Wouldn’t it be nice to live in a warm State that also doesn’t tax your income? Many people think so, and often we hear of retirees purchasing a second home in Florida to enjoy the winters out of the cold. Sometimes, these snowbirds extend the time they spend in Florida and eventually figure they will change their residency to Florida and save on income taxes.
This can be a problem if you still own your home in New York. Residency audits are becoming more common when a taxpayer tries to convince New York State that they are no longer a resident. New York does not give up those tax proceeds easily.
It is also important to plan for any large income events such as the sale of your New York residence (if possible) to reduce income tax on any taxable gain.
There are two tests that New York uses to determine residency, the domicile and statutory residency.
Many people focus on the statutory or 183-day rule. If the taxpayer spends 183 days or more in the State and has a permanent place of abode in the State, they are considered to be a resident of NY. It is important to note that any portion of a day spent in the State counts as a full day. A permanent place of abode might be a vacation home that is used for only a week during the year. This can be a sticking point for taxpayers who are not ready to give up their New York home just yet.
The second test looks at several factors to determine the taxpayer’s domicile. Among them are how large the houses are in each state, where the taxpayer’s business is located, ratio of time spent in new versus old state, where the taxpayer’s spouse and children live and go to school, and where the taxpayer keeps their near and dear items (valuables, collections, etc.).
Contact us for a consultation if you are considering a move to make sure you’ve covered all the bases!
Contact us today for more information.
Honorine M. Campisi, CPA
