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I was reading this article here: https://www.jpmorgan.com/wealth-management/wealth-partners/insights/working-remotely-watch-out-for-state-taxes and was interested by the "high state income tax refugee". In the example, they say said person must make his move to Nevada permanent to avoid paying California taxes.

I live in IL and pay rent there. However, I want to live with my friend in Texas for 3-4 months. Would I have to pay IL state taxes, Texas state taxes (note that it's 0%), or both in each scenario?

  1. I live with him, but still pay rent/keep my lease for my IL apt
  2. End my lease in IL

Assume

  1. employer does not have an office in Texas, but has given permission to do remote work from Texas.
  2. I need to update my W-4 to my friend's address in Texas.
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  • Such an interesting and difficult question ...
    – Fattie
    Dec 31, 2020 at 1:15

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https://www2.illinois.gov/rev/questionsandanswers/pages/369.aspx

You are an Illinois resident if you were domiciled in Illinois for the entire year. Your domicile is the place where you reside and the place where you intend to return after temporary absences.

Keeping the IL lease, continuing to pay the rent and then returning (because "want to live with my friend in Texas for 3-4 months") means you're domiciled in Illinois, even though you're in Texas.

If you don't plan on going back to IL, then you're not domiciled in Illinois anymore.

(Don't play tricks, though. "I changed my mind!" doesn't fly well if they audit you.)

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You would be taxed by both states -- by Illinois because it's you are a resident of Illinois, and by Texas because that's the source of the income (since you did the work while in Texas). Since Texas has no income tax, that effectively means you just have to deal with Illinois taxes.

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