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My company is paying me with large amounts of equity pay. Theoretically*, I could delay realizing some of the gains on this equity and move to a place which, unlike California, does not charge 9.3% on long-term capital gains (maybe, say, Texas) and save myself several thousand dollars (depending on how much company stock I haven't ditched yet).

How long do you need to stay in a place to count as a "resident" and pay taxes under their particular tax regime, instead of another? Are there any other factors besides the length of your stay?

*(which is to say, I don't have serious plans to do this, but I'm curious.)

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  • I'm not going to put this as an answer since I have no concrete references for this, but I think you are a resident for tax purposes as long as your start or end a year in a state. And most likely, the taxes will be calculated based on the portion of the year you lived in each state.
    – Nicole
    Oct 5, 2010 at 20:23
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    @Renesis - I've done multiple-state taxes in a year before (moving from NC to California) but it's not based on the amount of time you're in a state. They only tax the money you made while in the state. The thing is that they'll tax that money at a rate based on your total income, not just the income in that state. (If you made $100,000, of which 15% was in California, they'd charge you 15% of the tax for making $100,000 - which is more than the tax for making $15,000).
    – user296
    Oct 5, 2010 at 20:26
  • Right, that's what I meant... I was assuming a fixed income. So what is the question? It kind of sounds like you know the answer.
    – Nicole
    Oct 5, 2010 at 20:48
  • The question is "how long do you need to be there for it to count as 'resident'?" My earlier move was pretty permanent and I didn't have any doubt. :b
    – user296
    Oct 5, 2010 at 21:13

2 Answers 2

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It's not so much about time but about intent. If your intent is to move there permanently, it would be when you arrive in the state for the purposes of living there (i.e. not from a while before that when you went to check a place out or for an interview). I believe that most (if not all) states expect you to get a Driver's License from that state within 30-days of moving there.

Something like a Driver's License or State ID would be proof of your residency. These things vary greatly from state to state, so you'd have to research particular states. Or find someone who's done that already.

A bit of searching, specifically for Texas, brought me to this forum thread:

If you / he wish to establish residency here -- here being Texas -- get a Texas Driver's License and Voter Registration here. Government issued ID with a Texas address is pretty much bulletproof defense against being found to be a resident of elsewhere.

Your battle, if there is one, will not be with Texas, but with your present home of record state and/or local government if there are income taxes associated with having been a resident there during the tax year.

Which brings up the other question: You would need to make sure that California does not have some provision that would cause you issues. (This isn't so much a case of income from a company in the state as it about capital gains, but it is still prudent to check.)

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If you are going to be trying clever stuff with taxes in different place, you probably need a professional. Different countries definitely have different laws on the subject.

For example (several years ago) the UK considered you absent from the UK for tax purposes from the day you left, provided you were gone for a year, whereas Canada didn't charge you tax as long as you were not in the country for six months in the year. A carefully timed move enabled me to not pay tax at all for six months because I wasn't resident anywhere.

Also it was irrelevant whether I intended to stay or not.

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