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Today I've learned that Americans have to pay state income tax based on their last residency address, even if they relocate overseas. So let's say you know you will be moving from the US to another country next month. Would it be legal to rent a place in a no-income-tax state for a month, register your residency there, and then move out of the US?

NB: I am not a US citizen, so this is a purely theoretical question

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    Your present state of residence will work very hard to keep taxing you even if you move to a no-tax state for a month before leaving the country permanently. It is one thing for you to "establish" residency in a no-tax state; and quite another to get your present state of residence to acknowledge the fact.. – Dilip Sarwate Apr 25 at 21:18
  • Possible duplicate of In USA, what circumstances (if any) make it illegal for a homeless person to "rent" an address? and said question has links to a lot of other similar questions. – stannius Apr 26 at 15:59
  • I actually don't see anything in the linked question that proves you do have to pay state income tax to the last state you lived in. – stannius Apr 26 at 16:50
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All US states have their own policy on what they consider "residency" and what they consider a taxable resident.

So for example, California has income taxes while Nevada does not. Lets IMAGINE that Nevada says you can be a resident after a month, California has completely different requirements in determining whether it expects you to pay tax there, California will look to see where you lived most of the year, or at least 6 months of the year, whichever is less.

Individual states act like countries in this regard.

Its not illegal, it still has consequences. Different question

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Since California is the state with the highest state income tax, I assume they have the highest burden for proving you are no longer domiciled there. In fact they themselves point out that they are one of the few states to distinguish between residency and domicile. From CA Publication 1031:

Meaning of Domicile The term “domicile” has a special legal definition that is not the same as residence. While many states consider domicile and residence to be the same, California makes a distinction and views them as two separate concepts, even though they may often overlap. For instance, you may be domiciled in California but not be a California resident or you may be domiciled in another state but be a California resident for income tax purposes. Domicile is defined for tax purposes as the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. It is the place where, whenever you are absent, you intend to return.

And among their requirement for changing domicile, they specifically call out that you must have an intention of living in the new state permanently or at least indefinitely:

Change of Domicile You can have only one domicile at a time. Once you acquire a domicile, you retain that domicile until you acquire another. A change of domicile requires all of the following:

  • Abandonment of your prior domicile.
  • Physically moving to and residing in the new locality.
  • Intent to remain in the new locality permanently or indefinitely as demonstrated by your actions.

Massachusetts has a similar set of guidelines for proving that you are no longer domiciled there:

A new domicile may be acquired only by:

  • Abandoning the current domicile
  • Establishing a residence at a new place, and
  • Intending to make the new residence one's home permanently or for an indefinite time, with no certain, present intention to return to the previous home.
  • The burden of proving that a taxpayer has changed their domicile lies with the party asserting the change.

Moving to another state for a month isn't going to be enough to prove that you are now domiciled there. You would have to cut your ties to your old state and most importantly make new ties to your new state. Ties to your new state might include but not be limited to sign a lease for 12+ months, get a drivers license, register to vote, join local community groups, etc. There are guides available on performing these steps to the satisfaction of local authorities, for instance this guide to becoming a Texan.

Neither California nor Massachusetts can't see into your mind and so with enough ties to your new state, I don't know how they'd prove you intended to leave the country all along, however in both cases above, the burden of proof is on you to prove that you are planning on living permanently or indefinitely in your new state and/or making it your home base.

  • Strange that moving to another country doesn't count as changing one's domicile... – JonathanReez Apr 26 at 16:08
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    @JonathanReez It probably does. But the law says that you still have to pay state tax to your state of last domicile if you move abroad. That's what the OP is trying to get round. – DJClayworth Apr 26 at 16:14
  • @DJClayworth JonathanReez is the OP BTW. – stannius Apr 26 at 16:26
  • Oops, that's embarrassing. – DJClayworth Apr 26 at 16:47
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    "Moving to another state for a month isn't going to be enough to prove that you are now domiciled there." Especially if you are simultaneously making efforts to move to another country. – user4556274 Apr 26 at 22:07

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