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Legal Logistics: Domicile – How to give money to a state you might never visit

Kelly Reid • December 4, 2014

To grossly over-simplify the issue, establishing domicile as a full-time traveler is the act of simulating a home base.  This is accomplished by selecting a state with nomad-friendly laws  and using a forwarding service  to handle your mail.  You register to vote, get a Driver’s License (DL), tag title and register your vehicles, pay any income taxes, establish a permanent mailing address, register for insurance, and do basically everything else you’d do in your normal home state.  For a more detailed breakdown, use the resources at the end of this post.

Here are the absolute basics.  We’re not trying to optimize for a few hundred dollars at this point; we just want the easiest choice with the best options, even if it means paying a premium. In my research, there are 2 options that stand above the rest.  Neither of these have a state income tax (unlike IL’s  5% or MI’s 4.25% rake ).

Florida – No special DL requirements.  Must show up in-person to get license.    Laws favorable to travelers because of snowbirds.  No specific inspections needed.

Texas – Over 26k LBS requires a special license that takes a bit longer to get*.    Unsure if you need to show up in-person.  Vehicle must pass inspection each time it is in-state, which is relevant if you travel through Texas frequently.

South Dakota used to be a great option, but recent changes to the “affordable” care act have rendered it…unaffordable.  There are no nationwide plans in SD anymore, so unless you’re over 60 (we’re 30…) this isn’t an option.

There are other states as well, but I have no details on them beyond how they handle income tax.  No idea if they’re nomad-friendly or not.

 

Red means no state income tax. Yellow taxes only dividends and interest.

Using a close friend or family member’s home address is an option.  My parents are in New York and Anna’s are in Michigan, so those are options.  Unfortunately, my parents live in only one of the 2 municipalities in NY that charge a county income tax, so that leaves only Michigan.   We don’t want to burden them with the job of forwarding or scanning our mail, so we’d need to figure out some sort of arrangement that lets us receive non-critical mail at a forwarding service.

It might be easiest to domicile in MI for at least our first year, as we’ll be striking out from Ann Arbor and most likely making the vehicle purchase in the Ann Arbor-Detroit area.  Paying 4.25% on every penny we make is an insane cut for what amounts to nothing, but as I said, I am willing to pay a premium to make a smooth transition.  4.25% is a damn high premium, but it’s not forever.

Ultimately, the choices come down to FL TX and MI.  

MI and FL permit the use of a normal driver’s license, while TX requires a bit more.  MI has a 4.25% tax, FL and TX have 0.

MI requires a little help from family, TX and FL are fully self-sufficient setups.

FL has in-person requirements for getting licenses, which might be a dealbreaker.  TX has annoying inspection reqs and has a more complicated process for the DL.  MI may have in-person requirements but this is not a problem.

It’s not time to make this decision yet, but I still believe that the right choice is the one that gets us on the road with a minimum of fuss.  We shall see.

Obviously I am not a lawyer or any form of expert in this field.  If you notice an error or an out-of-date citation, please leave a comment and correct me.  It would be much appreciated.


Resources & Citations

WheelingIT – ACA in SD changes.  What to do if you’re < 60 and establishing / re-establishing domicile.

GWTW – Questions about Residency, etc.  They’re in TX.

Technomadia – Domicile in FL

Technomadia – A more detailed breakdown of the factors in choosing a state

Wikipedia – Map of State Income Taxes and lack thereof

ChanginGears.com – State DL Reqs for Large Vehicles


*Regarding TX Licensing:  For vehicles over 26,000 lbs GVWR, you need what’s called a “class b” license. This is based on the federal government’s classification of large vehicles.  It is not to be confused with the Class B motorhome; the two are unrelated and, in a stunning twist of legislative irony, a Class B motor home is not a class b “vehicle” by federal guidelines.

(but a Class A Motorhome IS!)

domicileinsurancelegal

Kelly Reid • December 4, 2014


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Comments

  1. Cait Morton April 26, 2015 - 7:22 pm Reply

    Hello fellow Michiganders! You beat us out of the gate by a few months, but we’re hot on your heels moving to full-time life on the road! We are located in Midland, MI area (about 1.5 hours north of AA) and came to the same decision – MI for now. My family is all here, and most of my husband’s. 🙂 Hope to see you on the road!

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