The tax benefits of living and doing business in Wyoming are quite appealing. After opening a business or trust in the state, many families and individuals begin to consider establishing residency to qualify for further tax benefits, but interestingly, there is no step-by-step guide to qualify for residency in Wyoming for these purposes. Instead, you need to prove to your home state that you should no longer be considered its resident.
Because Wyoming does not have a state income tax, it does not have specific guidelines to follow to ensure that you qualify as a Wyoming resident. (However, if you want to buy a fishing license in Wyoming, there are very specific protocols for how a Wyoming resident versus a non-resident can do so.)
When it comes to establishing yourself as a Wyoming resident for tax reasons, you need to create what we call “nexus” in Wyoming, meaning you need to build as many ties to the Cowboy State as you can and eliminate red flags that would suggest you are a resident of another state.
There are a number of financial and personal decisions you can make to build your case for establishing nexus in Wyoming. We recommend the following:
- Move your financial accounts to Wyoming.
- Establish your financial advising team in Wyoming.
- Update your estate planning documents to reflect your Wyoming address.
- Move the situs of your trusts and businesses to Wyoming.
- Make charitable donations in your new state and minimize the donations made in your former state.
- Purchase a home in Wyoming.
- Sign an affidavit of domicile.
- Sell (or downsize) your residence in your former state.
- Spend more time in Wyoming than anywhere else.
- Register to vote (and do it) in Wyoming.
- Register your cars to Wyoming and obtain a Wyoming driver’s license.
- Renew your passport with your Wyoming address.
- Get involved in local events in Wyoming.
- Get a doctor, dentist, attorney and accountant in Wyoming.
- Update your mailing address for your magazines, alumni associations, clubs, insurance, and memberships.
- Move your family records to Wyoming.
The more items you can check off on this list, the more likely you are to convince your former state that you should now be considered a Wyoming resident, and therefore not subject to your home state’s income taxes.
Additionally, we recommend that you meet with your advisors to discuss any items that might unintentionally tie you to your former state. For example, Idaho claims that if you attend a church and support a church in Idaho, you are considered its resident. If you make substantial donations to your home state, that is also a red flag. By reviewing your intentions with your advisors, they can help you identify and eliminate many red flags and help you establish nexus in Wyoming.
If you have any questions about becoming a resident of Wyoming or the financial advantages of the state, please do not hesitate to contact our Jackson or Laramie teams at 307.739.3900, or visit www.myfw.com to find a location near you.