Texas Residency Requirements for Tax Purposes What You Need to Know

Last Updated: July 12, 2022 8 min read
Author: Zach L.

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Establishing residency in the state of Texas can be achieved in many ways. This is beneficial as Texas currently has no income tax.

Texas Residency Requirements for Tax Purposes What You Need to Know

Do you live in Texas? If so, are you aware of the residency requirements for tax purposes? In this blog post, we will discuss the basics of Texas residency and how it affects your taxes. Whether you are a new resident or have been living in Texas for years, it is important to understand the rules and regulations regarding state taxes. Let's get started!

What Is Residency?

Before we dive into the requirements for Texas residency, let's first define what residency means. This will help to provide some context for the rest of the blog post.

In short, residency is your primary place of residence. This is typically the state where you own or rent a home, have a driver's license, and are registered to vote. If you have multiple residences, your primary residence is the one that you spend the most time in.

It is important to note that your residency status can affect more than just your taxes. For example, if you are considered a resident of Texas, you will be required to obtain a Texas driver's license.

What Does Residency Have To Do With Taxes?

What Does Residency Have To Do With Taxes?

Your residency status affects your taxes because it determines which state's tax laws you will be subject to. For example, if you are considered a resident of Texas, you will be required to pay 0% of taxes on your income to the state, which is pretty cool. However, federal income taxes will stay the same regardless of your residence status in Texas.

Establishing residency can also be beneficial when applying to a public college or university. Most colleges have in-state and out-of-state tuition that greatly differ. If you are able to establish residency in the state where you are attending college, your resident tuition rate will be significantly lower. If you have just moved to the state, your student’s residency status will change after you have spent an entire academic calendar year at the school you are attending. International students will struggle with paying more when it comes to tuition purposes since they have not established a resident status in the state. If you are a foreign student, look into scholarships or financial aid that is available to offset the higher tuition. If the legal guardian of a dependent student is a resident of Texas, the student is also considered a resident.

As you can see your residency can affect your finances in many ways, including taxes and tuition. Let's go over more about residency in Texas and how it affects taxes.

What Are The Texas Residency Requirements For Tax Purposes?

What Are The Texas Residency Requirements For Tax Purposes?

Requirements for residency can come in many forms. Whether it be through contributing to the economy or owning property, there are a few different opportunities to gain residency for tax purposes in the state of Texas. To be considered a resident of Texas, you must meet one of the following criteria:

You must reside in Texas for at least 183 days during the tax year: This is the most common way to become a resident of Texas for tax purposes. If you live in Texas for at least 183 days during the tax year, you will be considered a resident and will be required to pay state taxes.

Your domicile, or permanent home, must be in Texas: This means that your primary residence must be in Texas. You may have a second home in another state, but if your primary residence is in Texas, you will be considered a resident for tax purposes. Your home of record will establish your residency.

You own a business in Texas: If you own a business in Texas, you will be considered a resident for tax purposes. This is because you are considered to have an economic presence in the state. Additional documentation may be needed to verify this information.

You're married to someone who has established a domicile: If you are married to someone who has an establishment of domicile in Texas, you will also be considered a resident for tax purposes. This means that your spouse's primary residence must be in Texas.

You are employed within Texas: By contributing to the Texas economy, you are considered a resident for tax purposes. This includes both full-time and part-time employment and can be found on your earning statements. Student work is not considered employment to establish residency.

You reside in Texas for 12 consecutive months: An easy way to establish permanent residency in Texas is to live in the state for the entire year prior.

You maintain a physical presence in Texas for at least 30 days: If you travel often for work, you may like to know that as long as you have a physical presence in Texas for a least 30 days you will be considered a resident. Detailed information will be required to prove that you were physically present.

You must maintain a residence in Texas and intend to return there when you leave: This is generally used for students who attend school out of state. If you can prove that you have maintained a residence in Texas and intend to return there when you finish your schooling, you will be considered a resident for tax purposes. This temporary absence won't count against you if you consider your old state as your permanent residence.

As you can see, there are several ways to become a resident of Texas for tax purposes. If you meet any of the above criteria, you will be considered a resident of Texas for tax purposes. This means that you will be required to pay any taxes due in Texas.

If you have recently moved to Texas you may consider working on making this new state your new domicile for tax purposes since Texas has no income tax. If you consider this state home for the foreseeable future, follow the list above to establish residency. There are some exceptions to this rule, so it is important to speak with a tax professional if you have questions about your specific situation.

What Are The Tax Implications Of Being A Texas Resident?

As a resident of Texas, you will be required to pay state taxes according to Texas state law. You will also be required to file a state tax return each year. Your state residency however does not have any impact for federal income tax purposes.

If you are a resident of Texas, you may also be required to pay local taxes. This includes city and county taxes, as well as school district taxes. The amount of local taxes you will be required to pay will depend on the location of your residence.

Benefits of Working With Tax Professionals To Establish Residency

Benefits of Working With Tax Professionals To Establish Residency

There are many benefits to working with tax professionals to establish residency in Texas. Tax professionals can help you understand the tax implications of becoming a resident, as well as help you file your state and local taxes. They can also help you determine if you meet the criteria for residency, and guide how to maintain your residency status.

Working with tax professionals can save you time and money in the long run, and it can help you avoid penalties and interest on your taxes. If you have questions about establishing residency in Texas, or if you need help filing your taxes, don't hesitate to contact a tax professional within the lone star state. Texas law is constantly changing, and consulting with a professional is your best bet in avoiding incorrect information on your state taxes.

How To Find A Tax Professional Within Texas

If you need help understanding the tax implications of being a resident of Texas, there are many resources available to you. The first step is to contact a local tax professional. They will be able to answer any questions you have about your specific situation.

There are also many online resources available, such as the Texas Comptroller's website. This website provides information on all aspects of state taxes, including residency requirements and tax rates.

Final Thoughts

To summarize, it is important to understand the residency requirements for tax purposes if you live in Texas. These requirements can affect your taxes in a variety of ways, so it is important to speak with a tax professional if you have questions about your specific situation. Thanks for reading!

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