My spouse and I own a home in Michigan where he worked until the end of July. We will move to Colorado in August and he starts work in September. We plan to buy a home there but will live in Michigan four months of the year in 2008, 2009, 2010.

Will we be legal residents of both states? Do we need to select a primary domicile and declare the other as a vacation home? What are the tax implications, federal and state?

Thanks for any insight.

You can be a resident of only 1 state at a time. Starting in August you should consider CO as your main residence, and think of MI as a vacation home - this assumes that neither of you are employed in MI after August, 2007. For tax year 2007 you will file part-year resident income tax returns for MI covering the period of January through the August move date, and for CO for the period from the move date through December. For 2008 and beyond you will file only CO returns as full-year residents - no need in 2008 and beyond to pay any MI income taxes.

There are no implications regarding your federal tax, other than the possible deduction of some of your moving expenses.

Agreed!