If I move to Virginia partway through the year but haven't yet finished changing my legal domicile, is income I receive right after I arrive taxable by Virginia?

Plain-English summary

A taxpayer moved from another state ("State A") to Virginia in March 2019. He reported March 23, 2019 as both his last day of State A residency and his first day of Virginia residency on his part-year returns in both states. Five days later, on March 28, 2019, he received a taxable life insurance distribution tied to a divorce settlement. He reported that distribution to State A, arguing his actual move to Virginia -- new driver's license, vehicle registration, voter registration, and a new job -- wasn't complete until April, so the distribution should still count as State A income.

Virginia disagreed and upheld the assessment. The key rule: once you spend more than 183 days in Virginia during the year, you're taxed as an actual resident starting from the day you first became physically present -- separate from, and often earlier than, the date your legal domicile change is complete. Because the taxpayer used March 23, 2019 as his move date on both states' returns, the Department held him to that date. His argument that the "real" move wasn't finished until he got his Virginia license and registration in April didn't move the needle, especially since State A's own return showed the distribution wasn't actually taxed there (it was attributed to his nonresident period).

What this means for you

People moving to (or from) Virginia mid-year

Virginia recognizes two ways to be a resident: a domiciliary resident (Virginia is your permanent home/domicile) and an actual resident (you were physically present in Virginia for more than 183 days in the year, regardless of domicile). Changing your legal domicile -- driver's license, voter registration, vehicle registration -- takes time and often lags behind your actual move. But if you end up spending more than 183 days in Virginia for the year, Virginia can tax you as an actual resident from your very first day of physical presence, even before your paperwork changes catch up.

The date you write on your part-year returns matters

The Department leaned heavily on the fact that the taxpayer used the same date (March 23, 2019) as his move-out date on his State A return and his move-in date on his Virginia return. If you weren't actually present in the destination state on the date you write down, be prepared to document that with more than your own say-so -- the Department will hold you to the dates you reported absent contrary evidence.

Accountants and tax professionals

This ruling is a clean illustration of the actual-residency rule operating independently of domicile: a taxpayer can be taxed as a Virginia actual resident on income received before domicile is legally perfected, as long as total days in Virginia for the year exceed 183. It also shows the Department checking a taxpayer's story against the other state's return -- here, State A's own filing undercut the claim that the distribution was properly State A income, since State A treated it as attributable to the taxpayer's nonresidency period, not to a period of continuing State A residency.

Common questions

Q: Does Virginia tax me as a resident only once my domicile change (license, registration, etc.) is complete?
A: Not necessarily. If you spend more than 183 days in Virginia in the year, you're an actual resident from your first day of physical presence, independent of when your domicile change is finished.

Q: What counts as a "day" of presence for the 183-day test?
A: Any portion of a day you're physically present in Virginia counts, except time spent purely in transit through Virginia to a destination outside the state.

Q: I reported different move dates to two states -- does the Department check?
A: Yes. Here, the Department compared the taxpayer's Virginia and State A returns and also examined how State A itself taxed the income at issue, which undercut the taxpayer's position.

Q: Does this ruling apply to my situation?
A: Not automatically. This is an official published ruling based on this taxpayer's specific facts and the law as it stood in 2023. Your facts may differ, and you should not assume the same result without your own review.

Citations and references

• Va. Code § 58.1-302 (domiciliary resident and actual resident defined)
• Va. Code § 58.1-1821 (application for correction of assessment)
• 23 VAC 10-110-30 B 3 (domicile continues until replaced; only one domicile at a time)
• P.D. 16-130 (6/22/2016) (timing of domicile change)
• P.D. 15-99, P.D. 17-118, P.D. 18-92, P.D. 21-158 (actual residency runs from first day of physical presence)
• P.D. 98-183 (definition of a "day" for actual-residency purposes)
• P.D. 17-65, P.D. 19-20, P.D. 20-30, P.D. 21-15 (income attributable to period of Virginia residency)

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-106

Original ruling text

October 5, 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 “Taxpayer”) for the taxable year ended December 31, 2019.

