How a Remote Consultant Untangled a Two-State Residency Problem
Sam's List Editorial | 2026-07-28
How a Remote Consultant Untangled a Two-State Residency Problem This is an illustrative scenario, representative of the kind of multi-state residency work described below. Details are anonymized and figures are for illustration; state rules vary considerably and results are not reliable. The move felt clean. New apartment in August, new clients unaffected, same laptop, same work. Sixteen months later a letter arrived from the old state asserting that the consultant had never stopped being a resident and owed tax on the entire year. Two state residency taxes are the most common expensive surprise in remote solo work, and the reason is that leaving a state is a legal act with an evidentiary burden, not a logistical one. This representative case study follows an independent consultant billing roughly 240,000 dollars a year who learned that distinction the hard way. The Problem The consultant moved in August from a high-tax state to a lower-tax one. Everything about the move looked like a real move. New lease, boxes, a change of address with the post office, a new gym. Everything about the paper trail looked like a person who had not moved. The old apartment was kept for another eight months because the lease had time left and a sublet seemed like a hassle. The driver's license was never changed. Voter registration stayed put. The primary bank account, the accountant, the dentist, and the doctor were all still in the old state. And there were roughly a dozen trips back over the following year, some for clients, most for family. Then the filing decision. The consultant filed a single full-year resident return in the new state and nothing at all in the old one, on the theory that residency followed the lease. The notice from the old state was not arbitrary. From the state's point of view, someone who kept a residence, a license, a registration, a bank, and a doctor there, and who was physically present frequently, looked exactly like a resident who happened to travel. The Diagnosis Two separate tests were in play, and conflating them was the original error. Domicile is where your permanent home is, and it is a facts-and-circumstances determination. It changes only when you both leave a place and demonstrate an intent to make somewhere else your permanent home. States weigh a familiar set of factors: where you keep your home, where your family is, where you are licensed and registered to vote, where your professional and medical relationships are, where your significant belongings are, and where you spend your time. No single factor decides it, which is...
