I (will) own no property in IN and will rent in WA. My car insurance in IN is very cheap (<$700). I have earned quite a bit of money this year in IN from Feb-Aug. Would changing residencies allow me to forego paying IN state income tax for this year?
2007-06-22 07:30:10 · 3 answers · asked by Matthew P 1 in Business & Finance ➔ Taxes ➔ United States
The state of Washington does not have a state income tax therefore any money earned while in the state of WA would be free from income tax. However your earnings in IN would still be taxed by IN. Establishing residence in WA could be beneficial in the future and with other items like car insurance.
2007-06-22 07:37:26 · answer #1 · answered by ? 6 · 0⤊ 0⤋
Even if you do change your residency, you'll still pay IN tax for the income earned in IN.
Keep in mind that if you return to IN after you complete your studies, IN may view this as a tax dodge since a student's domicile does not change merely by attending school out of state. It's the same as a military person's domicile, which does not change when they are stationed outside their home state.
If they determine that you did it only to avoid IN income taxes, they can levy the tax against income you earned just as if you had not changed your domicile. CA, VA, and MA are notorious for doing this to students and GIs. If you do change your domicile, do NOT return to IN immediately after you graduate! Take a job in WA for a few months, even if it's just flipping burgers to help establish that your intent was to stay in WA. With that, you'll be in a much better position to defend yourself against any claims by the state of IN that you were only trying to dodge IN taxes.
2007-06-22 15:41:49 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
You'd still be a partial year resident of Indiana, so changing your residence would not let you avoid paying the Indiana taxes.
2007-06-22 15:05:41 · answer #3 · answered by Judy 7 · 0⤊ 0⤋