MWE’s Jennifer Bobé talks about the difference between a domicile versus a residence – and the tax implications of each in this episode of Margolin Minute.
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People are often looking to move to different states, and to sort of understand the tax ramifications around that, and it's important to plan ahead of time, prior to trying to implement something.Two of the big things to think about is, if you're looking to move and you're thinking, "I'm going to take my home state from say New York to Florida," what you want to understand is there's a difference between what your domicile is and what your residence is.And so, for domicile, every person can only have one domicile. So that's sort of the place where you intend to return to, it's home. It's sort of up to you to establish what that is if you change it.Whereas residence, you can have multiple residences, and all that matters is that you're physically present, and have a place to live. So, it's two different things to think about. And vitally important determining whether you're domiciled somewhere.You know, sometimes people will call and say, "Okay, well you know, what if I spend half the year in Florida and half the year in New York? Will that work?" There's not a number, there's not a magic formula. They really look at, what are you doing, and what is your intention? And where are you? So, if in the past, you spent most of your year in New York, then that's where you were domiciled. And now you say you're domiciled somewhere else, well then you should probably be spending most of your year in that new place. Not half and half, you know, that's a change in pattern. So it's not consistent with what you were always doing. It's important to plan, so to think about these things before you do it.Having said that, if you actually did this, and you think you didn't do it properly, it's a good idea to talk to somebody about it to understand that, if I were audited, what do I need to do to make sure that I have the proper documentation that I actually did the right things.