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This weekend I was talking to a friend who was talking about a family member.
They live in Arizona during the winter in a small trailer in a small trailer park community....55+? Not sure. Not sure whether they own the trailer or rent. Winters they spend up north in a friends cabin.
But their "home address" is a PO Box in South Dakota.
I suspected they rent because that's the only way this works right? Is to not own property?
I googled (briefly) and found a bunch of references to full-time RV'ers. That makes sense I guess.
There are apparently places that forward mail etc. for RV'ers and the full time RV'ers have to have a home state somewhere so SD is a friendly state for that.
There is a rebuttable presumption that an individual is domiciled in Iowa if the individual meets the following factors:
(1) Maintains a residence or place of abode in Iowa, whether owned, rented, or occupied, even if the individual is in Iowa less than 183 days of the tax year and either
(2) Claims a homestead credit or military tax exemption on a home in Iowa, or
(3) Is registered to vote in Iowa, or
(4) Maintains an Iowa driver’s license, or
(5) Does not reside in an abode in any other state for more days of the tax year than the individual resides in Iowa.
So then I guess it comes down to what Arizona thinks of this? Since they borrow the cabin their main residency would seem to be Arizona because the rent there vs. RV'ing full-time.
A little worried for her family member. I hope they have this nailed down and it doesn't come back to bite them. So many people listen to other people and think its legal and haven't done their own homework. People retire to tax free states, nothing wrong with that. And I have to admit it sounded like a good deal. Its makes me wonder if there are ways to do it, but sounds like you have to be really careful, if doable at all.
It is not legal but unless the State of residency investigates/audits they may not be found out. Also since they are living in an over 55 trailer the tax savings are inconsequential and most likely no State would bother to waste resources identifying someone at this income level.
Now since they do not file there is no statute of limitations so if they cared to the resident State could investigate their status forever.
Most states have a 6 month/183 day rule but this guys website re AZ says more than 9 months or more.
It also talks about bank accounts, drivers license's mail etc. - but since that can all be done electronically that's easy to avoid.
To determine residency, a facts and circumstances test is used. Generally, a person is an Arizona resident when the person has a true, fixed and permanent home here and, if outside Arizona, intends to return here. Among the facts decision makers have looked at in residency disputes are the following:
When I retired, at the beginning of 2011, I drove to South Dakota, spend one night in a campground, and got a receipt needed to establish residency. I already had my mail service in place. By the end of the day I had new insurances, new title, registration and drivers licenses. I kept my SD residency until the end of 2014. During that time we traveled. My wife rented a couple of apartments in NY while helping with care for the grandchildren. The last year and a half we also owned a house in NY. We spent 6 months living in the house before traveling again for 6 months. I believe I was within the law claiming SD as my residency and that was never questioned by anyone.
I spent a great deal of time researching the legal definitions of residency. It turns out that residency is a very vague concept and "intent" is the main factor in establishing residency. Intent is not just a claim made by the individual involved (although that is important). Intent is established by one's actions and the consequences of those actions. There is another extremely important factor. With a vague legal definition, the individual can be defenseless if a State decides to question the individual's intent. Money is the factor and the States are likely to win just because they can bully the individual and legal fees are beyond the reach of the individual. If you want to establish residency in South Dakota, for example, be sure to change everything, including all of your financial records. File the appropriate change of address form with the IRS.
During the time I was a SD resident, I paid little or no Federal income taxes. I did not work and earn a salary. Although I owned a property and lived in it part time, I paid full property taxes and did not claim any benefits that would require residency. In my case that cost me an additional $3000/year in property taxes. It turns out that I also saved that amount with reduced RV and auto insurances and reduced medical insurance costs.
Forget the lists and any attempt at a black and white definition of residency. When money is involved the State will bully the individual and is likely to win. I am not some sort of paranoid anarchist, just a realist. Let me give you a few million examples of how the States win regardless. Suppose you decide to move to another State. You find a place to live, pay rent or even own a home, you pay your utilities, you transfer all of your financial addresses and get new insurances and drivers licenses. Sounds pretty clear. You are a resident of the new State, correct? Not if it is to your financial benefit and costs the State money. If you apply for resident tuition at a State school, you will find out you are not considered as a regular resident of the State. You can live in the State full time for years while going to school and your status will not change. This is true whether you are a minor or an adult. While you are being denied the benefits of a resident, the State will still consider you as a full or part time resident if income taxes are involved. You are likely to also be included on the lists for jury duty.
It is not legal but unless the State of residency investigates/audits they may not be found out. Also since they are living in an over 55 trailer the tax savings are inconsequential and most likely no State would bother to waste resources identifying someone at this income level.
Now since they do not file there is no statute of limitations so if they cared to the resident State could investigate their status forever.
wonder if this would be found out when their estate was settled?
I think you have to look at the resident problem from the perspective of each state that you lived in during the year. Yes, intent, the 180+ days living in the state, etc all matter but your problem is not getting the no tax state to accept you as a resident but to convince the state that might want to tax you that you are not a resident of that state.
The year of your move will probably require a part time resident tax return in both your old state and your new state (if they have an income tax).
For death taxes you will be subject to your resident state and each state that you have property in. For property such as a house or camp you are stuck with probating in that state. For brokerage accounts my guess is that you are ok if all correspondence goes to your intended resident state.
The Escapees have a 'place of residency' in Livingston, TX, maintains mail operations, etc for the members. They come, stay, travel on, but this is their place of residency. Jury duty doesn't come an issue as they are often out-of-state, etc. have to deal with vehicle licensing, etc. if truly interested in how it works, check them out.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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"home address" is a PO Box in South Dakota.
I suspected they rent because that's the only way this works right? Is to not own property?
I googled (briefly) and found a bunch of references to full-time RV'ers. That makes sense I guess.
This is completely legal as long as you do not trigger residency in another state (keep on the move, pay taxes where you are employed (Wage income)), You can own properties in other states, just not a declared primary residence.
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