How to leave South Carolina residency?

If you're leaving South Carolina residency for lower taxes or a new job, it's important to take specific steps to officially cut ties with the state for tax purposes.

Whether you're moving for job opportunities, retirement, or a fresh start, following these steps will help ensure a smooth transition and avoid unnecessary taxes from South Carolina.

Step 1: Establish a new domicile

The first step to leaving South Carolina residency is to set up a new permanent home in another state. This process involves more than just moving; it requires taking several important steps to show that your new state is where you truly intend to live for the long term.

Here’s how to do it:

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 South Carolina.

• File a Declaration of Domicile: Some states allow you to file a Declaration of Domicile to formally state that you now live there. This legal document can help reinforce your move, especially in states like Florida.

Residency guides:

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

2) Relocate your belongings

Moving personal items like your furniture, vehicles, and other household possessions to your new state shows that you are serious about making it your permanent home.

3) Spend time in your new state

Spend more time in your new state than in South Carolina. This is important because spending too much time in South Carolina could make it harder to prove that you’ve left the state for good.

4) Transfer IDs and vehicle registrations

Update your driver’s license and vehicle registration with your new state’s Department of Motor Vehicles (DMV). This is a clear sign of your intent to make the new state your permanent home.

5) Register to vote

Registering to vote in your new state is another important step in establishing residency. Don’t forget to cancel your voter registration in South Carolina.

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 South Carolina doesn’t withhold state income taxes after your move.

Step 2: Sever ties with South Carolina

Once you’ve set up your new domicile in another state, the next step is to cut all significant ties with South Carolina. This ensures that the state no longer considers you a resident for tax purposes. 

Here’s how to make a clean break:

1) Close South Carolina financial ties

• Close local bank accounts:  If you have any bank accounts or financial assets based in South Carolina, consider closing them or transferring the funds to banks in your new state. This shows that your financial life is now centered in your new state, not South Carolina.
• Update personal records: Update your address with the IRS, Social Security, and any other relevant entities. Keeping all personal and financial records in your new state helps solidify your move.

2) Sell or lease property

If you own property in South Carolina, selling it is one of the clearest ways to signal that you’re no longer a resident. If you’re not ready to sell, consider leasing it on a long-term basis, which also helps demonstrate that you’ve left the state.

3) Cancel local subscriptions/services

Make sure to cancel any memberships, utilities, or subscriptions tied to South Carolina, such as gym memberships, utility services, or local organizations. Keeping these active could give the impression that you still maintain a presence in the state.

4) Transfer healthcare and insurance

Move your healthcare services and providers to your new state. Transferring these essential services further strengthens your case that your daily life is now based elsewhere.

Step 3: Time spent outside South Carolina

To successfully leave South Carolina residency and avoid being taxed by the state, it’s important to manage the amount of time you spend in South Carolina. Like many other states, South Carolina uses the 183-day rule to determine residency for tax purposes. 

This means that spending too much time in the state could result in South Carolina still considering you a resident for tax purposes.

183-day rule

• What is the 183-day rule?: If you spend 183 days or more in South Carolina 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, make sure you spend fewer than 183 days in South Carolina each year. Any part of a day counts, so even short visits add up.

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 South Carolina 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 South Carolina. Having a detailed log of your movements will be helpful if your residency status is ever audited by South Carolina’s Department of Revenue.

Step 4: South Carolina-sourced income

Even after you’ve officially left South Carolina and established residency elsewhere, you may still have tax obligations if you earn income from sources within South Carolina. 

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

1) Ongoing tax responsibilities

• File non-resident tax returns: If you continue to earn income from South Carolina sources, such as rental properties or business profits, you will need to file a non-resident tax return in South Carolina. This allows the state to tax only the income you earned in South Carolina, not income earned in your new state of residence.
• Tax on South Carolina-sourced income: Even though you are no longer a resident, South Carolina still has the right to tax income generated within the state. This could include wages earned in South Carolina, rental income, or profits from South Carolina-based businesses.

2) Rental or business income

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