Hello everyone, especially you accountants and tax attorneys out there. We had a conversation with our accountant yesterday about this, and remain undecided.
S#1 is making a decent amount of money on summer internship in Tx, as he did last year. He also makes money during the year as a tutor for a college tutoring company and gets a 1099. He is still considered a resident of our state, which hit him with a 7% income tax on his earnings last year. The same will happen this year, unless he changes his residency officially to Tx, where he attends school. It has no state income tax, so the savings will be enough to make a difference. As he has lived off campus this summer (and in 2005-06) he can probably produce utility bills in his name with an in-state address. He will have to get his drivers license changed (which he won't mind, because it will no longer need to have that big "UNDER 21" thing on it.) What else would we need to be thinking about, should he decide to do this? (The car is registered in my name, so we can probably leave that alone).
The school tuition will be unaffected by the in-state-out-of-state issue, so that doesn't play into the equation.
We were told we would still be able to claim him as a deduction, since we still pay the majority of his expenses. Are there other issues we need to consider?
Thanks for the help