In tax, the idea of domicile or residence determines who, what state or country, can tax you. If you move to another state or another country, then your tax residence changes too, right? Not always. Georgia, along with several other states, assumes that you continue to be a resident once you are a resident of the state until you prove otherwise. Even if you move to another country, you have to prove that you intend to stay in the new place indefinitely.
The Strange Case of the UK Diplomat
In 2014, the Georgia Tax Tribunal considered a US attaché and their family that had moved from Georgia to London for a position in the US Embassy. While living in London, they still filed a GA return but did not report their income from the Embassy job, only the income from the rental of their GA house. The court found that the family had not obtained a permanent residence permit or driver’s license in the United Kingdom. They did not pay income tax in the UK. They were in the UK for a temporary position due to the nature of the job. Based on all of this, the court held that the family had never established a domicile in the UK. Consequently, even though they had moved out of state, they were still residents of Georgia.
What does this mean for you?
If you are moving out of state or out of the country, it is crucial to understand that you may still be a resident of the state you left. This can have adverse tax consequences, such as in the above case where the taxpayer is now liable for all the past taxes they would have paid as a full resident of Georgia.
If you plan to move and want to give up your residency in Georgia, then make sure that you take steps to establish a new residency somewhere else. This has to be more than just a temporary measure. Even a student going away to college will have a change of address with the Postal Service and incur moving expenses. Consider taking the more permanent steps such as changing your driver’s license to the new place, filing and paying taxes, revoking the Georgia homestead exemption in favor of one in the new location. The burden of proof is on you to prove you have established a new domicile, not on Georgia to prove you have not, so taking and documenting those extra steps is essential.
If Georgia is claiming you have not established a new domicile, contact us today to get help.