John Bullis: Documenting domicile

It is important to document your intent to have Nevada as the place you regard as your residence and domicile. Lots of states are looking for more taxes and the question of your choice of residence and domicile can be very important.

The previous state may have a “rule” that says if you are in that state more than 183 days of the calendar year, they believe that proves you are still a resident of that state and they want an income tax on your entire income. So, it can be helpful to keep a record of where you were each day of the year. Maybe a calendar could be used to note when you were in that other state and why. Some states say any part of a day spent there counts as a full day. Some other states do not count travel days and half days.

Some states want you to sever ties and relationships. The more contacts you have with that state, the more likely they will consider you a resident. That means be sure to change your drivers license, vehicle registrations, church and club memberships and fishing licenses, etc. Some folks will sell the old home and either buy a smaller home in that other state or even just rent a new place there. If you leave behind a lot of valuable items like jewelry, furs, art, etc., some states view that as evidence of your intent to remain a citizen of that state.

An attorney almost had to pay New York state income tax even though he retired, moved from New York to Florida and only did a little legal work in Florida. He did not apply for a Florida attorney license. When he had to appear in Florida court for one case, the court gave him special permission to provide legal services in that one case. But New York tried to tax all of his income because his New York attorney license indicated he was still licensed in New York. The case was finally resolved with him not having New York residence or domicile.

Your will and/or trust can state where you are a resident and that your domicile (the place you always plan to return to) is Nevada.

A long time ago when Howard Hughes died, several states tried to establish he was a resident in their state to get the state death or inheritance tax. Now many states don’t have a state death tax or state inheritance tax, but some still do. Nevada does not have a state death or inheritance tax and the federal death tax exemption is $5.43 million in 2015.

That is the amount of assets you can leave behind (if you did not make any large, taxable gifts in your lifetime) with having a federal death tax.

Someone asked their CPA, “how much did Joe leave behind when he died?” The answer was, “all of it.”

Don’t register vehicles in another state to save a little on the registrations fees. Don’t tell an insurance company you are resident of some other state to save a little on premiums.

Did you hear? “There is a very little difference in people, but that little difference makes a big difference. The little difference is attitude. The big difference is whether it is positive or negative.” — W. Clement Stone

John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.


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