Moving to Wyoming: what Wyoming asks, and what the state you left will check

Wyoming has no resident return, no part-year return and no nonresident return, because it has no income tax. A person who moves here files one last state return: the part-year return of the state left behind, covering income through the move date and any income from that state afterward. From then on the federal return is the only return. Whether the move is accepted, though, is not Wyoming’s decision. The former state has a definition of resident, a list of factors and auditors who apply them to people who file a final resident return and disappear, and a person becomes a Wyoming resident for income tax by ceasing to be a resident of somewhere else under that state’s rules. Wyoming’s own residency rules exist, but they are about plates, licenses and property tax, and they run on different clocks.

The move usually works in the retiree’s or remote worker’s favor, because Wyoming is a place people actually live rather than a place they claim. A person who sells the Denver house, buys in Cheyenne and takes a Wyoming job has nothing to prove. The cases that go badly are the ones where the old house is kept, the family stays, and the calendar says the person was in Wyoming less than half the year.

Two tests in the old state, and both must be passed

Every taxing state uses two tests. The first is domicile: the one place a person treats as a permanent home and intends to return to. Domicile does not change until a new one is established with the intent to abandon the old, and the person claiming to have changed it carries the burden of proof. States weigh the same things: where the main home is and what happened to the old one; where the days are spent; where the spouse and children are; where the business and the job are; where the doctors, the bank accounts, the church, the clubs and the things a person cares about ended up. A driver license and a voter registration are expected and prove little on their own, because anyone can change them in a week. A sold house, a Wyoming job and a calendar that puts the person in Wyoming most of the year prove a great deal.

The second is a statutory test that catches people who keep a home in the old state and spend too many days there, whatever they call their domicile. Most taxing states treat a person as a resident, regardless of domicile, if the person keeps a permanent home in the state and spends more than half the year there; the common line is 183 days, and any part of a day counts (verify the former state’s rule). A person who keeps the old house and splits the year is the one that test was written for. Stay well under the count, document the days, and do not rely on the count alone: 180 days in the old house is poor evidence of having left it.

Each state publishes its own factors and its own return for the move year; the Wyoming side of this publication cannot cover all of them. Read the former state’s own article in this set, or its department’s residency publication, before the move if possible, and keep the records from the first week.

What Wyoming actually requires, and when

Wyoming’s residency rules are not about income tax, and they do not wait.

The vehicle rule is the one newcomers trip on. “Immediately” means the week the job starts or the lease is signed, and a car bought in the last few months before the move owes Wyoming the difference between the tax paid elsewhere and 4% plus the county rate, with the receipt as proof (verify).

None of these is evidence Wyoming needs for income tax, because Wyoming has none. All of them are evidence the former state will look at. A Wyoming license dated the month of the move, Wyoming plates, a Wyoming voter registration that was actually used in November, and an owner-occupied affidavit swearing to eight months in the Wyoming house are the paper trail of a real move. The affidavit matters twice: it is a sworn statement to a Wyoming county that this is the primary residence, and most states that grant a residential property tax break require the same thing, so a person cannot sensibly swear to eight months in Cheyenne and keep a homestead-type exemption on the old house. Assessors in different states do compare notes.

The one-way trap: Wyoming gives no credit

A Wyoming resident never files a Wyoming return, but can still owe another state, and there is nothing to offset it with. A taxing state taxes nonresidents on income earned inside its borders, and in a state with an income tax the home state gives a credit for that tax so the income is not taxed twice. Wyoming gives no credit because Wyoming charges nothing. The result is that a Wyoming resident with out-of-state income pays the other state in full and files its nonresident return every year.

The common cases:

• Working across the line. A Cheyenne resident who drives to a job in Fort Collins owes Colorado nonresident income tax on those wages and files a Colorado nonresident return each year. The employer should withhold for Colorado. The same is true of a Wyoming resident working in person in Montana, Idaho, Utah or Nebraska. South Dakota, like Wyoming, has no income tax, so a job in Rapid City owes nothing.
• Remote work for an employer in a convenience-rule state. A handful of states, New York among them, tax a nonresident’s wages for days worked at home if the home office is for the employee’s convenience rather than the employer’s requirement. A Jackson resident working from home for a Manhattan employer may owe New York on all of it (verify the employer’s state).
• Property, business and gambling elsewhere. Rent from a house kept in the old state, a business still operating there, the gain on old-state property sold after the move, and winnings at a casino across the line are all taxed by that state as nonresident income.

What the former state cannot do is follow a pension. Federal law, 4 U.S.C. §114, bars any state from taxing the retirement income of a person who is no longer its resident, however the pension was earned; the protection covers pensions, IRA and 401(k) withdrawals, government and military retired pay, and most deferred compensation paid over ten years or more. Residency for that purpose is decided under the former state’s own law, which is the whole reason the domicile evidence matters.

The move year on paper

The old state gets a part-year resident return for the year of the move: all income received through the move date, then only old-state-source income after it. The move date should be the same on that return, the Wyoming vehicle registration, the Wyoming license and the owner-occupied affidavit. A move date on the return that is earlier than the plates and the license invites the question of what the person was waiting for.

Custodians and employers change the state of record when the address changes, or when they get around to it, so the state withholding boxes on every W-2, 1099-R and SSA-1099 for the move year should be checked against the move date. Old-state tax withheld after the move is recovered on the part-year return. From the move date on, a new Form W-4 with the employer and new Forms W-4P and W-4R with each custodian should show no state withholding, because there is no state to withhold for.