At MEDOWS CPA, PLLC, our NYC Accountants have dealt with numerous residency issues. Whether it is a state issue or a foreign issue, we are here to help.

The New York State Department of Finance and Taxation is becoming stricter with residency classification. Improper classification can cause serious tax problems for you such as increasing the amount you owe in taxes and having to pay additional penalties and interest (which start as soon as the Department assesses that you owe and add up until you pay them.)

Under New York State Tax Law, all residents are required to pay taxes to the State of New York on all sources of income received. Nonresidents of New York State pay taxes to the State of New York on New York source income only.

A person is considered a resident for tax purposes if they are either: (1) domiciled in New York or (2) not domiciled in New York, but maintain a permanent place of abode in New York and spend more than 183 days of the taxable year in New York State.

A person’s domicile is the place of an individual’s permanent home or where a person would return to after being away. One’s domicile does not change until a person intends to make a new permanent home in another location (either in another state or abroad). You are only allowed to have one domicile at a time, and your domicile is not dependent on your citizenship. For example, a United Kingdom citizen who permanently establishes his home in New York State is domiciled in New York State, regardless of his UK citizenship.

A person maintains a permanent place of abode in New York State if he or she maintains a dwelling place in New York State. The dwelling place may either be rented or owned by the taxpayer. New York Tax Law Regulations specify that a cottage or camp suitable and used only for vacations is not a permanent place of abode; however, if this type of abode is maintained for substantially all of the taxable year, it is considered a permanent place of abode. To fulfill the requirement of spending more than 184 days of the taxable year in New York State, spending part of a day is considered one day.

If you think you are a domicile of New York State based upon the information above, you may still be classified as a nonresident for tax purposes; thus your tax liability may be different. The same kinds of issues will arise when assessing your New York City residency. It is recommended that you seek help in determining your residency, as an incorrect assessment can expose you to serious tax problems.

If you would like further help as to your residency classification for income tax purposes in New York State, feel free to call one of our NYC Accountants or visit our website and set up an appointment today.