Whether you`ve undergone a New York residency audit, tax filing issues, or establishing a New York City residency, contact Hodgson Russ LLP`s tax attorneys in New York. Our team can handle claims, audits, and a variety of tax issues in multiple states. Contact us today for a consultation to discuss the specifics of your situation. The legal residency test is a threshold test based on the number of days physically present in the state. Any New York resident taxpayer who spends more than 183 days in the state is considered legal residence for the entire year. Whether or not the resident uses the New York residency is irrelevant to this test. The mere presence, even for a few minutes, is enough to add a day to their count and classify them as tax residents. When the five factors are weighed, it must be clear and convincing that they have more ties to their new residence than to NYS. The difficulty, however, is determining when enough ties to NYS were severed and established in the new home to stop filing tax returns with NYS as a resident. Therefore, good planning and proactive recording are essential. The real challenge can come years later, when NYS questions residency. For a list of what does and does not constitute New York`s source income, as well as more information, see: New York Tax Law Section 605(b) can be notoriously tricky. It provides two separate bases for the collection of State tax on the income of a natural person.
As a general rule, anyone living in New York is subject to income tax unless they meet certain conditions. Even if they live elsewhere, a person can be a “legal resident” subject to income tax if they have their permanent residence in New York and spend more than 183 days (or parts of days) per year in New York. NYS defines “resident” as a person who (1) is a resident of NYS or (2) has permanent residence and spends more than 183 days of the taxation year in NYS. [ii] So, to establish residence outside of NYS, you must change residence and spend less than 183 days at NYS. NYS expects you to simultaneously keep detailed records showing that both items were met for the tax year in which the change was made. Before you can decide whether or not to file a tax return with the State of New York, you must first determine whether you are a resident, non-resident, or partial resident. State taxes vary depending on the state in which the income was earned in the tax year. Therefore, forms must be submitted separately for each State. For example: Taxpayers classified as residents of New York City must pay city income tax on all of their worldwide income, regardless of where it comes from. Non-residents are not subject to New York City income tax. Typically, residency checks occur when taxpayers move their residence from New York to another location.
However, according to state and city residency rules, your residency won`t change until you can prove with clear and convincing evidence that you abandoned your townhouse and established a new home outside of New York City. There are two criteria for residency: the residence test and the legal residency test. Note that New York State has the same residency tests as the city. Andreozzi Bluestein`s team works proactively with taxpayers who change their place of residence, and we provide strategies and ideas to make planning and execution processes easier, more efficient and, most importantly, more reliable. Clients who engage our firm in proactive residency planning and preparation increase the chances of successful change and improve the ability to respond to tax authority residency requests in the most effective and efficient manner. Contact us anytime for a no-obligation consultation if you are considering a change of residence outside of NYS. In addition, the taxpayer must retain his place of residence for himself. Ownership or ownership of the apartment is irrelevant. For many years, taxpayers and the New York Department of Taxation have disagreed over what is required for a taxpayer to be considered a PPA in New York. The New York Supreme Court of Appeals recently addressed this issue in Matter of Gaied, 22 N.Y.3d 592 (2014), a landmark case in which Hodgson Russ represented the taxpayer. In Gaied, the court held that for a dwelling to be a PAL, the taxpayer must “use the place as a residence.” The PPA must also be maintained essentially year-round, which the tax department has interpreted in the past as a period of more than 11 months. Some taxpayers rent their space for a short period of time during a tax year, or their apartment is unavailable due to construction work or other problems.
Under the 11-month rule, these taxpayers would likely fail the legal residency test, although the department recently questioned that. However, there is an often overlooked exception in the form of the 548-day rule, which relieves taxpayers of New York`s heavy burden of proof when applying for a change of domicile. If a person meets all three criteria of the rule in a year and a half (548 days), they are not subject to New York income tax, although they remain a state residence for that year.
