
- in which state are your cars/home/life/health insurance policies written?
- in which state are your children enrolled in school? College? Did your kids claim in-state tuition rates on their applications?
- in which state do you have your physician? Your childrens' doctor?

And so on.

In some states, even if you are clearly, unequivocally domiciled in another state and you're merely living out in a mancamp or you're living out of a hotel room, and you're in the state for the specified number of days, the state wants you to file or pay their state income taxes. ie, there might be no requirement that you set up any kind of domicile in the state where you were staying - you were merely in the state for a minimum number of days, and whammo, you need to file a return, even if you have only passive income reported in your home state.

If you have kids, pulling this off can be hard. If you are single it is fairly easy. Just use or rent an address in the state. Using a friend or relative's is the best.