Changing State Residency

Discussion in 'Life After the Academy' started by Stealth_81, Sep 23, 2010.

  1. Stealth_81

    Stealth_81 Super Moderator Moderator Founding Member

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    Son will graduate in May, and is asking questions about changing his state residency when he starts UPT. Since Wisconsin is a high tax state, I can't say that I blame him. Can any of you veterans of military moves give me the pros and cons of changing? Are the tax benefits worth it? Are there negatives that I don't know about?

    Stealth_81
     
  2. Christcorp

    Christcorp Member

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    It all depends on which state he wants to change residency to. He needs to research. There's no real "Negative". However; each state has their own requirements for residency. Some require you to get a driver's license from that state. Some require that you own/rent property there, unless you were born there. Some have other requirements like vehicle registration. It's not uncommon for military personnel to change residency to take advantage of tax issues. Texas, Wyoming, and Nevada . For what it's worth, there's only 7 states with NO State Income Tax. Washington, Nevada, Alaska, Wyoming, S. Dakota, Texas, and Florida. But each has their own residency requirements. Have him research the states he's interested in and then make a decision. Good luck. Mike....
     
  3. Stealth_81

    Stealth_81 Super Moderator Moderator Founding Member

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    Thanks, Mike. Texas is where he was considering, since his first two choices for UPT bases are there. I didn't want to bog the thread down with a narrow discussion, so I left that out.

    Stealth_81
     
  4. Capt MJ

    Capt MJ Member

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    This is just my two cents based on personal experience.

    Home of Record will always be just that - the place from which you joined the military. State resident, for tax purposes, something else.

    Each state will have info on requirements for residency and how they handle out-of-state active duty military for tax purposes. These days, it's on the state.gov websites.

    JAG or Legal Services Office should have some references on state resident and tax issues, as well as official advice.

    Most of us current and former military PCSers know the states that have no state income tax. Off top of mind, FL, TX, NH, NV, WA and others I can't remember. Great, if you happen to be stationed in that state and do the necessary actions to meet the requirements to establish residency in that state and tell your old home state buh-bye when they come calling for annual state income tax. You can't just say, yep, I think I'll select FL, with no physical presence or activity to kick-start the notion of residency.

    There are some states which do not tax their residents when serving out of state on active duty. Husband was a PA resident, and that was their deal. As a naval aviator, he never returned to the state for active duty, hence, he kept PA as his declared state for tax purposes. Might not be so good for other services which might have duty stations there.

    Some states do not tax the FULL amount if their residents are serving out of state on active duty. Again, check the state.gov website.

    I, on the other hand, hailed from GA, and they wanted their full state income tax the years I was in Spain and Italy. I wasn't using their roads, schools or other state services, and did not intend to reside there, so as soon as I PCSed to FL, I registered to vote, registered the car with FL DMV, got a FL driver's license and gave GA notice I was now a FL resident. I continued to vote absentee in FL elections for the remainder of my career. I did not retain FL plates or driver's license, but changed that as needed in various states as current plates/license needed renewing.

    That all said, first step is to explore WI's deal for active duty serving out of state. Next step, determine what states along your son's projected path might offer a better opportunity for residency and what their requirements are.

    Hope that helps.
     
  5. Capt MJ

    Capt MJ Member

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  6. USAFretired1996

    USAFretired1996 Member

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    When I was stationed in San Antonio in the late 80s, I had a NM license and my vehicles were registered in NM but I changed my legal residency to TX to take advantage of the no state income tax. We didn't even own a home there as we didn't anticipate being there long. I don't recall what was required to establish residency but it must not have been much. I think all I did was go down to Accounting and Finance and fill out a form. Most of my co-workers did the same unless they were already residents of states with no income tax or states like PA that didn't tax you if you were on active duty residing out of the state. I had 2 more assignments after we left TX and didn't change my residency again until we retired in VA. No idea what the current requirements are.
     
