Ashley Quinn reveals all of the benefits of Nevada taxes and residency.
Ask anyone in Reno-Tahoe about the advantages of living here and ‘outdoor adventure’ will surely top the list of responses. After all, the Sierra Nevada offers world-class outdoor recreation and year round eye candy. But there’s an equally impressive benefit that many locals have come to take for granted: Nevada’s tax-friendly atmosphere.
Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno, Nevada, has kindly taken a closer look at the tax benefits that residents of the Silver State enjoy every day—and appreciate at least every April 15. What follows is the firm’s expert answers to frequently asked questions.
Frequently Asked Tax Questions
Ashley Quinn, CPAs and Consultants, Ltd.
What may be the income tax advantages of establishing and maintaining residency in the state of Nevada?
Nevada is one of only a handful of states which do not impose an income tax upon individuals or businesses. Nevada residents may generally avoid state income taxes on many types of income which are not sourced to other states. Nevada also has no inheritance or estate taxes.
Who can most benefit from establishing Nevada residency?
Individuals who expect to earn significant income from intangible assets. This includes interest income and dividends, gains on the sale of publically-held and closely-held securities, and income from retirement benefits, including IRAs.
What are the requirements for Nevada Residency?
Generally the legal residence of a person is in Nevada if the person has been physically present within the State during the period for which residency is claimed. Legal residence starts on the day that such actual physical presence begins. The more important question, however, is how does a person become a nonresident of his former state?
How can I change my residency from California to Nevada?
The simple answer is you need to move here. You will have to abandon your domicile in California and establish domicile in Nevada. If you maintain multiple residences, you have to make Nevada your principal place of residence, your primary home.
Do I have to move to Nevada permanently?
In order to considered a nonresident of your former state you must generally establish that your intent to leave your former state was for other than a temporary or transitory purpose. If your absence is temporary you will generally continue to be considered a resident of your former state.
How will a Nevada resident be taxed if all his income continues to be earned in another state?
- It depends on the type of income.
- Income from intangible assets is generally taxable in the state of residence of the owner.
- Income from tangible assets is generally taxable by the state where the tangible asset is located.
- Income from personal services as an employee is taxable where the employee renders the services.
- Retirement income is generally taxable by the state where the recipient resides when the income is received.
- Business income must generally be apportioned to the states where the business is conducted.
Can I become a Nevada resident (and a nonresident of my former state) while maintaining a secondary residence in another state?
Yes. But the determination will depend on an analysis of all the facts and circumstances. A taxpayer’s state of residence is generally the state with which he maintains his closest connections. Various factors are considered in determining whether a taxpayer has close ties with a particular state, including:
- Where you are physically present
- Where you have sources of income
- Where you register to vote
- Where you own a house
- Where you claim the homeowner’s exemption
- Where your driver’s license is issued
- Where your closest business contacts are, i.e., attorneys, accountants, banks, etc.
- Where your closest social contacts are, including religious, community and social affiliations (clubs)
- Where your vehicles are registered
- Where your minor children attend school, and whether you paid resident or non-resident tuition
- Which state has jurisdiction in the administration of your wills and trusts
- Where you obtained a homestead exemption
- Where you maintain a safety deposit box
- Where you filed an affidavit of domicile
- Where you own a cemetery plot