Your child does not need to be a dependent to be insured under your health care. Even a married child with a child of her own can still be covered by your medical plan, but the husband and the grandchild are not covered. My niece is still on her father’s policy asn she is completely independent, lives in DC, works in DC, is registered to vote in DC, pays her own taxes in DC, yet is on her father’s policy because it is cheaper (free for her) and better coverage. When she turns 26 next year, she’s off.
The child doesn’t need to be a resident of your same state to be a dependent for IRS purposes. Many people take their children who live with another parent in another state as a dependent; residency of the child is not a requirement for the IRS.
A state return may be different, but I don’t see why she can’t be a legal resident of Utah yet still be your dependent. If she’s a resident of Utah, earns all her income in Utah, why would she be a resident of California and have to file in California? The IRS allows you to claim a child away at college as if she lived with you for all 12 months.
“Many people take their children who live with another parent in another state as a dependent; residency of the child is not a requirement for the IRS.”
Not according to the IRS guidance @BelknapPoint posted earlier. There are special rules for children of separated or divorced parents, but otherwise any absence must be “temporary”. If your child has moved her (permanent) residency to Utah, it’s hard to claim her absence from California is temporary. Indeed if her absence from CA is temporary then (except for certain long term employment contracts) she would remain domiciled there and subject to CA taxes on her worldwide income (see page 6 of https://www.ftb.ca.gov/forms/2018/18_1031.pdf) which was where I started with this.
It seems many people’s kids may register to vote in another state while away at college without necessarily considering that to be an indication that they intend to permanently reside in the state where their college is located. But now we are into questions of eligibility to vote, not taxes, viz (per http://www.utahcounty.gov/Dept/ClerkAud/Elections/VoterRegistration.html):
To register to vote in Utah, you must :
Be a citizen of the United States of America
Have resided in Utah for 30 days before the election
Be at least 18 years old on or before the next election
Not be a convicted felon currently incarcerated for the commission of a felony
That makes one a Utah resident (registering to vote states you are a resident). Declaring that she’s a resident, which she’d have had to do to vote, may trigger other requirements like getting a new driver’s license and also subject her to jury duty.
Now if she wants to switch back to California residency, she can easily register to vote in California. You can keep switching the registration back and forth because you only need to be a resident for 30 days before the election.
And the definition of resident: “You are considered a resident of Utah if your principal place of residence is in the state and you have the intention of making your residence here permanent or indefinite.” (per https://voteinfo.utah.gov/).
I am intrigued about the broad brush statements apparently containing misinformation posted on websites that encourage students to vote (e.g the FAQ here https://www.bestcolleges.com/resources/voting-in-college/ stating that “where you vote will not impact your dependency status. Usually the IRS will consider you a dependent if your parents are paying for more than half of your expenses per year”) about students voting while attending college OOS. I reviewed the details for a handful of states and couldn’t find any that didn’t indicate either implicitly or explicitly that you need to be a permanent resident of the state to vote there.
Yes, the voter groups are, IMO, misinterpreting the supreme court case. I think the case was making it easier for student to establish residency to vote, but that they have to intend to be residents of that state to register, assuming all responsibilities like voting, getting a license, paying taxes, etc. I do not believe the court intended for students to be residents ONLY to vote and then immediately revert to the prior state as a resident, but to make it easier for those living in dorms or other short term housing situations to register to vote as residents of the new town/state.
The person has to choose, and choosing to be a resident of the new state might have consequences in the old state.
@twoinanddone I don’t understand your comment that “I don’t see why she can’t be a legal resident of Utah yet still be your dependent”. You can only be a legal resident of Utah (for example to vote there) if “your principal place of residence is in the state and you have the intention of making your residence here permanent or indefinite”.
In that case (apart from in the first year of college since that doesn’t start until August) she would not qualify for the fifth and final part of the “do you have a qualifying child” test (“Who lived with you for more than half of 2018”) or the Exception to time lived with you (“Temporary absences by you or the other person for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the person lived with you”) because the absence would not be temporary (it is “permanent or indefinite”). See https://www.irs.gov/pub/irs-pdf/i1040gi.pdf at pages 20-23.
Incidentally, this would appear to be the rationale behind why you can’t be claimed as a dependent on your parents’ tax return if you want to establish residency in Utah for tuition purposes - you can’t be both a permanent resident of Utah and live with your parents OOS for all but temporary absences.
Because the IRS says you can still claim the child. Temporary can be 4 years. I do know college kids who never ‘come home’ during summers. I didn’t.
If she doesn’t earn any income in California, she doesn’t have to file a return there. All you are getting by claiming her as a dependent is, maybe, a $500 credit. Is it worth it to you? If not, the decision to become a Utah resident is easy.
Yes “Temporary can be 4 years”. But then she would not be a “legal resident” of Utah. She would be a permanent resident of CA and have to pay CA tax on all income (including her taxable scholarships) whatever the source.
If CA had conformed to the new federal $12,000 personal deduction we would be better off getting the $500 credit with her as a dependent, but with a much lower deduction in CA, it will probably be better (and definitely simpler) the other way round. And in the long term, better to escape the CA tax net now rather than later (for example if she goes abroad after college).
In the case of OP’s daughter, I obviously disagree. She registered to vote in UT, and in doing so she indicated an intention to make UT her permanent or indefinite residence. This is incompatible with her residence in UT being temporary, as allowed by the IRS so that she can properly be claimed as a dependent on someone else’s tax return.
Twoin: if you are only inquiring about your D’s state income tax. California will not tax an out of state scholarship. Nor will CA tax a summer job when 100% of the earnings are out of state.
