How to manage state residency while living abroad?

The definition of “residency” is different for tax purposes. When you are a resident of a state, you are subject to the laws and jurisdiction of that state. Not only do you get the benefits offered by the state, you are also subject to the conditions set by them.

Due to the fact that one can obtain state-funded benefits as a resident, each state is restrictive in determining how you can become a resident. Several factors will help to establish your residency in a state:

  • Changing your driver license issued by the state.
  • Having a home address in that state.
  • Having a voting location in that state.
  • Having all your bills, bank statements, utilities, etc all going to that state.

Each state has its own rules around who’s domiciled in the state. Domicile means a fixed, permanent, and principal home that you reside in and that you intend to return to or remain in.

Definition of Establishing Residency in a State

To establish residency in a state, the first thing to do is to have a resident address in that state and can be a rented or purchased home.

Once you have an address, you can begin to update your mailing address for your bills, statements, etc. You would also be setting up utilities (electricity, water, gas, internet, phone) at your new resident home. All this is needed before you can apply for a new state ID.

Obtaining a state ID, be it a driver license or normal state ID, is one formal way to proof that you are residing in that state. This is because the DMV requires you to provide proof of residency in that state when you apply for an ID for the first time in that state. The DMV will usually ask you to provide at least two documents for this. Some examples of acceptable documents are:

  • Rental or lease agreement with the signature of the owner/landlord and the tenant/resident.
  • Deed or title to residential real property
  • Mortgage bill
  • Home utility bills (including cellular phone)
  • Medical documents
  • Employee documents

For a comprehensive list of acceptable documents, please visit the state’s DMV website.

Is Having a Mailbox Address Sufficient For Establishing Residency?

While a mailbox account in the state helps with having an address in the state and can get all your bills over to the state, it is not sufficient to establish. To do so, you still need to provide some sort of proof that you have a place to live there.

A good option of getting proof of address with a residential address is TruResidence.

Once you have established residency, then using a mailbox address to maintain presence in the state will be much easier and is allowed. This is the case with many expats where they moved to another country for years but still maintain their link with the state at home.

Overall, you should consult a tax lawyer or CPA to determine the laws that govern this if you are looking to move out of your current state.