Tuesday, May 25, 2010

Home is Where...?

In the touchy-feely times of yesteryear, "Home is where the heart is." If that were true, I'd probably still be in southeast Ohio, but that is neither here nor there.

Because as far as the government is concerned, "Home is where you have domicile."

For many foreign service families, home is where you lived before you came to Virginia for training. Your children went to school in your home district; you still have many relatives there; and you might still own property there.

We are local hires, so one would probably assume that means Virginia or D.C. would be our home. But not so quick.

As of Aug. 1, assuming Natalie's successful completion of her Spanish test, we will be homeless - save for the home we'll occupy in Hermosillo, the one the government owns.

So it would appear we will be without a home. We're fine with that. Natalie's ancestors were gypsies anyway, I think. Uncle Sam won't care too much, because he'll still get our federal income tax. Oh, but wait, some state will be asking for a handout in the way of state income tax because we don't have any ties to Alaska, Florida, Nevada, South Dakota, Texas, Washington state or Wyoming.

I suppose to be fair, it isn't a complete freebie to our "domicile-hosting" state. After all, we will be able to vote in which ever state we choose. So let's round up the candidates.

This has been our home for the past three years
We have Virginia driver's licenses
Our car is registered here
We've been voting here
The company I'm most likely to do most of my work for is here
In all likelihood, during any D.C. tours, we'll probably come back here, too

That is a pretty strong argument for Virginia, though the first point has no bearing on the future, the next three can be easily switched to any other state in which we can establish residence, and the last two points are speculation.

This is where we have the most familial ties
I was born here

For now, that is about the only thing keeping the Bluegrass State in the running, but that is more concrete than Virginia as we can establish residency here before moving to Mexico and then do the car and voting stuff in Kentucky.

This is where our second most of familial ties are
Natalie was born here
We got married here

Essentially the same key points as with Kentucky.

Washington, D.C.:
Natalie's employer is based here
We lived here for two years
We could live here during a D.C. tour

D.C. is much like Virginia, but just with weaker ties, but that could change in a few years.

The tricky thing about claiming a domicile is the issue of intent to live there. It is tricky for us because we don't have any intent to live anywhere other than where the government sends us. We don't intend to do a D.C. tour for at least four years, to ask us if we intend to live in either Virginia or D.C. (or <gasp> Maryland) now doesn't seem like a fair question.

Because choosing a domicile is essentially choosing which state we want to pay income taxes to, at least for our immediate purposes, it seems worthwhile to do another comparison exercise - comparing tax rates for our likely income bracket.

Washington, D.C.: 8%
Kentucky: 6%
Virginia: 5.75%
Ohio: 4.695% or 5.451% (the split occurs in our approximate income range)

So long to "My Old Kentucky Home" and I never liked living in D.C. anyway. Now we just need to decide if all that paperwork and legwork is worth "switching" our domicile from Virginia to Ohio, especially if we end up in the higher tax bracket.

Too bad we just can't build a little hut on the Texas-Mexico border and call that home. Who cares if our heart won't be in the hut, because "Home is where you pay your income taxes (if applicable)" anyway.


  1. This is my daughters' biggest question... and to date, I still have no concrete answer. I used to say, "it's where we all live"... though that won't exactly be the case in about 8 weeks!

  2. Home is in Missouri - because that's where I don't have to pay income taxes (and I have my bar license and I lived there for 7 of 8 years before moving to Virginia, but mostly its about the income taxes).

  3. One dilemma I've run into, which seems like it may be applicable to you... My driver's license is from NY (where I've lived and worked for the past 5 years), but I don't own property in NY, so when it comes time to renew what address would I use? Could I even keep my NY license without a valid address? That could be problematic, as it's a big part of my traceable ties to the state. What address would you guys use for VA, assuming you don't have family here?