Posted by Matiah Fischer on Friday, February 11, 2022 at 9:45 AM By Matiah Fischer / February 11, 2022 Comment
The state of Nevada is one of our country’s tax favorable places to live, mainly because it has no state income tax, gift tax, and estate tax on residents. In addition, Nevada has growing job markets, affordable cost of living compared to other states like California, unending entertainment for its residents, and beautiful scenery with mountainous regions, vast semiarid grasslands, and sandy alkali deserts.
However, before establishing residency in Nevada, there are various requirements to meet, which are based on the purpose of claiming the in-state residence. Therefore, it is essential to know all the important things needed for establishing residency in Nevada.
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Domicile Vs Residency
When establishing your residency in Nevada, the first thing to consider is the difference between your domicile state and residency state. Though these terms are similar, their meanings are quite different from a tax perspective.
What is Domicile?
Domicile means the permanent, predominant living place of an individual and generally, it is determined by your primary residence, the state in driver’s license, registered state for voting, the state of employment, and where your family and friends live.
What is Residence?
In contrast, an individual is considered a resident of a particular state if he/she has a permanent place of abode in that state and spends more than 183 days during the year. This is called the “statutory residency test” and many states follow this rule to decide whether non-domicile residents must be taxed on their income.
However, some states like California do not mind this rule and they just impose income taxes on residents who are physically present in the state for any purpose except temporary or transitory purposes. So, you must be careful when establishing residency in Nevada moving from California or another state that is not your domicile state.
In the case of Nevada, you can establish your residency without having to pay double taxes on your income as Nevada does not impose income tax on its residents.
Who Can be Considered as Residents in Nevada?
According to Nevada’s Revised Statutes: 482.103 and 483.141, residents in Nevada are defined as a person, but not limited to, who is
- Residing legally in the State of Nevada
- Operating an intrastate business on a motorbike or vehicle
- Residing physically while being employed or engaging in trade
- Claiming to be a resident to obtain privileges, which are not usually granted to nonresidents of Nevada. If the person is a tourist, an out-of-state student, a border state employee, or a seasonal resident, he/she is not considered as a resident in the state of Nevada.
How Can I Become a Resident of Nevada?
In general, becoming a Nevada resident is not that difficult. You just have to follow these three steps.
1. Establishing a Residential Address
To change your residency to Nevada, first, you have to obtain a residential address to showcase your physical location. For this, you may consider looking at some of the best places to live in Nevada. However, it cannot be an address used for your commercial purposes or receiving mail, because they cannot be considered permanent addresses.
The zip code of your residency should be used for voting purposes, your driver’s license, vehicle registration, smog inspections, checking whether taxes are being paid, and insurance rates that ought to be paid.
The DMV Residency & Proof of Identity page says that mainly two documents are required to prove your Nevada’s residential address: a record from a hotel, motel, recreational vehicle park, or campground located in Nevada indicating no fewer than 30 days of consecutive residency and DMV 005 - Certification of Nevada Residency form. Both these documents must be original and show your name and residential address in Nevada. Once you found a suitable place to live, you must live in the place for at least 30 days.
2.Obtain Your Nevada Driver’s License
After settling at your new place, you must apply for your driver’s license. As mentioned above, to obtain your driver’s license, first you will need two documents that prove your current residential address.
You will also need to present your old driver's license or ID card; your valid, unexpired passport, original birth certificate, or any out-of-state real ID as a proof of ID; proof of social security number, which can be either an original Social Security Card or a paystub; proofs of all name changes; a completed Application for Driving Privileges or ID Card; and some form of payment that can be cash, check or credit card.
3. Register Your Vehicle in Nevada
When registering your vehicle in Nevada, you must first obtain vehicle insurance from a Nevada-licensed carrier as out-of-state insurance is not accepted. But Nevada’s licensed carrier will need proof of continuous coverage from your current insurance company.
You must obtain a Vehicle Identification Number (VIN) Inspection for the vehicle you wish to register in Nevada. It is not mandatory to possess the title to your vehicle to register it in Nevada, but you will need the current registration for that.
To register your vehicle, you will need:
- Proof of Nevada’s Insurance Card or policy information
- Smog certificate obtained from Nevada
- Current registration and license plates
- Registered owner’s residential and mailing addresses
- Vehicle Identification Number (VIN) Inspection Certificate
- Some form of payment with cash, check, or credit card
Once you finished all these three steps correctly, you will officially become a resident of Nevada!
Nevada Residency
You may already have realized that establishing residency in Nevada is not that difficult. But there can be a few instances, where changing your residency to Nevada could get complicated.
For example, if you have multi-state income streams, properties in multiple states, or you are moving here for tax purposes, you should consult a CPA or a financial advisor to obtain professional advice regarding your relocation. Because the state where you live now might not want to let go of you so easily.
Moreover, it is important to know the state of residency of an individual, because if residency is triggered in multiple states at once, total income may be subjected to double taxation. Therefore, you may need to seek legal and tax advice before changing your residency to Nevada.
What to Look Out For When Becoming a Nevada Resident
Usually, when changing your residency, it is of good sense to think about the source and the type of your income. For instance, if you are receiving income from supplementary means, such as bonuses, options, and restricted stock units, you have to be extra cautious when establishing a new residency. Since these types of incomes are based on prior years of service, you may be caught to income taxes from your old domicile state.
Therefore, it is critical to seek any professional advice and proper planning, before changing your residency or potentially having dual-residency.
*Disclaimer: This material is provided for information purposes only and is not to be construed as investment or tax advice. Readers are strongly advised to consult with their professional advisors regarding the information herein.
