I’ve just had two clients find out that addresses have consequences.  What kind of consequences?  A tax bill, of course.

Even if someone no longer resides in a given state, if they employ an address from that state on the tax return, then they can expect a tax bill from that state.  The technical term for this is “domicile”.

If you were living in Arkansas (that is the case that was just adjudicated, but Kansas, New York, and Massachusetts also use this rule, among many other states) and left for a year or two, but never changed your mailing address on your tax return….then you should expect a tax bill.

New York started this deal way back when.  If you were present for 183 days or more (and in New York, that means you were present even for part of the day for any or all of  those 183 days), then you are a statutory resident.  Oh- and that doesn’t mean you really aren’t a resident of Maryland, Virginia, or California (among other choices).  The definition of domicile means you are resident of a state even if you spent no time in that state all year.  (This is one way military folks get to choose their state of domicile- having the military assign them to a base in Timbuktu doesn’t mean they’ve abandoned their Texas (or other state) domicile.  Or, if you were working overseas for a good chunk of the year (and get special FEDERAL tax considerations), it doesn’t mean you no longer have a domicile in Arizona (as yet another example).

One of the big ways one doesn’t change domicile?  Keeping an existing driver’s license or having one’s car remain registered in that state you claim you left.  (These applied to me for both the Commonwealth of Michigan- when I really wasn’t sure I wanted to be a Virginia resident- and the State of California, where I was living 3 or 4 days a week for years.)   But, the compounding fact?  Filing your federal tax return with your old domicile’s address.  That means you never ever considered establishing a new domicile.   (It’s possible that had a different address were used to file the Federal tax return, the old state wouldn’t mail a tax bill; they don’t often check the car registrations or driver’s licenses- yet!)

So, now you know.  Make sure you really change addresses, if you move to a new state.  Or, you could be liable for taxes AND penalties if you haven’t made those changes.

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