What’s the difference between Residence Vs Domicile?

The rules to establish residency for state income tax purposes vary by state.
Establishing residency for state income tax purposes can be tricky. Each state is different.

The first thing to consider is your resident status versus your state of domicile. Residency varies from state to state. Being in a state physically is the main residency test. Owning a home, family location, and financial interests are other factors which help determine residency.

Domicile and residency are often used interchangeably. They’re different however. Residency is simply where you stay. Domicile is your permanent place of residence, or where you ultimately call home. Where your family is located plays a large part in determining domicile.

You can stay in multiple places giving you residency in multiple places. Conversely, you can only have one domicile.

For tax purposes, most states consider some form of domicile. If your permanent home is in California, you’re considered domiciled there. Every state is different however, so you’ll need to research your own states residency and domicile requirements.

In practical terms, residency (rather your domicile depending on your state laws) is determined by your true intent to live in a state. This intent can be proved by things such as:

– In what state are you registered to vote?
– What state issued your driver’s license?
– Where is your vehicle registered?
– Where does your family live?
– Where do you own your home?
– Where do your kids go to school?
– Where are your financial interests located?
– Have you applied for any governmental programs, tax breaks, or privileges and in which state?

Those things, in large part, will determine in which state(s) you’ll need to pay income tax.