With the first snowfall in full force, I thought it would be a good opportunity to discuss residency matters regarding tax filings. Some of my clients use this time of year to escape to warmer weather areas. For Northeast Ohioans, Florida seems to be the warm weather destination of choice.
Some of us are limited to merely vacationing in Florida, while other more fortunate folks are able to escape our cold weather for even longer periods. With Florida’s warm weather and no state or local income taxes this becomes a common destination for many from Northeast Ohio. Whether it is Naples, Sarasota or Bonita Springs, it seems many from Northeast Ohio have a visual map of all of the communities in Florida.
So the question arises from time to time as to what it takes to change your state residency from Ohio to Florida or some other warm-weather state.
For taxpayers who maintain a home in both Ohio and another state such as Florida there are specific guidelines spelled out in the Ohio Revised Code so that you would no longer be considered an Ohio resident. Generally, any individual with an abode in Ohio is presumed to be a resident. The abode can be either owned or rented. Temporary absence from your Ohio abode, no matter how long, does not change your residency status.
An individual is considered a resident for Ohio income tax purposes if their only home is located in Ohio. If a home outside of Ohio is also maintained, then the taxpayer must compute the number of overnight stays in Ohio to determine if residency requirements are met.
If a person spent some of their time residing in Ohio and part of their time residing outside of Ohio, there is a formula based on contacts within the State of Ohio to determine residency.
If during a taxable year an individual has 182 or less contacts in Ohio and they maintain a home outside of the State of Ohio, they are presumed to be a nonresident. A contact is effectively considered to be an overnight period, although there is a very technical legal definition within the Ohio Revised Code. If a person spent their entire year outside the State of Ohio and were domiciled elsewhere, they are considered a nonresident as well.
There are other factors that are used to support a taxpayer’s residency including driver’s license and voter registration. Keep in mind that the burden of proof for an existing Ohio resident that wishes to no longer be considered an Ohio resident rests with the taxpayer. The Ohio Department of Taxation will presume that an individual continues to remain an Ohio resident if they have been an Ohio resident and continue to maintain a residence in Ohio. The taxpayer has the burden of proof that they were not domiciled in Ohio for more than 183 days, and the individual may be asked to provide clear and convincing evidence to the contrary when they are moving their domicile.
Furthermore, keep in mind that there are numerous consequences beyond the income tax obligations that go with changing your state of residency including in-state college tuition benefits, deductibility of 529 contributions, and other benefits that are determined at the state and local level.
So as your friends and family are traveling south for some or part of the winter, and working remotely is becoming a more viable option for many professions, make sure that you consider all of the implications of changing your residency. You will need to take a number of steps to ensure that you handle this residence change appropriately so that the taxing authorities have evidence that you are not simply attempting to avoid State of Ohio income taxes.
Paul Pahoresky is the owner of PRP & Associates. He can be reached at 440-974-1040 extension 214 or at paul@prpassoc.com. Consult your tax advisor for your specific situation for additional information and guidance on these topics.
