Domicile - South Dakota...?

[Steven UK]

So the conversation last week about Domicile got me thinking... back story I'm recently divorced, about to sell my house in Minnesota and I work from home... or soon a RV. One of my work collogues that I trust suggested getting an address in South Dakota. I am happy to do this to save some Income Tax but I'm wary of other potential unknown issues. I am a Green Card holder so there are a lot of things that I know just enough to be dangerous about. like Driving Licenses, postal address, TAX etc.

My office is about 25 miles from the Iowa border and my house about a mile from the border. So in summer I will likely be camping in the Lakes Area, weather is good and I have access to the office if needed.

Can anyone that has done this share their experiences...

Regards Steven

 

[Professor David]

I moved to Western South Dakota about eight years ago for a job. Love it. I recently retired, so no state income tax is a plus. Generally, things are relatively affordable here though the word the word has gotton out and real estate prices have gone up considerably in the last few years in the Rapid City area. My parents are from Denver and I grew up partly in the eastern side of the Rockies. The Black Hills remind me of the foothills of Colorado before that area became so sadly over populated.

 

[Steven UK]

Thankyou Professor David... to be clear I plan on being mobile for a few years I just need an address for legal purposes. Driving Licenses, Tax, Business LLC, Post... I will settle down again at some point but I need to regain some capital. My wife got pretty much everything... except the debt.

Regards Steven

p.s. if I do settle down it will be further South... i don't like the cold...

 

[docj]

Thankyou Professor David... to be clear I plan on being mobile for a few years I just need an address for legal purposes. Driving Licenses, Tax, Business LLC, Post... I will settle down again at some point but I need to regain some capital. My wife got pretty much everything... except the debt.

South Dakota is one of only a small number of States that permit you to establish a legal domicile using only a mail forwarding address. That's why it is so popular with RVers, added to the fact that it has no State income tax. We've been SD residents since we began full-timing in 2011. Our driving licenses are from SD as are our voter registrations my wife's nursing license and a small business LLC. We return at least every five years to get our licenses renewed. Our domicile is handled through YourBestAddress in Sioux Falls. We've been quite pleased with their service, but I am aware of several other highly recommended mail services in the State.

 

[Steven UK]

Perfect... I just googled 'YourBestAddress in Sioux Falls' it sounds ideal. Many Thanks.

 

[touchracing]

I use Dakota Post. They were extremely helpful to answer all the questions I had. My wife and I were able to get everything setup and transferred in one afternoon. The state side is a super easy process.

 

[CharlesinGA]

Some of the mail services will actually open and scan mail, then email to you, that you request them to do so with. Extra fee of course but could come in handy on occasion.

Charles

 

[SMR]

We use My Home Address in Emery, SD. They have been easy to work with.

My Home Address, INC

vehicle registration and mail forwarding

myhomeaddressinc.com

The motor vehicle department there is really easy to work with, they even answer the phone! Lol You could call them or a mail service with any questions you might have.
If you decide to use one of the above services PM the person who suggested it, sometimes they offer money off or other spiff for the referral (shameless plug)

 

[Djfan]

I moved to Western South Dakota about eight years ago for a job. Love it. I recently retired, so no state income tax is a plus. Generally, things are relatively affordable here though the word the word has gotton out and real estate prices have gone up considerably in the last few years in the Rapid City area. My parents are from Denver and I grew up partly in the eastern side of the Rockies. The Black Hills remind me of the foothills of Colorado before that area became so sadly over populated.

We just relocated to the Wyoming side. Love it here. Sure beats that So Wyoming weather.

 

[Steven L]

I've done some steep diving into the subject of establishing domicile in South Dakota as well, and being a Minnesotan myself I can tell you that you'll definitely want to be certain to cut ALL ties with this state to avoid issues with the Department of Revenue moving forward as far as taxing you will go.

Establish provable ties to your new state as far as bank accounts, dental and medical appointments, all of your insurance policies, church/other memberships, vehicle registration, driver's license... absolutely everything possible.

Definitely NEVER AGAIN spend in excess of 182 days in this state for any reason once you've become an official resident of South Dakota, even so much as using a credit card within the state will be something that could be used against you to prove you could still be claimed by the state as a resident.

What others are sharing as far as a more favorable tax situation are correct, one issue of warning as far as registering as a voter I should share here however. There are bills being sponsored currently in both houses of the SD Legislature to disallow the use of only a mail forwarding service address to establish full residency for the purpose of voter registration.

