Pub. 17 2018-2019 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 17 new jersey auto retailer W W W . N J C A R . O R G The terms “domicile” and “residence” are often used synony- mously. However, for income tax purposes, the two terms have distinctly different meanings. Residence means living in a particular locality. Domicile means living in that locality, but with the intent to make it your fixed and permanent home. “Fixed and permanent home” means the place to which you intend to return after a period of absence, such as a vacation overseas or a business trip. For state tax purposes, a person may have more than one place of residence, but can have only one domicile. Once established, a person’s domicile continues until he or she moves to a new location with the intent to both establish a perma- nent home there and abandon the old one. Simply moving to a new location, even for a long period of time, will not change a person’s domicile if the State determines that there is an intent to return. The tricky part is that there is no single indicator of “intent” when it comes to determining domicile. Some of the key factors that New Jersey considers in its analysis of domicile are the comparative size and value of homes, active business involvement, family ties, location of sentimental items, where you register to vote, where your vehicles are registered, and where you maintain your driver's license. The key is creating a fact pattern that supports the assertion that you’ve left your old permanent home in New Jersey and established a new one at your current location. Even if you’ve already moved your prized ’67 Firebird to Texas, sent the kids off to college in New Zealand, started work at a tech startup in Zanzibar, and burned your driver’s license, New Jer- sey may still consider you a resident for income tax purposes. If a taxpayer maintains a permanent place of abode in New Jersey and spends more than 183 days here during the calendar year, he or she is considered a statutory resident, regardless of domicile. When considering statutory residency, presence withinNew Jersey for any part of a day will generally constitute a day spent in the State. Therefore, maintaining detailed documentation of your whereabouts can be critical. Records such as travel receipts, E-Z Pass statements, credit card charges, and cell phone records can all be used to establish where you’ve been on a given day. As you can see, changing your residency for state tax purposes is not a simple process. It requires a real life-change. With careful planning, however, it is possible for a non-resident of New Jersey to maintain a home and presence in the State, while alleviating his or her tax burden on income earned elsewhere. Eugene Ruvere, CPA, is a partner at Citrin Cooperman and can be reached at 914.949.2990 or eruvere@citrincooperman.com . Azriel Septimus, CPA, is a State and Local Tax expert in the firm’s Flushing, New York office. We have the road map. Arent Fox’s Automotive Group drives innovative strategies forward. Our cutting-edge, national practice advises automotive leaders as the industry faces a dizzying array of competitive and regulatory hurdles. Smart In Your World arentfox.com Contact us today for your FREE, no-obligation quote! 855.466.2842 | NJCAR@spragueenergy.com Our Energy Makes the Difference TM www.spragueenergy.com NJ CAR Preferred Energy Partner Power Solutions for NJ CAR Members • Customized power contracts to fit your business’ needs • Budget certainty and pricing flexibility • Dedicated account manager with local knowledge and expertise