term domicile shall mean the place where an individual has his or her true, fixed, and permanent home and principal establishment, and to which whenever he or she is absent he or she has the intention of returning. Actual residence is not necessarily domicile.” The Nebraska Supreme Court has further stated: “The requirements to establish and change a domicile are settled. To acquire a domicile by choice, there must be both (1) residence through bodily presence in the new locality and (2) an intention to remain there. All of the surrounding circumstances and the conduct of the person must be taken into consideration to determine his or her domicile. To change domicile, there must be an intention to abandon the old domicile. To establish a new domicile, the present intention must be to remain indefinitely at a location or site or to make a location or site the person’s permanent or fixed home.” Unfortunately, this legal standard—based on intention—leaves a lot of wiggle room for Nebraska to tax you as a Nebraska resident. Courts cannot read a person’s mind, so intent is determined based on the review of a number of facts regarding the person’s location. Domicile Factors Established by the Department Itself In its information guide titled “Determining Residency Status for Nebraska Individual Income Tax Filing,” the Department has identified a number of factors that it will examine to determine domicile. These include the following: Purchasing a home in another state for use as a principal residence; Paying taxes as a resident of another state; Obtaining a driver’s license as a resident of another state; Registering a motor vehicle as a resident of another state; Voting in another state; The number of days a person is present in Nebraska; The size, value, and nature of a person’s Nebraska residence compared to his or her out-of-state residence; The location of a person’s employment, business connections, and professional licenses; The physical location of items that have significant sentimental value; A person’s social, community, and family ties in both locations; Where a person’s minor children attend school or daycare; and Where a person’s doctors, dentists, accountants, attorneys, bankers, and other professionals are located. Additional Domicile Factors Cited by Nebraska’s Courts In addition to the domicile factors cited by the Department, Nebraska courts have also identified the following additional factors they will consider in determining domicile: Addresses used for mailing and official purposes; Medical reasons for presence in a jurisdiction; Direct evidence of intent; Jurisdictions in which the person paid taxes as a resident; Jurisdictions in which a person operated a business; If a person leaves the country, the nature of their visa in the new country (and whether it is permanent); If a person travels outside of Nebraska, the location where they generally start and stop their travels; Statements on a person’s estate planning documents; and Location of burial plots or other funeral arrangements. MAIN STEPS TO END STATE TAX RESIDENCY Given all of these, how can a person end their state residency for tax purposes? As documented previously, the strict legal test of domicile is extremely fact sensitive. Precise recommendations on steps for a person to take to change their domicile depend on the particular fact situation of that person. However, several critical steps that should commonly be taken include the following: Spend Time in Your New State. The Department looks carefully at the location where a person spends their time. We suggest spending as much time as possible in your new state (and no more than six months in your old state). Vote in Your New State. The Nebraska Supreme Court has established that voting is a factor of particular significance in determining domicile. A person should register to vote, and vote, in their intended state of domicile. The person should also keep a copy of his or her voter registration and a log of elections voted. Sentimental Items. Move these to your new home (and keep a list of the sentimental items). Driver’s License. Change your driver’s license to your new state. Travel Records and Credit Card Statements. Keep a log of your time in Nebraska and elsewhere. Travel records and credit card statements are very helpful to establish the location of a person throughout the year. In addition, people can download apps to their phone that help keep track of a person’s location. Estate Planning Documents. Execute new wills, financial powers of attorney, and health care powers of attorney that designate your new state of residency. Community Involvement. Become involved in the community and recreational organizations in your new state. Consider whether to terminate your memberships to such organizations in Nebraska (as the Department of Revenue may use these against you). In general, as with most tax questions, the best way to realize the results you or your clients want is to address the question before your clients move. CONTINUED FROM PAGE 11 12 Nebraska CPA
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