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Factors in establishing a new domicile.

Even in today's mobile society, individuals fail to recognize the importance of properly establishing legal domocile when they more from one state to another. Since a taxpayer's state of domicile is entitled to tax all of his or her income, failure to abandon an old domicile can cause unfavorable tax consequences. At death, the state of domicile also can tax all of an individual's intangible assets regardless of location, as well as all property located within the state. The checklist below outlines some steps individuals can take to abandon an old domicile and clearly establish a new one. (Note: Even when domicile is clearly established, some states still try to tax a former resident's income, particularly pension benefits accumulated in the state. Residency audits often begin with an extensive questionnaire that should not be completed without a CPA's advice.)

* Sell residence in old state and buy or lease a home or apartment new state.

* Apply for and obtain a homestead exemption in the new state.

* Move physical assets from the old state to the new one.

* Server business relationship in old state.

* Close bank and brokerage accounts in the old state and open accounts in the new one.

* Rent a safe deposit box in the new state.

* Have an attorney in the new state review estate plan and draft a new will indicating the individual is a resident of that state.

* File an affidavit of domicile in the new state with the county clerk's office.

* Register and vote in the new state.

* File federal and state income tax returns as a resident of the new state, using new address.

* File state tangible and intangible tax returns, as required, in the new state.

* Register automobiles in new state and get new license plates; cancel old plates. Obtain a license to drive in the new state and cancel old license.

* Change the billing address on credit cards, pensions, Social Security payments and other business correspondence to reflect move to new state.

* Terminate any church or temple affiliations and reestablish them in the new state.

* Terminate any club membership in old state and join clubs and civic organizations in the new state, as desired.

* Join the local public library.

* Purchase a cemetery plot in the new state.

STANLEY HAGENDORF,LLM, is an attorney with offices in New York City and St. Petersburg, Florida. WAYNE A. HAGENDORF, CPA, JD, is an attorney with offices in Los Angeles and New York City.
COPYRIGHT 1995 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Hagendorf, Wayne A.
Publication:Journal of Accountancy
Date:Dec 1, 1995
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