Turbo Tax treatment of multiple residences in tax year

[jmenz9]

On March 15, 2019, we sold our home in Massachusetts. We then moved to a condo in Florida. On July 29, 2019, we purchased a new home in New Hampshire. NH is now our permanent residence. Our moved to Florida was temporary until we could close on the NH house. If we update our Turbo Tax personal information, it only asked our current permanent residence which is NH and then asks our previous residence which would be Massachusetts. It doesn't address the gap period between March 15, 2019 to July 29, 2019 when we lived in Florida. How does Turbo Tax handle the state tax return filings?

[TomD8 · Accepted solution]

Your state tax obligations are based on your state of domicile.  Your domicile is your main, permanent home.  Massachusetts' rule on changing domicile is that "each person keeps his or her own present domicile until he or she establishes a new domicile in another place."  https://www.mass.gov/service-details/learn-about-legal-and-residency-status-in-massachusetts

Since your time in Florida was temporary and transitory, you did not establish a new domicile there.

Therefore, you remained residents of MA for tax purposes until the day you began living in your new NH home, which became your new domicile on that day.  All your income prior to that date is taxable by MA.

So for 2019 you'll file a part-year resident MA tax return, and in TT you'll enter your NH move-in date as the date your residency changed.

NH does not have an income tax, but it does tax interest and dividends above certain threshold amounts.  You can read the details here:  https://www.revenue.nh.gov/faq/interest-dividend.htm

[AmyC]

The program will let you add as many state returns as necessary. When you go through Mass, you will confirm your residency status and dates. New Hampshire will take the information you have already entered in the personal section.

FL does not have a state income tax so you won't need to file a FL return, which is for other taxes.

[jmenz9]

Thank you for responding to my question. You wouldn't mind commenting further on the Massachusetts rules on establishing a domicile, I would appreciate it.

The basic rules indicate that a person has a domicile/legal residence when it is a domicile of choice (done by changing residence). It also states a new domicile can only be acquired by abandoning the current domicile; establishing a residence at the new place; AND intending to make the new residence one's home permanently, or an indefinite time, with no certain, present intention to return to the previous home. So, we moved to Florida. We did have to change our address to the Florida address on bank accounts, tax records (1099-S, etc.). We no longer own the Massachusetts property. We essentially abandoned it.

We did intend to move to NH and make it our legal residence.

But for the period after March 15th to July 29, 2019, we would have to consider the Florida address as our legal residence/domicile. We did not have multiple residence where one was used for general living and another for tax purposes. We had only the Florida condo which we own.

I'm inclined to interpret the Massachusetts rules in a way where our income for Massachusetts is only for the period of January 1 through March 15, 2019. So, I remain perplexed on how TT will handle it properly.

Your thinking is important to me so please add any other interpretations/understandings. I would greatly appreciate it.

Thanks.

[TomD8]

Here is Massachusetts' rule on changing one's domicile:

A new domicile may be acquired only by:
-Abandoning the current domicile
-Establishing a residence at a new place, and
-Intending to make the new residence one's home permanently or for an indefinite time, with no certain, present intention to return to the previous home.

https://www.mass.gov/service-details/learn-about-legal-and-residency-status-in-massachusetts

It would seem from your own statements that you never intended to make your Florida residence your permanent home nor to stay there for an indefinite time, as the Massachusetts rules require.  Therefore it appears that you did not establish a new domicile in Florida.  Note that, in tax terminology, "residence" and "domicile" do not necessarily mean the same thing .  You can have several residences, but you can only have one domicile.

[jmenz9]

Yes. I agree. Thanks again for responding and clarifying my incorrect interpretation. I see it now thanks to you.

[TomD8]

You're welcome.  The good news is that you're moving into a state with no income tax or sales tax.