New York Residency Rules (2024)

Quick Reference

Statutory Residency (183-Day Rule)

You are a NY statutory resident if BOTH: 1. You maintain a permanent place of abode in NY, AND 2. You spend more than 183 days in NY during the tax year

Even if domiciled elsewhere - Statutory residency trumps domicile in other state.

Consequences: - Taxed as NY resident on ALL worldwide income - Must file Form IT-201 (resident return) - Cannot claim nonresident status in NY

Domicile

Domicile = primary, permanent home with intent to return.

Once established, domicile continues until: - Abandon old domicile, AND - Establish new domicile elsewhere

Burden of proof: - Taxpayer must prove change of domicile - NY presumes domicile continues - Requires clear and convincing evidence

Convenience of Employer Rule

NY taxes nonresident's income if: - Employer located in NY - Employee works from home outside NY - For employee's convenience (not employer necessity)

Result: - Wages treated as NY-source income - Taxed by NY even though work performed outside NY - Home state may also tax (double taxation risk)

Details

Statutory Residency Deep Dive

183-day test is bright-line rule:

Day counting: - Any part of day in NY counts as full day - Includes weekends and holidays - Travel days count if any part in NY - Medical treatment days may not count (special rule)

Permanent place of abode: - Dwelling maintained for substantial period (generally entire year) - Available at all times (not seasonal) - Size and value not determinative - Can be owned, rented, or provided by employer - Must be suitable for year-round living

Examples of permanent place of abode: - Apartment in NYC owned or rented year-round - House in Westchester available all year - Co-op or condo maintained throughout year - Room in someone else's home if available to you continuously

Not permanent place of abode: - Hotel room (unless extremely long-term) - Seasonal cabin used only in summer - Apartment rented for only 3 months - Parents' home if you have no right to use it

Audit defense: - Keep detailed calendar of days in NY - Document days outside NY (receipts, credit cards, phone records) - Contemporaneous records critical (cannot reconstruct later)

Domicile Factors

NY considers all facts and circumstances:

Primary factors:

Principal residence: - Where is the larger/more valuable home? - Where do you spend more time? - Which home is furnished for permanent living?

Family location: - Where does spouse live? - Where do children attend school? - Where are family and social ties?

Business involvement: - Where are business interests? - Where do you work? - Where are professional licenses?

Official documents: - Driver's license state - Vehicle registration - Voter registration - Tax returns (what address listed?)

Financial accounts: - Where are bank accounts? - Where are investment accounts? - What address on file?

Personal property: - Where are valuables kept? - Where are personal belongings? - Where are heirlooms and collections?

Social and religious ties: - Where is place of worship? - Where are social clubs? - Where are professional organizations?

Intent: - Statements in documents - Declarations of intent - Actions consistent with intent

No single factor determinative: - NY considers totality of circumstances - Conflicting factors resolved based on weight - Intent to change domicile must be clear

Changing Domicile from NY

To abandon NY domicile and establish new domicile elsewhere:

Required steps:

Acquire new domicile: - Purchase or lease residence in new state - Move belongings to new residence - Spend majority of time in new residence - Establish it as primary home

Abandon NY domicile: - Sell NY home (strongest evidence), OR - Rent out NY home (year-round lease to unrelated party), OR - Substantially reduce time spent in NY home

Update official documents: - Obtain new state driver's license (surrender NY license) - Register vehicles in new state - Register to vote in new state (cancel NY registration) - Update passport to show new address

Update financial and legal documents: - Notify banks and investment firms of new address - Update beneficiary designations - Revise will and estate planning documents - Change address with IRS and Social Security

Establish ties in new location: - Join local organizations - Establish place of worship - Obtain new doctors and dentists - Use local service providers

File Declaration of Domicile: - Available in some states (e.g., Florida) - Not conclusive but helpful evidence - NY does not have this

Maintain documentation: - Keep receipts showing time in new state - Document days in each state - Save credit card statements, phone records - Keep contemporaneous calendar

Avoid maintaining NY ties: - Do not maintain NY driver's license - Do not maintain NY voter registration - Do not use NY address on documents - Minimize time in NY (well under 183 days)

Convenience of Employer Rule

One of most controversial state tax rules:

General rule: - If employer office is in NY - Employee works from home outside NY - Income is NY-source (unless employer necessity)

Employer necessity exception: - Employer requires employee to work outside NY - For employer's benefit (not employee's convenience) - Employer has no NY office where employee could work

Burden of proof: - Employee must prove employer necessity - Very difficult standard to meet - Written employer policy may not be sufficient

COVID-19 temporary relief: - NY provided temporary relief during pandemic - Relief has expired - Rule now back in full force

Examples:

NY-source (taxable): - NYC employer allows employee to work from home in CT for convenience - Employee prefers to work from vacation home in FL - Employer provides flexibility but has office space available in NY