All one has to do is file as a Part-time Resident (540NR) and show all of the earning in the ‘Other’ state column. I’m sure Utah has a similar form.
OTOH, if your goal is to obtain instate residency for tuitions purposes…
You don’t have to intend to be a resident of a state forever in order to declare residency. Obviously people move, they don’t lose their legal state residency the day they decide they want to move.
@calmom As per post #23: “You are considered a resident of Utah if your principal place of residence is in the state and you have the intention of making your residence here permanent or indefinite.” (https://voteinfo.utah.gov/).
Most states have a similar “permanent or indefinite” requirement although they express it differently. As @BelknapPoint noted, your residency changes not at the time you form the intent to move state but when you take the first affirmative action to demonstrate that intent (like registering to vote in the new state).
To return to the original topic, for tax purposes it’s possible to be a resident of two states at the same time, depending on the states’ rules. Residency for tax purposes doesn’t depend on where you register to vote, and it doesn’t necessarily depend on where you consider your primary or permanent residence to be. Many states say that if you live and work in the state for more than half the year, you’re a resident for tax purposes, even if you’re a permanent resident of another state. Here, for example, is what Minnesota’s rules say:
And Minnesota makes it clear this rule also applies to students:
This is not necessarily a desirable status, since both the state where the student is working while attending school and the student’s home state might consider the student a resident and subject to taxation on that basis—though often the home state will give credit for taxes paid to the second state.
I think you’re confusing the concepts of domicile and residence. Legally, you can’t have more than one domicile, or “permanent residence” (which some people refer to as “legal residence”). But you can be domiciled in one state and have actual residence in another. As the Legal Dictionary (online) explains:
Some states say you need to be a permanent resident (or domiciliary) of the state to vote there. Others merely say you need to actually reside there for a certain number of days to be eligible to vote. For example, Wisconsin says:
Unlike the Utah statute, that doesn’t say anything about intending to stay in the state permanently or indefinitely. It just says you need to actually live there, without any present intention to move. By this standard, a student from Minnesota who is attending the University of Wisconsin and actually living in an apartment in Madison is eligible to register to vote in Wisconsin, even if she remains a domiciliary (or “permanent resident”) of Minnesota.
Registering to vote in another state might be one indicator of intent to change domicile, but it’s only one of many, and all states say no single indicator definitely decides the question. Sometimes people want to claim domiciliary status in a state where they own property for purposes of, e.g., getting a homestead tax exemption. Mere voter registration or a record of actual voting by itself doesn’t guarantee that domiciliary status will be recognized. As one Florida law firm explains:
Among the factors a court will consider: voter registration and actual voting history, location of bank accounts and safety deposit boxes, driver’s license, motor vehicle registration, address used on your federal tax returns, declaration in a will or trust that you are a legal resident of the state, address used in business transactions and charitable activities, address used on credit cards and insurance policies, address listed on U.S. passport, address listed as primary residence on homeowner’s insurance policies, places of employment,location of professional relationships (doctors, lawyers, accountants, etc.), social, religious, and other organizational memberships. The list goes on, but you get the idea. Changing your voter registration doesn’t, by itself, definitively determine a change in domicile, which is determined by the sum total of all your most important relationships, assets, business ties, etc., coupled with an intent to make that place your permanent home.
@calmom true, but this seems awfully complicated for college. Do most college students declare residency where they attend college? I didn’t when I attended college out of state…like I stated before I declared residency only when I decided I was staying there…
I just want to reiterate what bclintock said. My son is a tax resident of two different states (where he attends college and our home state) because they use different rules. In his case, it doesn’t matter, as his income is low enough that he doesn’t owe in either state. So you need to check the rules of your home state to be sure your child loses tax residency there.
If he did have to file a return in both states, would he file the resident return in each of those states? Or would he file a resident return in one state and a non-resident return in the other state? The latter situation is much more common. Many people are a “tax resident” (I take that as meaning a person has a legal tax obligation) of multiple states, because income will be taxed by the state in which it was earned, but that doesn’t mean that the person is a legal resident of two different states at the same time. Tens of thousands of college students have a summer job in their home state and also are employed in a different state while away at school. If a tax return is required in either or both states, typically the student will file a non-resident return for the state where the school is located in order to pay taxes on the income earned there, and/or file a resident return for the home state, unless the student has taken one or more affirmative actions to actually become a legal resident of the state where the school is located.
@BelknapPoint, you most certainly can be a legal resident of two states at the same time for tax purposes. Minnesota makes that clear:
Clearly, under this definition, a person domiciled in North Dakota but working in Minnesota and renting an apartment there, intending to return to North Dakota at year’s end, could easily be both a North Dakota resident and an Minnesota resident at the same time. And as far as Minnesota is concerned, that person is responsible for paying Minnesota income taxes on all his income, including income earned in another state or country.
Some nonresidents must also pay Minnesota taxes on their earnings in Minnesota.
Nonresidents are responsible only for taxes on income earned in Minnesota.
You know, I think one of the biggest problems with this discussion is that there are many different terms being thrown around, maybe some slightly modified one way or another, and not everyone is applying the same meaning or definition to the same term. Not surprisingly, a major contributor to this problem is that there are 50 different sets of state laws that also do not apply the same meanings or definitions to the same term.
Just a few posts ago, you said that “Legally, you can’t have more than one domicile, or “permanent residence” (which some people refer to as “legal residence”).” Compare this to your words quoted at the beginning of this post. The slight modifications or qualifiers do not clear up any confusion; I think for the most part they add to it.