How the 184-Day Rule Applies to Paying Taxes in New York

paying taxesNonresidents of New York State may be asked to pay taxes if New York state decides they are spending enough time in the state to qualify.

 

High-asset individuals may have residences in one or more states. For tax purposes, you may prefer to maintain your primary home, or domicile, in a low-tax state, while routinely traveling or living in another state with less preferential tax treatment, like New York. If that is the case, understanding how you could accidentally qualify as a New York resident for reasons of taxation is important.

 

If you are “domiciled” within the state of New York, you are considered a resident, and liable for state and local taxes. According to the New York Department of Taxation and Finance (DTF), your domicile is that place which you call home, and where certain roads meet—such as where your children attend school, where you return to when traveling, where you register to vote, access to relatives, and where you keep your most treasured possessions, among other considerations.

 

While you may have abodes around the world, there is generally one which is considered your primary home. If that place is in New York, regardless of whether you own the property, you are on your way to qualifying as a resident of the State of New York.

 

The other half of the equation is how much time you spend in the state. If you spend 184 days or more in the state of New York, which is roughly half the year, you meet the requirement for residency. Together, a domicile and a majority of yearly time spent in New York qualifies you to pay taxes to the state. Other than traveling through the state, any part of a day spent in New York counts toward your residency days.

 

Why is this important? Your status as a resident or nonresident figures into how much tax you pay. Residents pay tax on all of their income, while nonresidents pay tax only on that portion from New York State. For a high-wage earner, the tax difference can be substantial.

 

Taxes on the income of high-asset individuals are an important budgetary source for New York State. In recent years, some wealthy New Yorkers have relocated to Florida and Texas, which have more comfortable tax environments. Collection from residency audits on nonresidents is an important function of the DTF. In New York, the burden of proof of nonresident status falls on the taxpayer. Residency audits are known to be painfully, personally detailed, and conducted by dedicated auditors.

 

When you have questions about New York tax rules, or are pondering tax exposure in New York, speak with an experienced tax attorney before you make a move.

 

Strategic tax guidance on New York tax regulations and tax controversy

The tax group at Robert J. Fedor, Esq., LLC represents business and individual clients in matters including offshore tax investigations, foreign bank accounts, compliance issues, or allegations of tax crime. When experienced tax advice is needed, call 440-250-9709 or contact us for a free consultation.

 

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