Resident of South Carolina, but work in Pennsylvania

[vanbro]

I am applying to become a resident of South Carolina now, but not moving there until next year. I want to still work at my job in PA until I physically move to South Carolina. How does this work? What do I tell my job? What do I do differently with taxes?

[rjs]

I don't know how you "apply" to become a resident of a state. Whether you are a resident is determined by the facts of your situation. It's not something you can apply for. Generally you become a resident of a state when you move there, but the rules can get complicated when the situation is not clear cut.

Different states have different definitions of a resident for income tax purposes, which may be different from the definitions for other purposes. Because the states have different definitions, it is possible to be considered a resident of more than one state at the same time.

How you handle your taxes will depend on exactly when you become a North Carolina resident for income tax purposes, when you stop being a Pennsylvania resident for income tax purposes, and when you stop working in Pennsylvania. Those could be two or three different dates.

For a summary of Pennsylvania's definition of a resident for income tax purposes, see "Residency Status" on pages 2 - 6 of the Brief Overview and Filing Requirements in the Pennsylvania Personal Income Tax Guide. You will see the terms "domicile" and "residence." You can have only one domicile at a time, but you can be a resident of more than one state. Note that Pennsylvania considers you a resident if your domicile is in Pennsylvania OR if you are a "statutory resident." You are a statutory resident if you have a home in Pennsylvania and spend more than 183 days of the year in the state. So in the year that you move to South Carolina, you could still be a Pennsylvania resident for income tax purposes.

Unlike most states, South Carolina does not make a clear distinction between domicile and residence. Here is a link to a guide from the South Carolina Department of Revenue that discusses how to determine whether South Carolina is your domicile or residence for income tax purposes.

[Opus 17 · Accepted solution]

In general, you owe state income taxes to the state where your permanent address is located on all your world-wide income.  If you work or live temporarily in another state, you also owe tax as a non-resident to that state, but only on income earned while living or working in the other state.  Your home state will give you a credit for taxes you pay to the non-resident state.

Residency, or domicile, is determined by a combination of all facts and circumstances.  Such as, where you live most of the time, where you own or lease a residence, where your significant family and social relationships are located, where you are registered to vote or drive, where your professional relationships are like doctor, dentist and attorney, and where you intend to return after any temporary absences.  There is no specific length of time--you could change your domicile frequently, if that is your intent, or you could maintain a domicile in one state while working for months or years in another state.  Here is what PA says on the matter of domicile. 

https://www.revenue.pa.gov/TaxTypes/PIT/Pages/Determining-Residency.aspx

Most importantly for your situation, you can't establish a new domicile without taking active steps to abandon your prior domicile.  That means things like canceling a lease, selling a home, or moving all your stuff, getting a new doctor, new car registration, and so on.

It sounds like your domicile is currently in PA and your job is in PA, so you are a PA resident.  You don't need to do anything if you are planning to move.

When you move, assuming it is a change of domicile, you would cease to be a PA resident and become a SC resident.  If you then also work in SC, there is nothing special about your situation except that you file as a part-year resident of both states in the year you move (you pay tax to PA for income earned while living in PA, and pay tax to SC for income earned while living in SC.)

Only if you continue to work inside PA (as a long distance commuter of some kind) after you move, or if you start working in SC before you move, then you would owe tax in two states.  But nothing needs to change unless you start working in a state that is different from your domicile.