If my spouse moves to another state and I stay in Virginia until later in the year, do we file as Virginia residents, part-year residents, or nonresidents?

Plain-English summary

The IRS flagged to Virginia that a husband and wife may have needed to file a 2018 Virginia return. They hadn't filed, so the Department requested information; the couple responded with a Virginia nonresident return, but after reviewing it the Department decided they were actually Virginia domiciliary residents and assessed tax. On appeal, the couple argued the wife had become a resident of another state (State A).

The wife had accepted a job in State A and moved there in January 2017, registered two vehicles there, filed her federal and State A returns from her State A address, and lived there essentially full-time except for visits home. Working against her: she and her husband still owned their Virginia home, used for weekend and holiday visits, kept a Virginia driver's license though she never renewed it, had her W-2s mailed to the Virginia address, and her husband continued actually living in the Virginia home with their children until June 2018, when the school year ended. The Department weighed all of this and credited the wife's explanations -- she kept the unexpired license only because it hadn't expired yet, and got a new-state license once it eventually did, when the couple later moved again to State B, had her mail sent to Virginia only as a security measure while renting an apartment in State A, and visited the Virginia home only intermittently. On balance, the Department found she had genuinely abandoned Virginia domicile and established a new one in State A as of 2018, and abated the assessment against her.

The husband's situation was different: he actually continued to live in Virginia -- physically, not just on paper -- until June 2018, when he moved to join his wife after their children finished the school year. Virginia taxes someone who becomes a resident of another state mid-year only for the portion of the year they were actually a Virginia resident, filed on a part-year return (Form 760PY) that apportions income between the Virginia and non-Virginia periods. Since the husband was a genuine Virginia resident for part of 2018, the Department instructed him to file that part-year return, if his income for the period met the filing threshold, rather than treating him as a full-year nonresident along with his wife.

What this means for you

Married couples where one spouse relocates before the other

Domicile and residency are determined separately for each spouse based on that spouse's own facts -- one spouse can genuinely change domicile while the other remains a Virginia resident, or a part-year resident, for the same year, especially when the move happens at different times or the couple physically lives apart during a transition period.

Anyone who moves mid-year and stays behind in Virginia to finish out a school year or similar commitment

If you keep actually living in Virginia for part of the year even after your spouse or family has relocated, you're a Virginia resident for that period and need to file a part-year return reporting income during the time you were still a Virginia resident -- you don't automatically get nonresident treatment for the whole year just because your household's move began earlier.

Anyone whose Virginia driver's license simply hadn't expired yet when they moved

Not renewing an old license, and getting a new-state license once you eventually do need one, is a materially different, and more favorable, fact pattern than actively renewing a Virginia license after moving away.

Common questions

Q: Can one spouse be a Virginia domiciliary resident while the other is not, for the same tax year?
A: Yes -- the Department evaluates each spouse's own facts and intent separately; here the wife was found to have changed domicile while the husband remained a resident through part of the year.

Q: If I move out of Virginia partway through the year, what return do I file?
A: You generally file a Virginia part-year resident return (Form 760PY), reporting and apportioning income between your period of Virginia residency and the period after you left, provided your Virginia-period income meets the filing threshold.

Q: Does keeping an unexpired Virginia driver's license after moving away hurt a domicile-change claim?
A: It's a factor the Department weighs, but simply not renewing a license that hasn't expired yet, especially with a credible explanation and a prompt switch to a new state's license once needed, is treated differently than actively renewing a Virginia license post-move.

Citations and references

• Va. Code § 58.1-302 (definitions of domiciliary resident and actual resident)
• Va. Code § 58.1-303 (part-year resident taxed only for the Virginia-residence portion of the year)
• 23 VAC 10-110-40 (computation of part-year resident's Virginia taxable income)
• Va. Code § 58.1-321 (filing threshold)
• Va. Code § 46.2-323.1 (driver's license applicants must certify Virginia residency)
• P.D. 00-151 (8/18/2000) (domicile can be abandoned even while retaining a Virginia license)
• P.D. 02-149 (12/9/2002) (obtaining or renewing a Virginia license is a strong indicator of retained domicile)

