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Minnesota Residency: Hot Topic for the DOR

According to experts, the Minnesota Department of Revenue is cracking down on taxpayers with possible Minnesota residency status.  Claiming Minnesota residency or the opposite can make a big difference according to your tax situation.  Minnesota is in the top five states for the largest top tax rate, and is one of the states with the largest estate tax rate.  It is not surprising then that many taxpayers who live in or spend time in multiple states might want to claim another state for their residency.

Here are some things to consider if you are trying to avoid residency status in Minnesota:

Intent – Individuals are domiciled (treat as a permanent home) in Minnesota if it is their intent that Minnesota be their permanent home.  Even if they are temporarily absent from Minnesota they can claim Minnesota as their residency if they intend to return.

183-day Rule – An individual can be considered a Minnesota resident if they spent at least 183 days in Minnesota.

An individual can also be considered a Minnesota resident if they own or rent an abode in Minnesota. Property is considered an abode when it is winterized, such as a typical residential home.  A summer cabin without heat or with only seasonal accommodations will not be considered an abode.

An individual can be considered a Minnesota resident even if they did not spend 183 days in Minnesota, as long as they did not spend 183 days in any one other place.  This would be the case if the taxpayer traveled for a majority of the year.  They did not spend 183 days in Minnesota but they did not intend to make any of the places they were traveling their permanent domicile.

Other Factors – The DOR will consider a variety of factors to determine if a taxpayer is a resident of Minnesota. Some of these include:

  1. The location of the taxpayer’s property
  2. Jurisdiction for drivers license
  3. Jurisdiction for professional licenses
  4. Voting Registration
  5. Employment location
  6. Location of clubs or social organizations
  7. Location of religious involvement
  8. Mailing address
  9. Etc.

If you are considering a change in your domicile but still intend to spend time and produce income in Minnesota, it is recommended that you keep meticulous records.  Make sure you are consistent with your address and any residency questions.  Keep logs of how much time you spent in and out of Minnesota and be very clear about your domicile intentions.

For any questions about your specific tax situation, please consult your tax advisor.

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