Not NY-source (not taxable): - Employer has no NY office - Employer requires employee to work from regional office in MA - Employer assigns employee to client site outside NY

Multi-state employers: - If employer has offices in multiple states - Employee works from home state office (not NY) - Generally not NY-source (but complex analysis)

Audit risk: - High-income remote workers targeted - NY issues notices demanding tax - Employee must prove non-NY-source

Planning: - Document employer necessity in writing - Show employer has no NY office available - Keep records of work location - Consider impact before accepting remote work arrangement

Part-Year Residency

If you move to or from NY during the year:

Filing requirement: - File Form IT-203 (Nonresident and Part-Year Resident Return) - Cannot use IT-201 (resident return)

Income allocation:

Resident period: - All income taxed (worldwide) - Includes wages, investment income, business income

Nonresident period: - Only NY-source income taxed - Wages for work performed in NY - Business income from NY trade or business - Rental income from NY property - Sale of NY real estate

Allocation methods:

Wages: - Allocate based on work days in each period - If moved mid-year, divide by days worked before/after move

Investment income: - Generally allocate based on time periods - Some taxpayers allocate to period received (less favorable)

Business income: - Various methods depending on type of business - May need to allocate based on revenues, days, or other factors

Reporting: - Form IT-203 has separate columns for resident and nonresident periods - Must carefully track income sources

Nonresident Taxation

NY taxes nonresidents only on NY-source income:

NY-source income includes:

Wages for services in NY: - Work performed in NY - Days-worked allocation if partially in NY - Subject to convenience of employer rule

Business income: - Income from NY trade or business - Partnership or S corporation income from NY entity - Self-employment income from NY customers (if sufficient nexus)

Rental income: - From NY real property

Sale of real property: - Gain on sale of NY real estate - Withholding may be required at closing

Gambling winnings: - From NY sources (casinos, lottery, OTB)

Not NY-source: - Investment income (interest, dividends) unless from NY business - Wages for work performed outside NY (subject to convenience rule) - Sale of stock or intangibles (even if company is NY-based) - Pension income (even if from NY employer)

Allocation formula: - Total income x (NY-source income / Total income) - Applied to deductions to determine NY taxable income

Credits: - Credit for taxes paid to other states (on same income) - Avoid double taxation

Audit Red Flags

NY aggressively audits these situations:

High-income individuals claiming non-residency: - Earned over $500,000 - Claimed to move to FL, TX, NV, or other no-tax state - Still maintain NY home

Statutory residency issues: - Maintain NYC apartment - Claim to live elsewhere - Cannot document less than 183 days in NY

Domicile changes: - Sell high-value assets after claiming to move - Large capital gains reported in year after alleged move - Suspicious timing

Convenience of employer: - High earners working from home in CT, NJ - Employer has NYC office - Claim income is not NY-source

Common audit triggers: - NY driver's license or voter registration while claiming other domicile - Using NY address on tax documents - Children in NY schools - Spouse remains in NY - Cannot produce contemporaneous records of days

Audit defense: - Detailed day counting with supporting documents - Contemporaneous calendar (not reconstructed) - Receipts, credit card statements, phone records - Testimony from third parties - Written employer necessity policy (for convenience rule)

Planning Strategies

If leaving NY: - Plan move carefully with documentation - Sell or rent out NY home - Establish clear domicile elsewhere - Stay well under 183 days in NY - Update all official documents immediately

If working remotely: - Understand convenience of employer rule - Get written employer necessity policy - Document work location - Consider impact on multi-state taxation

If maintaining ties to NY: - Be prepared for statutory residency - Keep meticulous day count - Avoid having permanent place of abode if possible - Consider hotel instead of apartment

Citations

New York Tax Law: - NY Tax Law § 605(b)(1)(B) - Statutory residency definition - NY Tax Law § 631 - Resident defined - NY Tax Law § 632 - Resident individual's NY source income - NY Tax Law § 631(b)(1)(B) - Permanent place of abode and 183-day rule

Regulations: - 20 NYCRR § 105.20 - Resident defined - 20 NYCRR § 105.20(a) - Domicile - 20 NYCRR § 132.18 - Allocation of wages and other compensation

Cases: - Matter of Gaied, DTA No. 816684 (2003) - Domicile factors - Matter of Tamagni, DTA No. 817194 (2004) - Statutory residency - Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (2003) - Convenience of employer rule upheld

NYS Department of Taxation and Finance: - TSB-M-06(5)I - Guidance on Convenience of Employer Rule - Publication 361 - New York State Income Tax Information - Publication 1031 - Guidelines for Determining Resident Status (similar to CA)

Forms: - IT-201 - Resident Income Tax Return - IT-203 - Nonresident and Part-Year Resident Return - IT-112-R - New York State Resident Credit

Other: - https://www.tax.ny.gov/pit/ - NY Division of Tax Appeals decisions (for case law)