What Is Non-Domiciled? Meaning and Implications for Expats in the U.S.
If you’re an expat living in the U.S. or planning to move here soon, you’ve probably come across the term “non-domiciled” and wondered what it means for you. Is it about where you live? Where do you pay taxes? Or something else entirely?
The truth is, your domicile status can play a huge role in how your income, foreign assets, and even your estate are taxed. And for global citizens juggling life across borders, understanding whether you’re considered non-domiciled in the U.S. isn’t just helpful—it’s essential.
A non-domiciled individual in the U.S. lives in the country temporarily but legally considers another country their permanent home. While they may be physically present in the U.S., their domicile of origin, where they intend to return, remains elsewhere.
This distinction matters, especially for tax purposes. For example, a British expat working in New York for a few years may remain non-domiciled if they plan to return to the UK afterwards. Their non-dom status can affect how they pay tax on foreign income, dividends, and even their worldwide assets.
In the U.S., your domicile status doesn’t automatically change just because you reside here. The IRS and tax authorities consider your intention, financial ties, and legal documents when determining if you are non-domiciled. This directly affects income tax, inheritance tax, and estate planning.
Many expats assume that where they live automatically defines where they're domiciled, but that’s not always true. Domicile and residence might sound similar, but they mean very different things regarding legal rights, long-term intentions, and, most importantly, tax responsibilities.
Before you decide how your non-domiciled status applies to you, it’s important to understand the key differences between these two terms.
Domicile refers to your one true, fixed, and permanent home. The place you intend to return to and remain in indefinitely. Unlike residence, you can only have one domicile at a time.
Key attributes of domicile include:
It is defined by intention, not duration.
It continues until a domicile of choice is established in a different country.
It affects long-term financial obligations such as UK inheritance tax or U.S. estate tax.
It can begin at birth, known as your domicile of origin (often inherited from your father under British law).
This concept is vital for non-domiciled individuals. Even after living abroad for years, if you maintain strong legal and emotional ties to your country of origin, that domicile remains active for tax purposes.
Residence refers to the physical place you live or stay at a given time, regardless of your long-term plans. Unlike domicile, you can have multiple residences in different countries.
Residency is determined by:
Duration of stay (often measured by tax years)
Visa or immigration status
Day-to-day living arrangements
An expat can reside in the U.S. for several years without becoming domiciled, especially if they maintain a home, family, or bank accounts in their country of origin and plan to return.
This scenario is common among wealthy individuals and high-net-worth individuals working on long-term contracts in the U.S. but still holding a UK bank account and other foreign ties.
Understanding this distinction helps expats navigate different rules for taxation, inheritance, and legal obligations—both in the U.S. and abroad.
You are considered non-domiciled in the U.S. when you live in the country temporarily but legally intend to return to your domicile of origin or domicile of choice in another country.
This is especially relevant for expats who plan to qualify for certain tax benefits while maintaining ties to their home jurisdiction. Your tax status as a non-domiciled individual depends more on intention and permanent ties than physical presence.
For example, an expat with a long-term work visa in the U.S. who holds a UK bank account, owns property abroad, and expects to return home after their assignment may still be classified as non-domiciled.
These individuals often remain legally and emotionally connected to their home country through money, family, and other long-standing affiliations.
For many, this presents an attractive option for international tax planning. Unlike a UK resident, a non-domiciled person in the U.S. may avoid being taxed on their worldwide income, especially if their foreign income is not brought into the U.S.
It’s worth noting that this approach has drawn both interest and criticism over the years. It has also been highlighted even in discussions about the former prime minister of the UK, whose spouse benefited from non-dom status to legally reduce her need to pay UK tax.
Your non-dom status can significantly affect the tax you must pay in the U.S., particularly on foreign income, dividends, and worldwide assets.
Non-doms may:
Only be taxed on U.S.-sourced income, not worldwide income
Avoid U.S. inheritance tax on foreign estates
Possibly file under special rules like the remittance basis (commonly used in the UK, but relevant for comparison)
While the U.S. does not offer a formal non-domiciled tax regime like the UK tax system, determining whether you're a non-domiciled or deemed-domiciled individual still impacts estate planning and IRS reporting obligations.
Example: A non-UK domiciled expat in the U.S. who inherits worldwide assets may not be liable for U.S. inheritance tax, depending on treaty agreements and citizenship status.
For accurate compliance, a U.S. tax return should reflect your true domicile and be supported by legal evidence.
If you live in the U.S. for work, education, or other short-term reasons, but plan to return to your birth country, your domicile is likely still abroad.
To determine this, authorities will consider:
Whether you maintain a permanent home outside the U.S.
Your intention to return (shown through contracts, ties to family, etc.)
Whether you’ve formally declared a new domicile of choice in the U.S.
So, your domicile status may remain foreign even if you've been a U.S. resident for several tax years. This often applies to high-net-worth individuals who manage estates, income, and gains across borders and wish to avoid unnecessary U.S. tax liabilities.
Domicile, citizenship, and nationality are separate legal concepts. A person’s taxation and estate obligations often depend more on domicile than citizenship.
Key differences:
You can be a U.S. citizen but still be non-domiciled in the U.S. if you’ve established a domicile of choice abroad.
Conversely, you can be a non-U.S. citizen but still be domiciled in the U.S. if you reside here with the intent to stay indefinitely.
Nationality refers to your country of legal allegiance, while domicile is based on where you intend to make your permanent home.
Understanding these distinctions is essential for tax planning, especially regarding UK IHT (inheritance tax), income tax, and wealth transfer obligations across jurisdictions.
Are you still unsure how nondomicile status works in real life? You're not alone. Expats often question how domicile is determined, how it affects their tax situation, and what role things like visas or residency play.
Below are answers to a few common questions for people living or planning to live in the U.S. while maintaining ties to another country.
Yes. Being a U.S. resident for tax purposes. For example, meeting the Substantial Presence Test does not automatically make you domiciled in the U.S. If you intend to return to your home country, and your financial and family ties remain abroad, you may still be considered non-domiciled.
Not necessarily. Your visa is one factor, but domicile depends on your full circumstances, especially your intention to stay or leave the U.S. For instance, someone with a renewable work visa may reside in the U.S. for years and still maintain domicile abroad if their life remains centered in another country.
Yes, but it’s not as simple as picking a place. To establish a new domicile of choice, you must physically move there and intend to remain indefinitely. This means cutting substantial ties to your old domicile and building new legal, social, and financial roots in your new permanent home.
Understanding the non-domiciled meaning is essential for expats in the U.S., especially those with complex financial or international arrangements. It impacts how much income tax you owe, whether your foreign income is subject to U.S. taxation, and how your worldwide assets are treated under federal and state law.
Proper classification as a non-domiciled individual, backed by clear documentation and legal intent, can help you manage your tax burden more efficiently and avoid issues like double taxation or unexpected inheritance tax obligations.
If you're living abroad or planning your next big move to the U.S., WellAway offers global support for expats, beyond just healthcare. Visit WellAway to explore tailored coverage, expert guidance, and trusted resources to keep you informed, protected, and ahead of every major life transition.