How to leave New Mexico residency?

Leaving New Mexico residency involves specific rules that can affect your tax obligations and eligibility for state benefits. This guide will help you navigate the process of officially leaving New Mexico and establishing residency elsewhere while managing any remaining financial ties with the state.

Step 1: Establish a new domicile

After deciding to leave New Mexico, the next step is to establish your new permanent home, or domicile, in another state. Just moving isn't sufficient; you need to take specific 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 New Mexico.

• 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

Make sure you spend more time in your new state than in New Mexico to establish your primary residence.

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 New Mexico 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 for your new state. This will ensure that New Mexico doesn’t withhold state income taxes after your move.

Step 2: Sever ties with New Mexico

After moving to your new home, it’s important to sever significant connections with New Mexico to prevent being considered a resident for tax purposes.

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

1) Close New Mexico financial ties

• Close local bank accounts: If you have any bank accounts, investment accounts, or financial assets linked to New Mexico, 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 New Mexico, selling it is one of the strongest ways to show that you no longer consider New Mexico your primary residence. If you’re not ready to sell, consider leasing the property out for an extended period, as this can also help demonstrate your intent to leave.

3) Cancel local subscriptions/services

Make sure to cancel any subscriptions or memberships associated with New Mexico, such as gym memberships, utilities, or local services, as keeping these active could imply that you still have connections 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 New Mexico

To avoid being taxed as a resident in New Mexico, it’s important to manage how much time you spend in the state. New Mexico 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 New Mexico 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 New Mexico 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 New Mexico 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 New Mexico. Having a detailed log of your movements will be helpful if New Mexico’s Department of Revenue ever audits your residency status.

Step 4: New Mexico-sourced income

Even after you have officially ended your residency in New Mexico, you may still have some income connected to the state, such as rental income or business revenue. It's important to understand how to manage income sourced from New Mexico in order to stay compliant with state tax laws.

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

1) Ongoing tax responsibilities

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

2) Rental or business income

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