HOW DO I STOP BEING A MICHIGAN RESIDENT FOR TAX PURPOSES?

By Rick Miller, CPA MBA

MIDLAND, Mich – Moving between states is one of the basic freedoms we have as Americans but state
individual tax rules can make it a little more challenging. Here is a brief summary of the
steps you need to do to prove to Michigan that you’re no longer a resident for individual
income tax purposes.

What You Need to Know
A person who used to live in Michigan needs to know how to officially end their
residency with the Michigan Department of Treasury. You must understand the legal
rules for changing your “domicile” (your main home), what to do with your taxes, and
how to prove that you no longer live in Michigan.

The Rules

What is Domicile and How Do You Change It?
In Michigan, your “domicile” is your main, permanent home that you always plan to
return to. To stop being a Michigan resident, you have to do three things at the same
time:

1. Decide to leave your Michigan home for good.
2. Decide to make a new state your permanent home.
3. Actually move to and live in that new state.
   The Department of Treasury will look at many things to decide if your domicile has
   changed, such as:
   ● Where you keep your most important belongings.
   ● Where your family lives.
   ● Where you vote.
   ● Where you have memberships (like clubs or gyms).
   ● Where your car is registered.
   ● Where you do your banking.
   ● Where you run your business.
   No one single thing is the most important. The state looks at all of them together.

What to Do with Your Job’s Withholding
If your job takes out taxes from your paycheck, you must tell your employer that you no
longer live in Michigan within 10 days of moving. This will make sure that they stop
taking out Michigan taxes. This change will only affect future paychecks, not any that
came before you told them.

Proving You No Longer Live in Michigan
The state of Michigan assumes you are still a resident unless you can show them proof
that you are not. You have to give the Department of Treasury detailed information to
prove you have moved. If you don’t pay taxes in the state where you now claim to live,
the state of Michigan might not believe you have moved.

File a final Michigan Form MI-1040
When you are a resident of Michigan, you are required to pay income tax on all income
you earn, regardless of where it was earned. A “part-year resident” is someone who
moved their permanent home into or out of Michigan during the tax year. For the time
you were a resident, you must pay Michigan income tax on the income you earned,
received, or accumulated while living there. Filing a final return ensures you have
properly reported and paid tax on that income.

The state presumes that a taxpayer is a Michigan resident unless they can prove
otherwise. Filing a part-year return is a formal way of notifying the state of your change
in residency status for tax purposes. This helps to prevent the Department of Treasury
from mistakenly believing you are still a resident and sending you notices about unpaid
taxes on income earned after you moved.

What This Means for You
To officially end your Michigan residency for tax reasons, you must:

1. Meet the legal rules for changing your domicile. This means you must show that
   you planned to leave Michigan, planned to live in a new state, and actually moved
   there. You should provide proof like voter registration, car registration, and
   banking information from your new state.
2. Tell your employer. If your job takes out taxes from your paychecks, you must tell
   them you are no longer a Michigan resident within 10 days of moving. This will
   change your future tax withholding.
3. Give the state proof. You must give the Department of Treasury detailed proof
   that you no longer live in Michigan. This includes showing that you have moved
4. your life to another state. If you are not paying taxes in your new state, it will be
5. harder to prove you have moved.
6. File a final tax return. Your final partial-year resident tax return is your final
   declaration showing that you have left the state and have appropriately resolved
   your Michigan residency status.
   
   By following these steps, you can make sure that the state of Michigan officially
   recognizes you as a nonresident for tax reasons.

This information is provided for information purposes only. Please consult with a licensed practitioner before acting on any advice you read in a web post or other media.