It’s really not that big a hassle to change residency (I’ve lived in 8 states). If you are a student, you can do it at your convenience, like on Jan 1 so you don’t have to file double tax returns. If you do move after grad school, establish residency in the new state. It’s not hard.
One reason to change is to feel part of the new state and community. Get involved, even if it is just voting, in the local issues. Have a say in how your sales tax dollars are spent (and they are substantial in some states), how parks and hiking trails are maintained, whether the college town allows multiple non-related people to rent the same house. Don’t (can’t) vote, can’t complain when something doesn’t go your way. Even a grad student needs to use public services, should care about local laws even if it is just parking regulation.
And you may get benefits. Residents of Florida get cheaper tickets at Disney (well, college students do too), get residents rates at all kinds of places, beach stickers.
There may well be value in establishing domicile in a low tax state if you were originally in a high tax state. Once you start earning money those high tax states like CA are reluctant to let you leave the tax net if you have any ties to the state. And if you take a job abroad you will continue to pay taxes in the state where you were previously resident. Even some remote/travel based jobs in the US with no fixed place of work can cause problems (and you may wish to be resident in a low tax state which will be harder if you don’t spend much time there).
Interestingly, that was one reason she had brought up why she might WANT to register to vote in GA: It would have a larger impact THERE than at home
Makes sense, in the 2nd and later year, there might well be paid internships/placements, at which point she should just deal with one state, rather than having to also declare in her “home” state.
Some states have voting rules may make it more difficult for newcomers or college students to actually vote (as opposed to register), so she needs to check the rules carefully to ensure that she is not denied voting.
That’s a lotta ‘ifs’, none of which has been mentioned by OP.
For a multi-millionaire, sure, but someone getting their first job out of grad school after they’ve had near zero income for a couple of years? Not gonna happen.
“And if you take a job abroad you will continue to pay taxes in the state where you were previously resident.”
Not necessarily. Even high tax California has a Safe Harbor exemption for Expats which can exclude income if you’ve been gone 546 days.
“Some states have voting rules may make it more difficult for newcomers or college students…”
In nearly all states, Grad students are considered independent adults, not ‘college students’…
You seem to have two issues. First, can you continue to claim your ~22, 23, 24 year old child who is a full time grad student as a dependent. You have to read the IRS rules about that, but it won’t matter if she’s a resident of your state or not. You might figure out if it is worth it to continue to claim her. Would she get tax benefits being independent? Education tax credits, other deductions you may not qualify for? Will she earn enough to use those credits?
Second is it beneficial for child to remain a resident of the current state or would it be better to become a resident of the new state. All the things discussed above - voting, resident benefits, lower tax or insurance rates?
What might be best for the first year might not be best for multiple years.
Yes - and as I started to consider all that, one first needs to determine which part of those equations are actually “options” where we have a choice, vs. what actions might be “prescribed” by statute - in which case we don’t have to worry our little heads.
Hence my quest to see what might be “dictated” and realizing that I ran into a lot of vague language on official sites, what the rules actually are and to whom they apply when.
To OP: You are searching for perfection. It rarely exists especially not with governmental agencies and across state lines. To me, I think you should just do whatever makes you/your daughter feel the most comfortable. From what you have said here, I think that is having her obtain a license in GA, registering to vote in GA and taking other steps to become an official resident of GA. Sounds like you will sleep better at night though you obviously know yourself/your daughter better than any of us.
Thought of other benefits of being a resident today. In Denver, residents get a break on greens fees (and other rec center fees), get to make reservations a few days earlier than non-res.
Also get to park at the light rail stations without paying an extra fee. Parking at light rail is funded through sales tax which of course everyone pays, but if you aren’t a resident of one of the 6 metro counties, you have to pay a parking fee (like $2/day) and of course an OOS plate is a dead giveaway.
Little things, but I’m not seeing the benefit of not becoming a resident of the new state.
For my kid, the advantage of not becoming a resident of state where she goes to grad school is not having to do anything. No fees for a new license or plates. No applications to change anything. In grand scheme of things, not huge costs without question. But so are most of the benefits of becoming a resident of grad school state people are noting here. And to date, none of those benefits would be there for my kid.
Seems to me, like a lot of things, the answer is it depends. YMMV as they say.