  7. SteveHolt243

    SteveHolt243 Member

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    Technically speaking, I'm pretty sure the form alone doesn't change your residency. It just tells the military under which state to figure your tax withholding. I'm too lazy to go find my copy, but I think it also mentions on there that a copy will be sent to your old state. Either way, you still have to do things that would demonstrate your residency, such as register vehicles, register to vote, DL, etc. It covers all of that on the form in the fine print, but just be aware that whoever's helping you at your local PSD office may or may not know what's actually required.
     
  8. Mongo

    Mongo Banned

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    No doubt, you were in violation of at least one state's law, probably two. A military member is not required to license his vehicle in the state in which he is stationed. His only other option however is to maintain registration in his state of residency. Since you were no longer a resident of NM, you were probably in violation of their law as you were in TX, being both a resident of TX and stationed in TX, with your registration elsewhere.

    Also, had you retired back in NM and commenced paying state taxes again, they could have used DMV records to establish that you had been a resident of NM all along and hit you up for a lot of back taxes.
     
    Last edited: Sep 24, 2010
  9. MakeItHappen

    MakeItHappen Member

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  10. kp2001

    kp2001 USMMA Alumnus

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    Hmm, let's see:

    I'm a Texas resident with a Texas driver's license, who lives in a totally different state whose car is registered in a third and different state. My wife (dual military) is a resident of a completely different state. Oh and my medical license is from the same state my car is registered in, but I don't work in that state anymore. Oops, almost forgot, I own real property in one of those states as well, but not my "State of residence". Go figure that one out :biggrin:

    Here's the easy scoop: have them go talk with the JAG/lawyer for their base/command. They will know the path.

    For Texas it basically comes down to saying you "plan" on returning there. Do the smart thing and talk to legal though. The vast majority of people I know on active duty quickly change their legal residence once they are stationed in one of the states without income tax. Those that don't are either already residents of states without tax OR they are a resident of one of the states that doesn't tax out of state military members.

    The big kicker is that for your spouse (unless mil-mil) they will have to change their state every time you PCS to a new state. (I think there is a very small push to get this changed, but don't see it happening in the very near future)
     
  11. Mongo

    Mongo Banned

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    I figure that you are, like USAFretired, breaking the laws of at least one state, probably two. Auto registration and drivers license are a function of both the Soldier's and Sailor's Relief Act and varying state law. However, as a general rule, both have to be from either the state of residency or the state where one is stationed.


    Which only applies if the spouse either works or buys an automobile, either jointly or outright.
     
  12. USAFretired1996

    USAFretired1996 Member

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    No laws broken. Registered to vote in TX and voted absentee after I left the state. My wife who is also retired AF was originally from PA and until she retired, she maintained PA residency and also voted absentee there. We both continued to have NM licenses and plates on our vehicles until we retired in VA. I never was a legal resident of NM, only stationed there. Since I currently reside in an area with one of the highest concentrations of active duty personnel in the country, surprisingly, there are not that many out-of- state plates on the bases, other than those from no income tax states. My guess is that all of these active duty folks are still residents of states other than VA but for whatever reason have elected to register their vehicles in VA.
     
  13. Mongo

    Mongo Banned

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    If you were never a resident of NM, you could only have a license and vehicle registration while you were actually stationed there. When you received orders to TX, your only option became your residency or TX where you were actually stationed. When you became a resident of TX, they both became the same. Hence, your only option while stationed in TX was TX registration and license. When you received orders to VA, your choices again became either residency (now TX) or where you were stationed (In this case, VA). NM was neither of those. Once you retired, VA was your only option. Google it.
     
  14. usna1985

    usna1985 USNA Alumnus

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    One thing to consider . . . if you plan to get out and go to grad school and/or if you have kids getting ready to go to college, you may want to establish residency in a different state.

