Ask Terry Questions IL Residency and State Tax

IL Residency and State Tax

By Terry Savage on March 20, 2021 | Financial Planning / Retirement

Situation – while maintaining an Illinois home address (for convenience with parents), taxpayer traveled extensively in 2020 and had ALL 2020 earnings declared on a W2 from a NY State employer with NY State w/h.
Had small dividend and interest earnings reported by a broker (1099 INT, 1099DIV) to the Illinois address.
File in Illinois?
If yes, how to declare residency?
Thank you.

Terry Says

Changing your state of residency — and proving it — is a complicated affair. But let me start out by saying you likely don’t want to switch from Illinois to New York!! Have you seen their tax rates??!!
Traveling extensively is NOT a criteria for residence. To be considered a resident of a state you will need a permanent address there, have all your financial transactions sent there, get a new state driver’s license, change your insurance address to the new residence, title a car there if you have one, give up homestead exemptions in Illinois and get them in your new state of residence — and much more. Some suggest you revise your will under the laws of your new state of residence (remember, Illinois has an inheritance tax) and even purchase a cemetery plot to show your intention to PERMANENTLY reside in that other state!

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