I moved out of state for work years ago and pay taxes there now, but I still have a Virginia driver's license and a house I visit regularly — does Virginia still consider me a resident?

Plain-English summary

The Department received information from the IRS suggesting a taxpayer should have filed a 2020 Virginia income tax return; a records check confirmed he hadn't. After gathering additional information, the Department determined he was a Virginia domiciliary resident for 2020 and issued an assessment (reduced by a credit for tax he'd already paid to another state, "State A"). The taxpayer appealed, arguing he was a State A resident, not a Virginia one.

Virginia's two-part domicile-change test. Va. Code § 58.1-302 defines a domiciliary resident as someone whose permanent home — the place they intend to return to even while living elsewhere — is Virginia. To change that domicile, a person must (1) actually abandon the old domicile with no intent to return, AND (2) establish a new one through actual physical presence plus intent to remain there permanently or indefinitely. Both elements must be shown concurrently, and the burden of proving the change falls on the person claiming it. Relevant factors include expressed intent, financial independence, employment, income sources, spouse's residence, property, and vehicle registration/licensing — no single factor or bare declaration is enough on its own.

What favored the taxpayer. He moved to State A in January 2015 after being transferred there for work, and had lived and worked there since. He leased three different residences in State A, filed State A resident income tax returns, registered to vote and voted there in 2020, and eventually obtained a State A driver's license in November 2023.

What worked against him. He kept renewing his Virginia driver's license — in August 2016 and again in February 2022, both years AFTER he claimed to have become a State A resident. He owned two vehicles registered in Virginia. And he continued to own a Virginia residence that he returned to for four days every two weeks.

Why the Virginia driver's license mattered so much. Virginia law (§ 46.2-323.1) requires every driver's license applicant to certify they're a Virginia resident. While the Department has previously found a person CAN establish domicile outside Virginia while still holding a Virginia license, renewing or obtaining that license is treated as a STRONG indicator of intent to keep Virginia domicile. The Department also discounted the taxpayer's explanations: he said he kept the license because he'd paid for a long-term version, but had paid for that long-term license AFTER the date he claims he became a State A resident; and he said he only switched to a State A license in November 2023 because of THIS audit — but actions taken in response to an audit are treated as less persuasive evidence of genuine intent. His characterization of the Virginia home as a "vacation home" also didn't hold up given how regularly he actually used it.

Result: Virginia domicile not abandoned, but credit for State A tax preserved. Weighing everything, the Department found the taxpayer's ongoing Virginia connections raised substantial doubt about any intent to abandon his Virginia domicile, so he hadn't met his burden of proving a domicile change occurred by 2020. He remained subject to Virginia income tax as a domiciliary resident — but the Department confirmed he was still entitled to a credit under Va. Code § 58.1-332 A for the income tax he'd actually paid to State A (limited to the lesser of the tax actually paid there or the Virginia tax on that same income; local taxes paid to State A don't count toward the credit). Because the original assessment used the best information available under § 58.1-111, the taxpayer was given 30 days to file an actual 2020 Virginia return claiming the proper credit, after which the assessment would be adjusted accordingly — or treated as correct if no return was filed in time.

What this means for you

Anyone who's moved out of Virginia for work but kept some Virginia ties

Renewing or obtaining a Virginia driver's license after you claim to have moved away is treated as a STRONG signal you never actually gave up Virginia domicile — much stronger than most other factors. If you've genuinely relocated, get a new state's license and let your Virginia one lapse as part of that move, not years later.

Retaining a home you visit regularly

Calling a property you return to every couple of weeks a "vacation home" is unlikely to hold up. The Department looks at actual usage patterns, not labels.

Taking corrective steps only after an audit starts

If you switch your license, registration, or voter registration only once a residency audit is already underway, expect the Department to weigh those actions as less persuasive evidence of your original intent — they look reactive rather than reflective of your actual situation at the time in question.

Accountants and tax professionals with multi-state clients

When advising a client on establishing domicile outside Virginia, push for a genuinely clean break as early as possible: new driver's license, vehicle registration, voter registration, and reduced/eliminated use of any retained Virginia property — all done around the same time as the actual move, not years apart.

Common questions

Q: Can I keep my Virginia driver's license and still establish domicile in another state?
A: In principle yes, but the Department treats renewing or obtaining a Virginia license as a strong indicator you intend to remain a Virginia domiciliary — it's a real risk factor, not a neutral fact.

Q: I only switched my license and registration after Virginia opened an audit against me — does that help my case?
A: Not much. The Department gives less weight to actions taken in response to an audit, since they don't reflect your intent at the time the domicile question actually arose.

Q: If Virginia decides I never left, do I still get credit for taxes I paid to my new state?
A: Yes — Va. Code § 58.1-332 A provides a credit for income tax actually paid to another state, though it's capped at the lesser of what you paid there or what Virginia would have taxed on that same income, and local (not state) taxes paid elsewhere don't count.

