Moving to Georgia may help to save money on income and other types of taxes. However, it is critical to establish residency in the state if you wish to take advantage of its tax rules. If you are considered a resident of another state, you may be required to file a tax return there. Failing to do so might increase the risk of an audit.
How states determine residency status
In most cases, you are a resident of the state where you spend the majority of a given year. New York considers anyone who maintains a permanent home within its borders and spends more than 183 days in the state to have obtained residency status. The same is also generally true in New Jersey, Connecticut and Maryland. The state of California determines your residency status by comparing your ties there with those in other states. If you have the strongest connection to California, you will likely be subject to its tax laws.
You’re guilty until proven innocent
It is important to note that you have the burden of proving that you aren’t a resident of a given state. This may be done by producing copies of plane tickets, hotel reservations or anything else that can prove where you were on a given day. It may also be a good idea to keep a travel log or other written records of where you spent time during a calendar year.
State tax authorities will often review cellphone, social media and other records when determining a person’s whereabouts at any given time. Therefore, it is generally in your best interest to store copies of text messages or Facebook posts mentioning a new apartment or the traffic on Atlanta roads.
If you are facing a state or federal tax audit, it may be a good idea to hire an attorney who has experience with tax law cases. This may make it easier to assert that tax bills were paid in a timely manner or that you aren’t subject to tax laws in the state where the audit was initiated.