If I win a lottery and move, will I have to pay N.J. taxes?

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Q. Let’s say I won a big lottery and choose the lump sum payment. If I win in July or August and don’t collect immediately, then move to a lower tax state and collect the lottery after establishing residency, can I save on taxes? Or am I stuck being taxed by New Jersey?
— In it to win it

A. Nice try.

The country has certainly been wrapped up in lottery fever in the past few weeks.

“Since the taxpayer is a resident of New Jersey at the time of winning the lottery, the winnings would be taxable in New Jersey,” said Philip Siana, principal in the wealth preservation practice at Porzio, Bromberg & Newman in Morristown. “Changing residency to another state does not change the winnings being subject to tax in New Jersey.”

He said if you are domiciled in New Jersey, you are a resident for income tax purposes, and all of your income, regardless of its source, will be taxable.

“While residence simply requires physical presence in a state, domicile requires physical presence in the state and the intent to make that state your fixed or permanent home,” he said. “It refers to any place you regard as your permanent home.”

It’s the place to which you intend to return after a period of absence such as from vacation, business assignment or educational leave.

“A person can have only one domicile, although he or she may have more than one place to live,” Siana said. “Once established, your domicile continues until you move to a new location with the intent to establish your permanent home there and to abandon your original domicile.”

Moving to a new location, even for a long time, does not change your domicile if you intend to return to your original domicile, he said.

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This story was originally published on Aug. 1, 2022.

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