FACTS

The Taxpayer filed a part-year Virginia resident income tax return for the 2019 taxable year indicating that he became a Virginia resident on March 23, 2019. The Taxpayer also filed a part-year * (State A) income tax return for the same year, indicating that his last day of residency in State A was March 23, 2019. Under review, the Department discovered that the Taxpayer had received a taxable life insurance distribution on March 28, 2019. The auditor adjusted the return to include the distribution in income attributable to his period of Virginia residency and issued an assessment. The Taxpayer appeals, contending that, because his move to Virginia was not complete as of March 28, 2019, the distribution was attributable to State A.

DETERMINATION

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. While a simple declaration is not sufficient to establish residency, a simple declaration alone is also not sufficient to disprove an established residency.

Once a domicile is established, it continues until the individual establishes a new domicile elsewhere in accordance with the two-pronged test above. See 23 VAC 10-110-30 B 3. In addition, an individual may only have one domicile at a time. See id . The implication of these rules is that an individual always has a domicile somewhere at all times. The Department has acknowledged often that a change in domicile occurs as part of a process in which no single factor is dispositive, and that the exact timing of when the true intent of an individual to change domiciliary residence occurs can be difficult to discern. Unless some other time is clearly established by a preponderance of the evidence, the Department will generally consider the change to have occurred toward the beginning of the process. See Public Document (P.D.) 16-130 (6/22/2016).

In this case, the Taxpayer clearly took steps to change his domicile to Virginia by obtaining a Virginia driver’s license, vehicle registration, and voter’s registration. It also appears that he clearly formulated the intent to abandon his State A domicile. Therefore, the question becomes when the Taxpayer first established physical presence in Virginia with the intent to change his domicile.

Because the Taxpayer spent more than 183 days in Virginia, he would also have been an actual resident of Virginia. The Department has determined that such an individual, even if they remained a domiciliary resident of another state, is subject to tax as an actual resident from the date they first entered Virginia to the last day they spent in Virginia in such taxable year. See P.D. 15-99 (5/11/2015), P.D. 17-118 (6/29/2017), P.D. 18-92 (5/18/2018), and P.D. 21-158 (12/28/2021). In addition, for purposes of determining actual residency, a “day” is any portion of a day in which a person is physically present except for a part of a day during which an individual is present solely while in transit to a destination outside Virginia. See P.D. 98-183 (10/31/1998) and P.D. 17-118.

The Taxpayer explains that, on March 28, 2019, pursuant to a divorce decree settlement, the distribution at issue was deposited into an account that he held jointly with his ex-spouse. He also explains that he used March 23, 2019, as his residency start and end date on his state tax returns because that was the first date he was able to move his belongings into his leased Virginia residence. He states that, while he began his move that day, he did not complete the move until April 2019 when he started working in Virginia and obtained his Virginia driver’s license, vehicle registration, and voter registration. In the absence of information that would clearly indicate the Taxpayer was not physically present in Virginia on or before March 28, 2019, the Department must assume the move-in and move-out dates reported by the Taxpayer on the Virginia and State A returns, respectively, represent the day he changed residency.

In addition, the Taxpayer claims that he reported the distribution to State A because he requested the distribution while he was a State A resident and it was deposited into the joint account held with his ex-spouse in State A. A review of his part-year State A return revealed that, contrary to the Taxpayer’s assertion, the distribution was not in fact taxed by State A because it was attributed to his period of nonresidency on the State A return.

CONCLUSION

Based on the facts presented and established Virginia policy, it appears that the Taxpayer’s period of actual residency began as of March 23, 2019, even if he had not perfected a domicile change as of that date. The Department has consistently held that income is attributable to the period of residence in Virginia if the taxpayer is a Virginia resident on the date the income is received. See P.D. 16-130, P.D. 17-65 (5/10/2017), P.D. 19-20 (3/26/2019), P.D. 20-30 (3/4/2020), and P.D. 21-15 (2/16/2021). Therefore, any income he received on or after March 23, 2019, is income attributable to Virginia.

Accordingly, the assessment is upheld. The Department’s records indicate that the assessment has been paid in full. Therefore, no further action is required.

The Code of Virginia sections, regulation 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/4194.Y

Related Documents

98-183

15-99

16-130

17-65

17-118

18-92

19-20

20-30

21-15

21-158