Q: What factors does Virginia look at to decide if I've changed my domicile?
A: Expressed intent, actual conduct, financial independence, employment, spouse's residence, property ownership, and vehicle/driver's license registration — considered together, not any single factor alone.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-302 — defines domiciliary resident and actual resident; two-part test for changing domicile
• Va. Code § 46.2-323.1 — a driver's license may only be issued to a Virginia resident
• Va. Code § 58.1-205 — assessment presumed correct; burden on the taxpayer
• Va. Code § 58.1-332 A — credit for income tax paid to another state, limited to the lesser of tax paid or Virginia tax on the same income
• Va. Code § 58.1-111 — Department may assess based on best information available

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-136

Original ruling text

December 13, 2024

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you seek correction of the individual income tax assessment issued to * (the “Taxpayer”) for the taxable year ended December 31, 2020.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2020 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. Based on the information received, the Department determined that the Taxpayer was subject to Virginia income tax as a domiciliary resident of Virginia. Accordingly, the Department issued an assessment but reduced the tax due by the amount of income tax the Taxpayer had paid to * (State A). The Taxpayer appeals, contending he was a resident of State A.

DETERMINATION

Residency

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 that person and the place to which that person intends to return even though they may be residing elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their 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 their 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 their 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 person’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. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.

The Taxpayer explains that he lived and worked in Virginia from January 2009 until January 2015 when he moved to State A after being transferred to work at his employer’s headquarters. He states that he has lived and worked in State A ever since. During this time, he leased three residences in State A and has filed State A resident income tax returns. The Taxpayer also registered to vote and voted in State A in 2020. In addition, he obtained a State A driver’s license in November 2023.

The Taxpayer also retained significant connections to Virginia. He maintained a Virginia driver’s license which was renewed in August 2016 and reissued in February 2022. He owned two vehicles which were registered in Virginia. In addition, the Taxpayer continued to own a Virginia residence to which he returned for four days every two weeks.

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 they retain 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 Department expects that when individuals are seeking a permanent change of domicile, they will normally register vehicles, obtain a new driver’s license, register to vote, and perform other official acts indicating their intent to change domicile. Retaining such connections with Virginia raises considerable doubt as to the individual’s intent to abandon their Virginia domicile. If a permanent change of residence were intended, there would be no need to retain such connections with the former state.

The Taxpayer explains that he maintained his Virginia driver’s license because he had paid for a long-term license. The Taxpayer, however, paid for that long-term license after the date he states he established residency in State A. In addition, although the Taxpayer relinquished the Virginia license and obtained a State A license in November 2023, he states that he took this action because of the residency audit. The Department has found that actions taken as a result of an audit are less persuasive as evidence of intent. See P.D. 13-161 (8/13/2013) and P.D. 17-97 (6/12/2017). The Taxpayer also explains that he retained the Virginia residence as a vacation home. The regularity with which he returned to the residence, however, suggests a level of use beyond that of the typical vacation home.

Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show he was not subject to income tax in Virginia.

As stated above, a change of domicile requires that a taxpayer prove two elements concurrently: 1) that they abandoned the old domicile and had no intent to return to it; and 2) that they established a new domicile, which must have been formed by physical presence coupled with the intent to remain permanently or indefinitely. In this case, even if the Taxpayer intended to establish a new domicile in State A, the Taxpayer’s ongoing connections with Virginia raise substantial doubts as to his intent to abandon his Virginia domicile. Accordingly, the Taxpayer has not met the burden of proving that a domicile change had occurred as of the 2020 taxable year.

Credit for Taxes Paid to Another State

Virginia Code § 58.1-332 A allows Virginia residents a credit on their Virginia return for income taxes paid to another state provided the income is either earned or business income or gain from the sale of a capital asset. Virginia law does not necessarily allow a taxpayer to claim a credit for the total amount of tax paid to another state. Rather, the credit is limited to the lesser of the amount of tax actually paid to the other state or the amount of Virginia income tax actually imposed on the taxpayer on the income earned or derived in the other state. See P.D. 97-301 (7/7/1997). The limitation is computed by multiplying the individual’s Virginia tax liability by a fraction, the numerator of which is the income upon which the other state’s tax is imposed, and the denominator of which is Virginia taxable income.

In this case, the Department adjusted the Taxpayer’s assessment to allow a credit for tax paid to State A before he filed this application for correction. The Taxpayer should be aware, however, that local tax paid in State A is not eligible for the credit. See P.D. 21-121 (9/7/2021).

CONCLUSION

After carefully reviewing all of the evidence provided, the Department finds that the Taxpayer has failed to prove that he abandoned his Virginia domicile as of the 2020 taxable year. In particular, the regularity with which he returned to his Virginia residence and the fact that he had his Virginia driver’s license renewed and reissued during the period when he claimed to be a State A resident are significant factors evidencing an intent to maintain a Virginia domicile. Therefore, the Taxpayer remained subject to income tax as a domiciliary resident of Virginia. The Taxpayer was, however, eligible to claim a credit for the income tax he paid to State A.

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer, however, may have information that better represents his Virginia income tax liability for the taxable year at issue. Therefore, he should file a 2020 Virginia resident income tax return and claim credit for income tax paid to State A to the extent permitted by Virginia Code § 58.1-332. The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, P.O. Box 27203, Richmond, Virginia 23261, Attention: *. The return will be reviewed and processed, and the assessment will be adjusted as warranted. If the return is not received within the allotted time, the assessment will be considered to be correct.

The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at () * or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

Related Documents

97-301

00-151

02-149

13-161

17-97

21-121