How to leave Iowa residency?

Leaving Iowa residency can be an exciting change, whether you’re moving for a new job, lower taxes, or just a change of scenery. Iowa has specific rules about residency that can affect your tax obligations, eligibility for state benefits, and more. 

This guide will walk you through the steps to officially leave Iowa, establish your new domicile, and manage any financial ties you still have with the state. 

Following these steps will help you make the transition smoother and avoid any unnecessary complications.​

Step 1: Establish a new domicile

Once you’ve made the decision to leave Iowa, the next step is to set up your new permanent home—your domicile—in another state. Simply moving isn’t enough; you need to take concrete steps to make your new state your official residence. 

Here’s how to do that:

1) Establish new residency

• Secure a residential address: Find a place to live in your new state, whether it’s through renting or buying a home. Many states, like Florida, offer tax benefits such as the homestead exemption, which could help lower your property taxes. Setting up a permanent residence in your new state is essential to proving that you’ve left Iowa.

• File a Declaration of Domicile: Some states, like Florida, allow you to file a Declaration of Domicile, a legal document that confirms your intent to make the new state your permanent home.

Residency guides:

• Florida Residency Guide
• South Dakota Residency Guide
• Texas Residency Guide
• Nevada Residency Guide

2) Relocate your belongings

Moving your personal belongings—like furniture, vehicles, and household items—helps show that your move is permanent, and that you intend to live in the new state long-term.

3) Spend time in your new state

Spending significant time in your new state shows you’ve made a real move. Make sure you’re spending more time there than in Iowa to avoid any confusion about where your primary residence is.

4) Transfer IDs and vehicle registrations

Update your driver’s license and vehicle registration to reflect your new address in your new state. This is a strong indicator of your intent to live there permanently.

5) Register to vote

Registering to vote in your new state is a clear indicator of residency. Don’t forget to cancel your voter registration in Iowa as well.

6) Update financial accounts

Notify your bank, credit card companies, and other financial institutions of your new address. Keeping all your financial documents up to date with your new residency helps confirm your move.

7) Notify your employer

Let your employer know about your new address so they can update your payroll and tax withholdings to your new state. This will help make sure Iowa doesn’t withhold state income taxes after your move.

Step 2: Sever ties with Iowa

After establishing your new domicile, it’s crucial to cut all significant ties with Iowa. This will help ensure that the state no longer considers you a resident for tax purposes. 

Here are the steps you should take to sever these ties:

1) Close Iowa financial ties

• Close local bank accounts: If you have any bank accounts, investment accounts, or financial assets linked to Iowa, consider closing them or transferring your funds to banks in your new state. This action shows that your financial life is now centered in your new state.
• Update personal records: Notify the IRS, Social Security, insurance companies, and other relevant agencies of your new address to ensure all personal records reflect your new residence.

2) Sell or lease property

If you own a home or any other property in Iowa, selling it is one of the strongest ways to show that you no longer consider Iowa your primary residence. If you’re not ready to sell, consider leasing the property out for an extended period, which can also help demonstrate your intent to leave.

3) Cancel local subscriptions/services

Make sure to cancel any subscriptions or memberships tied to Iowa, such as gym memberships, utilities, or local services. Keeping these active could suggest that you still have ties to the state.

4) Transfer healthcare and insurance

Transferring your healthcare providers and insurance to your new state shows that your essential services are now tied to your new domicile.

Step 3: Time spent outside Iowa

To avoid being taxed as a resident in Iowa, it’s important to manage how much time you spend in the state. Iowa employs the 183-day rule, which is commonly used by many states to determine residency.

183-day rule

• What is the 183-day rule?: If you spend 183 days or more in Iowa in a calendar year, you may be considered a resident for tax purposes, even if you’ve moved to another state. This means you could be liable for state income taxes.
• Stay under the 183-day limit: To avoid being taxed as a resident, you’ll want to make sure you spend fewer than 183 days in Iowa each year. A day counts as any part of a 24-hour period spent in the state, so even short visits can add to your total.

Keep detailed travel records

• Why it’s important: If your residency status is ever questioned, having detailed records of your time spent in and out of Iowa will be essential for proving that you’ve stayed under the 183-day limit.
• What to track: Save flight tickets, hotel receipts, and any other travel documents that show when you entered and left Iowa. Having a detailed log of your movements will be helpful if your residency status is ever audited by Iowa’s Department of Revenue.

Step 4: Iowa-sourced income

Even after you’ve officially left Iowa residency, you may still have some income tied to the state, such as rental income or business revenue. It’s important to know how to handle Iowa-sourced income to remain compliant with state tax laws.

Here’s how to handle Iowa-sourced income once you’ve moved:

1) Ongoing tax responsibilities

• File non-resident tax returns: If you continue to earn income from sources within Iowa, such as rental properties or businesses, you’ll need to file non-resident tax returns. This ensures that Iowa only taxes the income you earned within the state, not the income from your new home state.
• Tax on Iowa-sourced income: Even though you are no longer a resident, Iowa still has the right to tax income generated within the state. This could include wages earned in Iowa, rental income, or profits from Iowa-based businesses.

2) Rental or business income

If you own rental property or a business in Iowa, any income generated from those sources will still be subject to Iowa state taxes. It’s important to consult with a tax professional to ensure compliance with Iowa tax laws, especially if you have complex income streams that tie back to the state.