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Introduction to New York State Residency Rules

I’d like to extend a thank you to the folks at “BSchool.com” for listing the blog as one of the 50 Best Blogs to Get You Through Tax Season (listed under the old name, “Poker and Taxes”). Some quality blogs on that list.

Today’s entry turns to New York State. I live and work in New York, representing taxpayers facing NYS Department of Taxation and Finance audit and collection matters. Indeed, a tremendous source of NYS tax revenue are from the state’s residents. Unsurprisingly, many taxpayers who file NYS nonresident returns while earning most of their income outside the state face NYS audits.

This post provides some introductory and fundamental NYS residency concepts, with the nuances and complexities to follow in the future.

NYS residents must pay to NYS income tax on income from all sources, regardless of where the income is generated, or the nature of it. NYS nonresidents, however, pay to NYS income tax only on income actually generated in New York.

Clearly, one can see the significance of a taxpayer’s NYS residency status. There’s also the issue of a NYS resident earning income in other states. Under NY tax law, a taxpayer can be determined to be a NY resident under either of two tests:

1) Statutory Residency

A taxpayer is a NYS statutory resident if he:

  • Maintains a permanent place of abode in New York, and
  • Spends more than 183 days of the taxable year in New York, unless such individual is in active service in the armed forces of the United States.

This test is known as the “183 Day Rule,” and is a year-to-year determination.

2) Domiciled in New York

A taxpayer is treated as a NYS resident if the person is domiciled in New York State.

The domicile test is based on many factors, and looks to determine where the taxpayer’s true home lies: What is the one place to which the taxpayer intends to return?

Once a taxpayer’s domicile is established, it remains there until changed. The burden of proof is always on the party asserting a change of domicile. If the taxpayer has always claimed to be a NYS nonresident, for example, the burden is on the State to prove that the taxpayer changed her domicile from out of New York to New York.

UPDATE (April 7, 2012): Learn more about NYS residency issues by reading all of my posts on the topic, found here.

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