Part or Full Year Resident?

I have a home in KY in which I have lived for a long time. Recently I went to stay in NC with the idea of possibly relocating. I am staying at a friend's place. Having been here for a few weeks I am leaning towards possibly moving here permanently and perhaps buying property. I would later sell my house in KY.

I am retired and my income comes from investments, not employment or real estate. I do have some investment in KY muni bonds, so ideally I would switch over to NC muni bonds at the point when I establish residency.

My confusion is what constitutes 'residency' in regards to federal and state taxes. If it would make my life simpler then I would choose to establish residency on January 1, assuming I would then be a full-time resident of NC and not KY anymore, thus possibly avoiding filing two part-year resident returns (one each for NC and KY).

It looks like for NC, all I need is a utility bill in my name in order to get a NC driver's license. So for tax purposes would my residency be established at the point where I forfeit my KY license and obtain a NC license?

Any help or guidance greatly appreciated, Dee

Reply to
Dee
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On 2014-12-09 07:46, Dee wrote: [...]

"Residency" for federal purposes is a non-issue for you -- you will file your federal tax return using worldwide income no matter which state you live in.

For the states, it can become complicated due to each state having its own rules involving both statutory and domiciliary definitions of residence. Without going into the specifics of your situation (since I am not an expert on either KY or NC rules), I advise you to reconsider your inclination to establish a change of residency exactly on January

  1. I think it is far better in fact to file part-year returns in both states, as this will make it much easier for the state you are leaving to understand that you will probably not be filing any future returns. If you simply go from full-year resident return one year to none the next, they may well pester you for the next year's return, since they have no way to know you have moved.

It is rarely going to be as simple as the issuance of a single government document. You should be trying to determine when your overall ties (financial, religious, employment, social, medical, educational, real property ownership, etc) are stronger to the new state than the old. Think of an old fashioned balance scale, when did it tip over to the new state from the old?

Reply to
Mark Bole

Mark Bole wrote in news:m6a2ca$jco$ snipped-for-privacy@dont-email.me:

Thank you, Mark, for your reply and advice. I will think over what you have said. As for my overall ties to KY, there is only one and that is the house. A friend has expressed interest in helping to fix it up to sell, so that is probably what I will end up doing.

Dee

Reply to
Dee

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