Library Fact Sheets
Printable Fact Sheet
What is your Legal Residence?
Your legal residence (also called "domicile") is the place you consider as your true, fixed and permanent home. It is the state to which you intend to return after a temporary absence.
Your state of legal residence is important, because it is one of the key factors in determining, among other things, your liability for state income taxes, eligibility for "in-state" tuition rates, eligibility for voting in state and federal elections, and where your will is probated.
Many people in the military are confused about their state of legal residence, probably because they move around so much that they don't have any close, continuous links to any particular state. Some people think they do not have a state of legal residence at all; others know they have one, but don't know where it is. This handout will help clear up the confusion.
One factor contributing to the confusion is the number of different terms that mean almost, but not quite, the same thing. In this case, these slight differences can have significant consequences, so it's important to understand the terms correctly. Let's define them right now.
"State of legal residence" (SLR) and "domicile" mean the same thing, namely your true, fixed, and permanent abode. It is your permanent home, i.e., the place where, while you are absent from it, you intend to return to. For example, a soldier with a SLR in Oregon leaves the state on military orders, but intends to go back to Oregon after leaving the military. Oregon is his permanent home, even though he is temporarily absent from it due to military orders. The soldier might never be stationed in Oregon during a thirty-year military career, and yet Oregon would remain the soldier's SLR for the entire thirty-year period.
"Home of record" is almost always the state where you first joined the military. Home of record (HOR) is an accounting term used by the military to determine a number of military benefits, such as travel allowances, transportation expenses, travel time to report to duty, etc. A soldier's HOR is usually the same as the soldier's SLR, but that's merely a coincidence, since most people just happen to join the military in the state that is also their SLR. Except in the military, home of record is usually a meaningless term. However, since the HOR is the same as the SLR so frequently, some colleges have started asking for information about the HOR as evidence of a person's SLR.
"Residence" means the place where you are actually living. By itself, residence usually has little or no legal significance.
"Statutory resident" is very similar to "residence" in that it refers to the state where you are actually living. This term is used to describe a certain category of persons who are liable for state income taxes. For example, in some states, someone who is physically present in that state for a specified period of time is considered to be a statutory resident and therefore liable for state income taxes in that state. This is one time that "residence" does have some legal significance. It is important to note that a statutory resident of State A may still retain State B as the SLR and may be required to file a tax return in State B, too.
Every U.S. citizen has a SLR. For most people, there is no question about where their SLR is. For anyone who isn't sure, figuring out which state is their SLR is probably easier if they start from the beginning. Every citizen acquires a SLR at birth, namely the same SLR as their parents. A child has the same SLR as the parents, including any changes, until the child reaches the age of majority. After that, the child can change its SLR on its own.
Naturalized citizens usually are considered to have a SLR in the state where they became citizens. (As we'll see below, there may be an exception for naturalized citizens who are married to citizens domiciled in a different state.)
DOES MY LEGAL RESIDENCE CHANGE WHEN I PCS?
Under the Soldiers' and Sailors' Civil Relief Act, military members keep the state from which they entered military service as their domicile. Therefore, you may keep the legal residence that you held when you entered active duty. This also applies to civilian employees residing in Japan on government orders.
This is important because only the state of domicile may tax the military income and personal property of an active duty military member.
CAN I CHANGE MY LEGAL RESIDENCE?
A valid change of legal residence (domicile) requires that you satisfy ALL of the following requirements:
1. You must be physically present in the new state;
2. You must simultaneously intend to remain in the new state permanently or to treat that location as your permanent home; and
3. You must intend to abandon your old domicile
You can show your intent to change your domicile by taking as many as possible of the following actions:
Register to vote and vote in the new state
Get a driver's license in the new state
Register your vehicle(s) in the new state
Pay state taxes (income, property, etc.) in the new state
Change your Will to reflect the new state as your legal residence
Establish a permanent address in the new state
Notify the old state's taxing authorities of your change in domicile
You also need to record your change of legal residence with the Accounting and Finance Office on DD Form 114 and a W-4 Form.
There is one situation where you may be able to change your SLR without meeting the physical presence test. If you marry a resident of a different state, you might be allowed to claim your spouse's SLR as your SLR, or vice versa, without ever having been physically present in that state. This is a somewhat aggressive strategy, but there is some support for it. The marital relationship is so significant that, by itself, it may give the spouse a close enough connection to the new state to justify claiming the new state as the SLR. There is substantial historical precedent for this argument. Earlier this century, when a woman married a man from a different state, the woman became a legal resident of the man's SLR by operation of law. Those laws no longer exist, but that helps demonstrate the legal significance of the marital relationship and the type of legal consequences that can result from marriage.
ARE THERE ANY PROBLEMS WITH CHANGING MY LEGAL RESIDENCE?
Military members often mistakenly believe that changing the state of domicile in their pay records changes their domicile. While this tactic may cause the finance office to stop withholding state income tax, the member may not have validly changed domicile and may be liable for back taxes, interest, and penalties. In addition, the member may be subject to criminal prosecution for failing to pay state income taxes.
Even when a member validly changes domicile, the old state may require proof of the new domicile before removing the person's name from its tax rolls.
Member who continue to maintain their professional licenses in the state of their old domicile may have a difficult time establishing that they have the intent to change their domicile.
Changing your residence may also affect the following rights:
Liability for state inheritance taxes
Where your Will is probated
The right to vote in state elections
Bonuses for wartime service
The right to homestead, veterans' claims, or tax exemptions
Whether you or your children may attend a state college without paying higher fees required of non-domiciliary residents
Whether community property principles apply for divorce matters
Now that you understand the rules, let's look at some specific situations.
Being assigned in a state pursuant to military orders, even if it's for for five or ten or fifty years, is not sufficient by itself to establish a new SLR. Being stationed somewhere is nothing more than mere physical presence, and mere physical presence is not enough. However, if you have the mental intent to make the state where you are stationed your SLR, then you have met the requirements.
If you're overseas and want to change your SLR, you have to go back to the U.S., establish physical presence in a new state and have the appropriate mental intent while you are physically present there.
If you change your SLR, there are certain actions you should take.
a. You must be consistent. If you are a legal resident of State A, then you shouldn't keep your driver's license from State B or vote in State C. Inconsistency is probably the single biggest mistake that people make in this area.
b. You should adjust your state income tax withholding by filing DD Form 2058 with your local military finance office.
c. There is no need to publish a notice or file any documents with the state Attorney General's Office or anything like that.
d. If both the old and new states have an income tax, and if you moved on any day other than January 1, then you will have to file part-year returns in both states. For the first state, you report the income you had before moving to the new state. For the new state, you report the income earned after becoming a resident of the new state.
Domicile is a complex issue that is easy to ignore, but it is very important. Military members are encouraged to clearly establish their domicile to prevent future problems.