Domicile vs. Residency in U.S. Law

Domicile and residency might sound like the same thing, but they actually mean different things when it comes to U.S. law. These terms are important, especially for things like taxes, voting, and legal rights. Knowing the difference between where you live temporarily (your residency) and where your permanent home is (your domicile) can save you from a lot of confusion later.

In this article, we’ll break down the key differences between domicile and residency in simple terms, explain why they matter, and give you some helpful examples to understand how these concepts work in real life.

Definitions

Domicile

Your domicile is your true, permanent home. It’s the place where you intend to live for the foreseeable future, even if you spend time in other places. Your domicile stays the same unless you take clear steps to change it, like moving to a new state and making that your permanent home. It affects important things like your taxes, voting rights, and eligibility for government benefits.

Residency

Residency, on the other hand, is more flexible. You can be a resident of many places, but you can only have one domicile. Residency refers to where you are currently living, even if it’s temporary, like living in another state for work or school. While residency can affect local taxes and services, it doesn’t carry the same legal weight as domicile.

Key differences

Here’s a quick look at how domicile and residency differ:

Legal implications

Taxation

Your domicile plays a big role in determining where you owe state taxes. For example, if your domicile is in a state that collects income tax, you’ll likely need to pay taxes there, even if you’re living or working temporarily in another state. Residency can also affect taxes, but usually based on the amount of time you spend in a particular location. Some states have residency rules that require you to pay state taxes if you spend a certain number of days there (often 183 days or more).

Voting and benefits

Your domicile determines where you can register to vote and which state’s laws apply to you for government benefits like healthcare or education. Residency, on the other hand, can affect local services, like qualifying for in-state tuition at universities or access to public services, but it doesn’t carry the same legal weight as your domicile.

Changing domicile

If you want to change your domicile, you need to show both that you’ve moved to a new location and that you intend to make it your permanent home. This can include actions like buying a house, registering to vote, or getting a driver’s license in the new state. It’s important to officially cut ties with your old domicile to avoid any legal or tax confusion.

Examples

Let’s look at a couple of examples to make things clearer:

U.S. Citizens Living Abroad:

Imagine you’re a U.S. citizen working in another country for a few years. You may be a resident of that foreign country for work, but your domicile could still be in the U.S. unless you take specific steps to change it, like selling your home or declaring the new country as your permanent home. This distinction affects whether you still need to pay U.S. state taxes and where you can vote.

Snowbirds (Part-Time Residents):

If you spend winters in Florida but live the rest of the year in New York, you might be considered a resident of Florida for part of the year. However, unless you officially change your domicile to Florida (for example, by getting a Florida driver’s license and registering to vote there), New York will remain your domicile, and you may still owe New York state taxes.

How to change domicile

1) Establish a new residential address:

To change your domicile, you first need a residential address in your new state. This could be a property you own or rent, or even temporary accommodations like a hotel or RV park, as long as you can prove you’ve stayed there for a specified period.

• Florida residency guide
• South Dakota residency guide
• Texas residency guide
• Nevada residency guide

2) Obtain a driver’s license:

Once you’ve established residency, you’ll need to visit the DMV to get a driver’s license in your new state. This requires proof of residency (which Savvy Nomad can help organize), identification, and often a lease or utility bill showing your new address.

3) Register your vehicle in the new state:

Registering your vehicle and obtaining state-specific insurance is another crucial step. Some states require smog checks and annual inspections, which vary by county.

4) Register to vote:

Registering to vote in your new state solidifies your commitment to living there. Savvy Nomad offers assistance in making sure you’re registered and up to date, making this a straightforward step in your transition.

5) Provide additional proof of residency:

Utility bills, lease agreements, or mortgage documents can further prove your residency. Savvy Nomad helps ensure you have all necessary documentation in place to back up your domicile claim.

6) Sever ties with your former state:

To fully establish your new domicile, you’ll need to cut ties with your previous state. This might involve selling property, closing bank accounts, and updating all official records. Savvy Nomad can help with the logistics of this process, making sure your documents reflect your new state residency.

7) File Form 8822 with the IRS:

Finally, filing Form 8822 with the IRS is essential to inform them of your new address for tax purposes. This step ensures you receive all important correspondence at your new domicile. Savvy Nomad helps you complete and file this form, ensuring all your tax matters are in order.