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Dave CPA
Dave CPA, Accountant
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I lived in Alaska for 33 years. I did sell my house there in

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I lived in Alaska for 33 years. I did sell my house there in 2009. However I have not changed banks and still maintain an AK drivers license. I have accepted a job in Washington DC (federal job) in order to build my high three salary for retirement purposes. When I retire in the next 2-3 years I expect to move back to Alaska to live.
CAN I STILL CLAIM ALASKA RESIDENCY FOR STATE TAX PURPOSES? IF NOT WHY? IF SO, ARE THERE REQUIREMENTS I MUST DO TO MAINTAIN LEGAL RESIDENCY STATUS FOR TAX PURPOSES?
Submitted: 1 year ago.
Category: Tax
Expert:  Dave CPA replied 1 year ago.

Hello,

 

Welcome to Just Answer,

 

You are not a resident of Alaska per the definition below. While you can maintain a residency while absent per section (c), you have become inconsistent to section (a) when you sold your home and have no ties to the state.

 

Sec. 01.10.055. Residency.

 

(a) A person establishes residency in the state by being physically present in the state with the intent to remain in the state indefinitely and to make a home in the state.

 

(b) A person demonstrates the intent required under (a) of this section

(1) by maintaining a principal place of abode in the state for at least 30 days or for a longer period if a longer period is required by law or regulation; and

(2) by providing other proof of intent as may be required by law or regulation, which may include proof that the person is not claiming residency outside the state or obtaining benefits under a claim of residency outside the state.

 

(c) A person who establishes residency in the state remains a resident during an absence from the state unless during the absence the person establishes or claims residency in another state, territory, or country, or performs other acts or is absent under circumstances that are inconsistent with the intent required under (a) of this section to remain a resident of this state.

 

Below is a link to the state statute on this topic.

 

http://www.legis.state.ak.us/basis/statutes.asp?year=2011&title=1#01.10.055

Expert:  R. Klein, EA replied 1 year ago.

Hi. Another expert here. (Please give Dave credit for his research)

 

I am agreeing with Dave, and I will give another reason as well, that basically makes the point of what you are trying to do by establishing AK as your resident state moot.

 

Even on the assumption that you are an AK resident for the entire 3 years you work in DC, DC has the right to tax you as a NON-RESIDENT. If you were to file a DC Non-resident tax return based on your DC source income, you would pay the same or more tax to DC as if you were an Alaska resident.

 

As you know, Alaska has no state income tax on residents, so there is no change there. Your attempt to avoid DC tax, however, is not possible, whether you are an AK resident for tax purposes, or a DC resident (or part-year resident). As long as you work in DC, UNLESS YOU ARE IN THE MILITARY, income is taxable to the District.

 

If you are in the military, different rules apply altogether.

 

 

 

Customer: replied 1 year ago.
I do appreciate your analysis and response. I work for the Army Corps of Engineers- Civilian so I am not active military. However, I do deploy to Afghanistan (once for 12 months May 2010 to June 2011 and 7 months September 2011to April 2012. I guess I am curious if I can use this time to avoid or mitigate back tax scenario?
Expert:  Dave CPA replied 1 year ago.

I'm not aware of any exclusion for pay regarding non military personal working in a combat zone, but you can exclude a portion of your foreign earned income:

 

If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income.

 

You also can choose to exclude from your income a foreign housing amount. This is explained later under Foreign Housing Exclusion. If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion.

 

If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. This includes any expenses, losses, and other normally deductible items allocable to the excluded income.

 

Limit on Excludable Amount

 

You may be able to exclude up to $92,900 of your foreign earned income in 2011.

You cannot exclude more than the smaller of:

  • $92,900, or

  • Your foreign earned income for the tax year minus your foreign housing exclusion.

I have enclosed more information on this in the link below. It looks like based on your 12 month engagement, you might be able to exclude a portion of that income.

 

http://www.irs.gov/pub/irs-pdf/p54.pdf

 

If I answered your original question to your satisfaction, please rate me accordingly.

 

Dave CPA, Accountant
Category: Tax
Satisfied Customers: 840
Experience: Vast knowledge within the accounting/tax industry
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