Subject

Residency: Domicile - Intent to Change Outside Virginia Established; Part Year - Filing Required When Moving Out Of Virginia

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-14

Original ruling text

January 23, 2023

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to * (the “Taxpayers”) for the taxable year ended December 31, 2018.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayers, a husband and wife, may have been required to file a Virginia income tax return for the 2018 taxable year. A review of the Department’s records showed that the Taxpayers had not filed. The Department requested additional information from the Taxpayers in order to determine if their income was taxable in Virginia. In response, the Taxpayers submitted a Virginia nonresident income tax return along with other information. After reviewing the information provided, the Department determined that they were domiciliary residents of Virginia and issued an assessment. The Taxpayers appeal, contending the wife was a resident of * (State A).

DETERMINATION

Wife’s Domicile

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country or in another country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Additionally, a person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is also subject to Virginia taxation.

In order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. The burden of proving that the domicile has been changed lies with the person alleging the change.

In determining domicile, consideration may be given to the individual’s expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, profession or employment, income sources, residence of spouse, marital status, situs of real or tangible property, motor vehicle registration and licensing, and such other factors as may be reasonably deemed necessary to determine the person’s domicile. A person’s true intention must be determined with reference to all the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.

The Department determines a taxpayer’s intent through the information provided. A taxpayer has the burden of proving that he has abandoned his Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he intended to remain indefinitely in Virginia.

The wife accepted employment in State A and began living and working there in January 2017. She registered two vehicles in State A, but did not acquire a State A driver’s license. She also filed her federal and State A income tax returns using her State A address. Except for brief periods for vacations and visiting family in Virginia, she remained in State A until 2021 when she moved to * (State B).

The wife also retained some connections to Virginia. She and her husband continued to own a home in Virginia. She states that they retained the home to use for weekend and holiday visits. A vehicle was registered in Virginia and was garaged at their Virginia residence for her use when she and her family visited. She explained that her husband continued to live in their Virginia home until June 2018 when their children finished school. Her W-2s from State A were mailed to her Virginia residence, and both she and her husband maintained their Virginia driver’s licenses until they moved to State B in 2021.

Virginia Code § 46.2-323.1 states, “No driver’s license ... shall be issued to any person who is not a Virginia resident.” In fact, this section states that every person applying for a driver’s license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains a Virginia driver’s license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver’s license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/9/2002).

The wife explains that she did not relinquish her Virginia driver’s license because it had not expired. While she did retain the Virginia license, it was never renewed and, when she eventually moved to State B, she and her husband both obtained State B driver’s licenses.

The wife also explained that she had her W-2s sent to her Virginia address as a security measure because, at that time, her residence in State A was an apartment rental. Further, her husband stayed in the Virginia home with their children only long enough for them to finish the school year and she only returned to that home intermittently.

Part-Year Residency of Husband

Virginia Code § 58.1-303 provides that any individual who becomes a resident of another state during a taxable year shall be taxable as a Virginia resident for only that portion of the taxable year during which that person was a resident of the Commonwealth. Title 23 of the Virginia Administrative Code (VAC) 10-110-40 further explains that the Virginia taxable income of a part-year resident shall be computed by determining income, deductions, subtractions, additions, and modifications attributable to the period of residence in Virginia. As such, any individual who is a part-year resident of Virginia during a taxable year must apportion their income between their periods of residence in and outside of Virginia on a schedule of income filed with their return (Form 760PY). Part-year residents who cease residing in Virginia during a taxable year, and meet the filing threshold of Virginia Code § 58.1-321, must file a Virginia part-year return.

The husband was a resident of Virginia until he left Virginia in June 2018. As such, he would have been required to file a part-year return for the 2018 taxable year if he met the filing threshold of Virginia Code § 58.1-321.

CONCLUSION

The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. After carefully considering all of the evidence presented, I find that the wife was not a domiciliary resident of Virginia in 2018. Accordingly, the assessment will be abated. The husband is instructed to file a part-year return if he met the filing threshold for doing so under Virginia Code § 58.1-321. More information is available in the instructions accompanying the 2018 part-year return form (Form 760PY).

The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4177.Y

Related Documents

00-151

02-149