Declaring VA Domicile

[Concretetocolor]

Hi everyone,

First post for me and Taylor. We are going full time in 9 days and working on our Domicile. We currently live in VA and run a wedding photography and film business. The business is registered in VA. We know that we are going to be taxed based on where we do our work (however I can't find a answer from the IRS if shooting a wedding (8-10 hours in VA) or editing a wedding (15-40 hours in whatever state we want to be in) goes into account for "where" most the work is done). Talking with our accountant she said that we of course will have to pay VA corp tax since our business is registered here...but that's besides the point.

My questions are.

1. How do we declare domicile in VA? All the information I am finding is talking about in-state tuition. We are VA residences now, but we will not have a physical address next week. The business has a registered agent for legal docs to be sent to and we are looking at a PO box or Mail Forwarding service.

2. Is the savings (car insurance, health insurance, property tax..etc) by doing domicile in FL worth the hassle of driving there to get it. I don't think we will be taking much advantage of the no state income tax because all of our weddings are in VA this year.


Really having a hard time getting clear cut answers on how to Domicile when you have no physical address.

Thanks for any help.

[kerrlakeRoo]

If your desire is to keep Virginia as your domicile, you need do nothing. You will need a mail forwarding service, otherwise I dont believe you need to do anything. Keep and later renew your drivers licenses as you normally would, you will have to continue paying personal property taxes and purchase county or city license fees according to where you establish the mailing address. As long as you are paying state taxes, Virginia will not disown you. Licenses, personal and professional, voter registration, anything that demonstrates your intention to return to Virginia frequently are the things you have to actively change to become something other than a tax paying Virginian.
You already are a Virginian, you will continue to be until you change it.

[CA_Traveler]

Yup, I pay state tax in CA and AZ.

[mowermech]

Long ago, DW was a traveling nurse, licensed in three states; our "home" state of Montana, Washington State, and California.
Of course, the Federal IRS wanted ALL income reported, no matter what state it was earned in.
Montana also wanted all income reported on the Montana Income Tax Return.
Washington has no income tax, so no problem there, we just paid the sales tax on everything we bought that was taxable.
California wanted all income earned in CA reported on the income tax forms, Plus we had to pay the CA sales taxes.
So, every year, we had to file Federal tax forms, Montana tax forms, AND California tax forms. It wasn't all that difficult, but the paperwork was annoying.
If we had moved to Wyoming instead of maintaining our Montana residence, that would have eliminated one set of tax forms. At the time, we didn't think it was worth the trouble.

[Bumpyroad]

I fail to see any advantage in keeping VA as your residence.
bumpy

[JimK-NY]

State sales and income taxes work differently. If you do work in another State you will need to pay sales taxes for that State. You will need to pay income taxes based on your residency. This could get complicated so you should consult a tax attorney.

Residency requirements can also become very complex. Even without a business, residency can be confusing. There is no one single factor that determines residency. You will need to look at the rules used by the State of Virginia. Having a business in Virginia is going to make it unlikely that you will be able to select another State in a remote location for residency.

Finally, it is all but essential to have an address in your State of residency. If you have a mailing address in one State and live in another, expect issues. Those issues often involve taxes, but there are others such as insurance and, as mentioned, voting.

[westernrvparkow]

donn0128 wrote:
Setup your business in a state more friendly to people like Florida. Then, no matter where you work you only pay FL taxes. I used to work all over North America and I only paid taxes where I lived. Your taxes are based on business address, not where the physical work was done.

This is not really true. As a small to very small business, Donn is correct, where you file your state income tax return will be the tax controlling entity. If you get bigger, or do all your work in a taxable state and then file elsewhere, they are eventually going to come after you. Things like collecting and paying sales taxes, registering your business with a state etc. is going to tip off that state that you need to be filing and paying income taxes.
An extreme example is professional athletes. No matter where they live and where their team is based (say a Dallas Cowboy, in Texas a state where there is no income tax) they still have to pay state income taxes in each state where they play a game and thus earn income. That Dallas Cowboy has to pay Pennsylvania state income on the game they play in Philadelphia each year. They have to pay income tax in California if they play the Rams or the 49ers at their stadiums. Conversely, the Rams players only pay California taxes on the income earned playing in California and can deduct the income they pay taxes on from their games played in other income tax states.
A photography business will likely fall under the radar, but it is still not technically correct that the state where your business is located is the state where you have to pay your taxes. If that was the case, every business and every employee would claim a residence or office in a low or no tax state and avoid state taxes altogether.

[kerrlakeRoo]

Wildnotlost wrote:
Hey CA,

Our main question is with no physical address what are we supposed to do for voting and all that stuff you listed? Thanks for responding.

There are a lot of mail forwarding services that can work with you. Also for a lot of information on this subject look at some of the clubs.

www.escapees.com
has a lot of information on this and offers mail forwarding from both SD and Texas domiciles.

[kerrlakeRoo]

I too am a Va. resident but am leaving as soon as my house sells. You should not be bound to Va after going mobile. Your decision on Domicile has a lot of factors.
Where do you plan to mainly spend your time? If you are looking at fulltiming out west such as winters in Az, and summers maybe in Montana or Wyoming, you may want to look at Wyoming, Nv or SD , no state income taxes, Wy even has no corporate income taxes.
Health insurance, again look at where you plan on mainly travelling, you may want to pick one of those states to simplify your insurance so at least a couple of months a year your in the area, and within a days drive other times of the year. Nv is popular for that reason.
Vehicle registration, some states dont require annual inspections, having to travel to a given state for that alone can be frustrating,
Vehicle insurance rates also vary somme states are considerably cheaper than others.
You are going mobile for the purpose of being mobile, take advantage of the flexibility.
I also just remembered one more sizable expense, Personal property taxes, many states dont have those either, and in Va they can be costly.
If you are mainly going to be working in Va one other state that may be worth considering is Tn. No state income taxes on wages, but they do tax income from stocks, bonds and investment income.

[CA_Traveler]

Medical may be significant. What happens when you need help and are out of network? Area and coverage may be different for emergency and non emergency coverage, eyes, dental etc. I'd make sure that any auto insurance is aware of your locations.

And you may pay multiple state taxes, depending upon a number of factors. Sounds like you should discuss your situation with a CPA.

[CA_Traveler]

You are a resident of 1 of 50 states. You will need a mailing address and a PO box may not be acceptable for some companies. So you could start with a mail service. Research your costs etc for FL, TX, SD, etc all of which are popular full time resident states.

[Concretetocolor]

Hey CA,

Our main question is with no physical address what are we supposed to do for voting and all that stuff you listed? Thanks for responding.

[CA_Traveler]

Why would the IRS care about your resident state?

Your resident state involves voting, drivers license, registration, mail, banks/financial, etc. Plus state, county and city taxes.

Since the year is about half over don't make any changes until later in the year when you have more information. Other factors are insurance, medical, cost of living, taxes, etc.

[donn0128]

Setup your business in a state more friendly to people like Florida. Then, no matter where you work you only pay FL taxes. I used to work all over North America and I only paid taxes where I lived. Your taxes are based on business address, not where the physical work was done.