U.S.

March 1, 2013

‘Domicile,’ ‘legal residence’ often confused

Fort Huachuca Tax Assistance Center

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People often confuse the terms “home of record,” “domicile,” “legal residence” and “residence.” While a person’s “home of record” cannot be changed because this is the place where they were living when they entered the military, a “domicile,” “legal residence” and “residence” can change.

Basically the terms “domicile” and “legal residence” refer to the same place — the state a person considers their permanent home. On the other hand, a “residence” is simply where a person lives at a particular time.

Because changing one’s residency can have serious consequences, including tax liability, taxpayers should contact the Fort Huachuca Legal Office for advice on specific questions.

“Domicile” defined
Every person acquires and maintains his or her parents’ legal residence until, after reaching the age of majority, usually 18, they acquire a new one of their own.

Members of the armed forces do not lose their domicile merely by joining the service and moving in response to military orders. They retain the domicile they held at the time they entered the service, unless they indicate otherwise. A person’s choice of domicile will determine many legal rights and obligations.

A number of factors affect a person’s decision to become a legal resident of a particular state. Taxation is often a service member’s primary consideration.

“Legal residence” requires proof
A person acquires a new legal residence by being physically present in a state, with the intent to reside there permanently or indefinitely. Service members must intend to return to that state as soon as their military obligations are completed.

This is all that is required, but showing the intent may be difficult. Acts indicating legal residence in a physical location include: voter registration and actual voting in elections in that state; a homestead exemption claim; motor vehicle registration and driver’s license issued there; the state to which state income tax is paid; and the exercise of other benefits or obligations of a particular state.

Merely purchasing a home in a new state or moving to a state under military orders does not necessarily indicate a person has changed legal residence. Claiming the state homestead exemption will affect legal residence.

Moving overseas does not change one’s legal residence, and it is virtually impossible to change it while abroad. The acts described above may be interpreted by authorities as expressing the choice of legal residence. Therefore, people are advised to vote, exercise their rights, and claim the benefits of legal residence only in the state where they intend their domicile to be. This is unless they intend to abandon the old legal residence and establish a new one.

Voting is considered the most important indicator of intent in most states. While voting “absentee ballot” may be inconvenient, a person should make the effort if their “residence” is not the state in which they are stationed.

The Military Spouse Residency Relief Act, or MSRRA, is a recent addition to protections under the Servicemembers Civil Relief Act. MSRRA changes some basic rules of taxation for military spouses who earn income from services performed in a state where they live with their service member on military orders. If that state is not the spouse’s legal residence, the military spouse generally will not have to pay income taxes to that state.

Depending on the laws of the domiciliary state, the spouse may be required to pay income tax there. For more information about how MSRRA may affect you, contact the Legal Assistance Office or the Fort Huachuca TAC.

Remember that in addition to establishing liability for state income taxes, domicile or legal residence determines other important matters, which include:

  • Liability for state inheritance taxes
  • The jurisdiction where your will must be probated and the resulting consequences (including who may act as your executor or guardian of your minor children)
  • The right to vote
  • The right to hold public office
  • The right to homestead
  • Determination of whether you or your children may attend a state college without paying higher fees required for out-of-state legal residents
  • The family relationship, including the rules on property rights, divorce and marriage annulments
  • Liability for state personal property taxes
  • Eligibility for public welfare

Those with questions about their state of legal residence should contact the Legal Office at 533.2009 or call the Fort Huachuca TAC.

Those who wish to have their income tax return done at the TAC should call 533.1040 during duty hours to schedule in advance.




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