By my reading of each of the proposals it won't preclude you from establishing domicile in South Dakota, however you not be able to vote if you do.

 

[Steven UK]

I've done some steep diving into the subject of establishing domicile in South Dakota as well, and being a Minnesotan myself I can tell you that you'll definitely want to be certain to cut ALL ties with this state to avoid issues with the Department of Revenue moving forward as far as taxing you will go.

Establish provable ties to your new state as far as bank accounts, dental and medical appointments, all of your insurance policies, church/other memberships, vehicle registration, driver's license... absolutely everything possible.

Definitely NEVER AGAIN spend in excess of 182 days in this state for any reason once you've become an official resident of South Dakota, even so much as using a credit card within the state will be something that could be used against you to prove you could still be claimed by the state as a resident.

What others are sharing as far as a more favorable tax situation are correct, one issue of warning as far as registering as a voter I should share here however. There are bills being sponsored currently in both houses of the SD Legislature to disallow the use of only a mail forwarding service address to establish full residency for the purpose of voter registration.

By my reading of each of the proposals it won't preclude you from establishing domicile in South Dakota, however you not be able to vote if you do.

Steven
Thanks for the info I have a colleague that lives in Iowa and has an address in South Dakota but that may be a Bricks and Mortar address. I'll definitely do some more digging. I'll also try and park south of the border (IA/MN) when I'm in town. Also currently I'm a Green Card holder so I cant vote anyway...

The Medical appointments may cause an issue... is this an absolute must...?

Regards Steven

 

[Laura & Charles]

A consideration our accountant warned us about: Should you change your domicile/residence state and you get struck with a catastrophic medical condition, the situation could arise where you end up in a nursing or rehab facility. If you end up spending down your resources, you’ll be stuck in a facility in your domicile/resident state. No choice … Medicaid is administered at the state level. If you should get hit with a catastrophic medical condition (accident or illness), your option to change your state will be scrutinized closer. So consider if you get stuck in that situation, will you have family and friends willing to come to SD (or TX or FL) to visit you?

We could’ve become Florida (or South Dakota or Texas) residents via the mailing services years ago…. And we certainly could’ve benefited—we paid Ohio over $15,000 in income tax last year. But we can now, legitimately, claim Florida residency (lease, here more than 6 months/year, utility bills, etc) so we have become Florida residents. And I trust our family and friends will come see us here even if we end up becoming Florida “Medicaid prisoners”.

 

[Steven UK]

A consideration our accountant warned us about: Should you change your domicile/residence state and you get struck with a catastrophic medical condition, the situation could arise where you end up in a nursing or rehab facility. If you end up spending down your resources, you’ll be stuck in a facility in your domicile/resident state. No choice … Medicaid is administered at the state level. If you should get hit with a catastrophic medical condition (accident or illness), your option to change your state will be scrutinized closer. So consider if you get stuck in that situation, will you have family and friends willing to come to SD (or TX or FL) to visit you?

We could’ve become Florida (or South Dakota or Texas) residents via the mailing services years ago…. And we certainly could’ve benefited—we paid Ohio over $15,000 in income tax last year. But we can now, legitimately, claim Florida residency (lease, here more than 6 months/year, utility bills, etc) so we have become Florida residents. And I trust our family and friends will come see us here even if we end up becoming Florida “Medicaid prisoners”.

Very good point... sadly I have no family here but I do have many friends. But I'm not sure they would be visiting me in a care facility. That ship sailed many years ago. The true friends that you make over many years are strung around the world anyway.
Regards Steven

 

[Professor David]

If you end up spending down your resources

Hopefully, we won't get to this point. Good points about wanting to be close to family. When my mother got to the point of not being able to keep her own house, she moved to Rapid City to be close to us. Luckly , there's a really great retirement place here in town called Westhills Village. Importantly, she had the resources to afford a good place (nothing super fancy) to spend her last few years. Actually, it wasn't that costly compared to keeping up a home. After an adjustment period (few months, she was a very independent person), she ended up absolutley loving it. Gave me a very positive perspective of life in a good retirement community.

 

[Trivet]

I've done some steep diving into the subject of establishing domicile in South Dakota as well, and being a Minnesotan myself I can tell you that you'll definitely want to be certain to cut ALL ties with this state to avoid issues with the Department of Revenue moving forward as far as taxing you will go.