    For example, I entered the USN from VA. I never was in any of the tax-free states long enough to establish residency -- hard to believe, but true. VA has relatively low state taxes compared to the other states in which I lived while in the military and so I maintained my residency there -- which is permitted under the law b/c it was the state from which I entered the military -- even though I owned property and/or registered my car in other states. At a minimum, I continued to vote and maintain my driver's license in VA. I planned to go back -- and did go back when I got out.

    When I got ready to go to law school, it really helped as I was an in-state resident for purposes of admission and tuition, even though I was physically living in another state. I simply provided my VA tax returns from the many years I'd been a VA state resident to prove my residency status. Saved me over $60,000 in tuition alone and I was able to attend a top 10 law school. The small amount of states taxes I paid as a JO paled in comparison to what I "saved" in tuition.

    Ditto for kids going to college. If you have a non-military spouse, that MAY help in that he/she will be a resident of the state in which you live which may or may not have great colleges. However, if you're like me and lived in a great state for colleges but changed your residence to a tax-free state where the schools may not be as good or to your kid's liking, you may wish you hadn't changed.

    As noted, you should consult your local JAG re what's legal. States are very strapped for funds these days and so you want to ensure that, when the state in which you currently live comes calling for tax money, you have solid proof of residence in the state you're claiming as your state of residence.
     
  15. kp2001

    kp2001 USMMA Alumnus

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    Then I guess a lot of states better start going after lots of military people. Just about everybody I know registers their car in the state it was purchased. None that I know of go out of their way to re-register their car in the state of residence. Hmm, will have to do some digging, but somehow I find it hard to believe that that is breaking a law.
     
  16. Pima

    Pima Parent

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    Our cars were re-registered in AK. In NC, if the car title is in the military member's name they do not have to re-register it. For 3 yrs we drove 2 cars with AK plates in NC. It was the military exception.

    That is also a little twist in the system. If we had both of our names on the loan, then we would have to re-register the car in NC, since there is no exception for the military spouse, just the member.

    If you live anywhere near a military installation you are going to see license plates from almost every state, including Hawaii. It really is up to the state on their policy regarding the MILITARY.

    You can be a resident of a state, but from a tax standpoint not be a resident. I.E. We owned a home in NC, but Bullet's HOR was AK. By owning a home we were allowed to title our car in the state, yet because his official residency was AK, we could have sent away for plates from them also. It was our option.
     
  17. pjnavy82

    pjnavy82 Member

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    I guess no one else noticed this statement in the Wisconsin link in one of the first few posts...

    http://www.revenue.wi.gov/faqs/pcs/military.html

    Under #3

    The federal Military Spouses Residency Relief Act, signed into law on Veterans Day 2009, allows a military service member's spouse to keep his or her tax domicile throughout the marriage. A nonresident spouse's income from working in Wisconsin will not be taxable to Wisconsin as long as the nonresident spouse is in Wisconsin solely to be with the service member who is serving in compliance with military orders.


    PJ
     
  18. Mongo

    Mongo Banned

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    State law normally mandated that new residents register their automobiles in that state and obtain corresponding drivers license within a certain time frame of moving to that state. The Soldier's and Sailor's Civil Relief Act of 1940 allowed a servicemember to maintain licensing in his HOME state which is his state of residency. Most state laws have been changed to reflect this federal law. Here is an Army base legal officer's interpretation of the SSCRA:

    http://www.monmouth.army.mil/monmessg/newmonmsg/april28/m17actt.html

    Nothing about maintaining registration at a previous duty station in a state where one is not a resident or maintaining registration in the state where the vehicle is purchased. More than likely in violation of a state law. As usna1985 stated, check with Legal.
     
  19. USAFretired1996

    USAFretired1996 Member

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    What state are you admitted to the bar in?
     
  20. kp2001

    kp2001 USMMA Alumnus

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    Anybody know what the penalty is for violating these statutes?

    (Regardless of the debate regarding whether these are violations)
     

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