Usually, spending over half a year, or more than days, in a particular state will render you a statutory resident and could make you liable for taxes in that state. It's not uncommon for states to conduct residency audits , and the onus would be on you to provide evidence to support a change in domicile.
Record of time spent within each state, preferably with more time spent in your new domicile state because of the day rule. Employment location and status permanent or temporary. Change of mailing address to new domicile state.
Updated voter registration to new domicile state. Purchase or lease of new residence in new domicile state, and sale or lease of residence in former state.
Establishment of bank and brokerage accounts in new domicile state. Location of school for your children. Board service for a business or charity in new domicile state. Memberships to social organizations or clubs in new domicile state. In cases where domicile and residency status may be disputed, an important deciding factor can be the intent behind your move.
Items on this list may provide support that the intention of your move was permanent instead of temporary. If you move to another state but fail to establish domicile there. If you lived in one state, move to another and then return to the original state. If you are living in one state while working in another.
If you have relocated to another state on a temporary basis. Many states have exceptions for military personnel in active service and for individuals receiving medical treatment for an extended period of time. During the global pandemic, some states issued guidance that relaxed enforcement of their residency rules while executive orders were in effect.
As the executive orders are set to expire, the guidance on relaxed enforcement of the residency rules are also expiring. If employees are continuing to work remotely and have relocated to other states to work, this could cause dual residency issues for the employee. There and elsewhere, taxpayers have the burden of proving through documentary evidence, which states they spend time in during the year and how long they remain in these states.
Other evidence often considered in evaluating whether there has been a permanent change in domicile includes:. If you live elsewhere but travel on a regular and frequent basis to another state, it is a good idea to maintain a diary or location log that clearly indicates the dates on which you are in a specific state, accompanied by supporting records such as transportation tickets and receipts.
Remember that any part of the day spent in a state, other than when traveling through the state, is generally considered a day spent in the state for residency determination purposes. Note that the allowable level of participation in charities and social organizations varies among states. Some states like Wisconsin do not count such participation against taxpayers claiming nonresident status.
While courts consider taxpayer intent in state residency disputes, they ultimately look to documents and facts to decide where the state of domicile is. Keep a close eye on factors your state reviews when tallying the days.
Those states have a tax reciprocity agreement with the state of Minnesota. In New York, any amount of time in the state counts as a day, but an exception is airport travel. If, however, you stop anywhere along the way for dinner before heading home, plan on adding another day to your tally. Treatment in a hospital, not including outpatient services, is generally disregarded in the day count. Counting your days can be tedious and most taxpayers fail to produce better records than the state in a residency audit.
This information can be used proactively to track and better plan your travel so that you avoid residency tax issues. The app will also alert you as you approach state residency thresholds. In addition, Monaeo data is audit-proven. Auditors have an arsenal of legal and digital tools at their disposal. That needs to be met with credible data and digital records to show concrete proof. Nothing in this article should be considered or construed as tax advice.
Monaeo does not dispense tax advice and always recommends that taxpayers consult their accountants or lawyers. Monaeo Blog Residency made simple. Subscribe and Get The Latest News. How remote workers and their employers can avoid a tax nightmare This article originally appeared in Digiday. If you thought was a messed-up tax year because of COVID, remote working and the wildly different laws from state to state, just wait ti All Posts.
Any amount of time can count as a day New York is especially tricky given how frequently people commute in and out of the city in the tri-state area. Pay attention to details and exceptions to the rule There are exceptions to every rule — and the day rule is no exception! Keep good records — technology can help Counting your days can be tedious and most taxpayers fail to produce better records than the state in a residency audit.
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