Establish provable ties to your new state as far as bank accounts, dental and medical appointments, all of your insurance policies, church/other memberships, vehicle registration, driver's license... absolutely everything possible.

And according to this decision by the Supreme Court of Minnesota, you'd better do everything in the right order if you don't want to continue to be a Minnesotan. Pretty harsh.
caselaw.findlaw.com/mn-supreme-court/1385455.html

 

[CharlesinGA]

There were bills in both houses of the SD legislature about a month ago, that would end the use of SD as a domicile. I am not familiar with the current status of those bills, but you need to be aware that even if it doesn't pass this year, you can be assured it will come up again. Video starts at the point where he begins discussing this.

 

[Gary RV_Wizard]

There were bills in both houses of the SD legislature about a month ago, that would end the use of SD as a domicile.

I think it would be more accurate to say it would restrict it, primarily with regard to voting rights. SD is concerned that "non-residents" are getting the right to vote in state & local elections. There are two different proposed laws to change that, but they are still being debated (and likely amended). Neither would prohibit an RVer from titling/registering vehicles there or using it as their tax home. The main effect would be a loss of the RVers ability to a vote in federal elections. If you aren't concerned about that, none of the proposed changes would matter.

Domicile, residence, and voter registration are all subtly different things. SD is proposing that you must be an actual resident to vote in the state.

 

[Trivet]

There were bills in both houses of the SD legislature about a month ago, that would end the use of SD as a domicile. I am not familiar with the current status of those bills, but you need to be aware that even if it doesn't pass this year, you can be assured it will come up again. Video starts at the point where he begins discussing this.

I don't do youtube but I gather you're talking about SB 124 and HB 1232, both of which concerned the address a person uses to register to vote, with provisions like it may not be a business address or a campground. Both of those bills were dead as of the end of March.

However, another bill did pass and is now law--SB 139. It's not as specific as the other bills when it comes to the type of address (one of them specifically said a campground address may not be used for voter registration unless approved by the county auditor upon appeal), but SB 139 does change the definition of residence for voting purposes from "the place in which a person has fixed his or her habitation" to "the place in in which a person is domiciled as shown by an actual fixed permanent dwelling, establishment, or any other abode."

Interestingly, SB 139 requires people to have maintained residence in South Dakota for at least 30 days prior to submitting the voter registration form. The bill as originally introduced required maintaining residence for at least 30 consecutive days immediately prior to the date the person registers to vote, but that was changed before final adoption.

This law affects only registration to vote. For some, inability to register to vote would be a dealbreaker when choosing where to establish domicile, but it might not matter to some, in which case this law doesn't appear to change the current method of staying one night in South Dakota and getting a driver's license and vehicle registrations there.

 

[Trivet]

One of my work collogues that I trust suggested getting an address in South Dakota. I am happy to do this to save some Income Tax but I'm wary of other potential unknown issues.

Since you mentioned potential unknown issues...I'm not sure if you're aware, but if work is performed in a state that imposes an income tax, the income from that work is subject to that state's income tax, even if the person performing the work isn't a resident of that state. That person would file a nonresident state income tax return in the state where the work was performed.

So if you changed your domicile to South Dakota but performed work in Minnesota, you'd owe Minnesota state income tax as a nonresident. Likewise for work performed in Iowa. And actually, if you remained a Minnesota resident but performed work while in Iowa, you'd owe state income tax in both Iowa and Minnesota

That sounds like double taxation, but typically, the tax paid as a nonresident gets credited against tax paid as a resident if the tax is on the same income, so you're paying tax only once on a given amount of income. (However, if the tax rate is higher in Iowa than Minnesota, you'll be paying more tax on that income than if you'd performed the work in Minnesota.)

The state income tax issues surrounding remote work became more visible when so many people started working remotely during the pandemic. States have time/income thresholds for filing nonresident tax returns and for employer withholding, and in some states, the threshold is so low that something like answering some work emails while on a layover in an airport in that state would cause the worker to have to file a nonresident income tax return in that state and the employer to withhold taxes in that state.

Here's an article about the issue:

taxfoundation.org/remote-work-tax-reform-mobility-modernization/#Thresholds

 

[dave54]

South Dakota is one of only a small number of States that permit you to establish a legal domicile using only a mail forwarding address...

What are the others?