Date of Residency in New State for State Income Taxes?

[Midpack]

I must be entering the wrong search terms, but I can’t find anything definitive. I’ve also read the state income tax instructions for both states, not definitive re: specific dates either that I found. They require a date, but don’t provide guidance on fixing a date - they just mention various actions that could establish residence (drivers license, new address, bank accounts, etc.).

We closed on our new home (new state) on 6/19 but didn’t actually arrive and take steps toward residency until 7/2. Closing on our old home (old state) was just completed on 8/2. So we owned homes (and still have bank accounts) in two states for just over 6 weeks. Incomes taxes are higher in the new state, so left to my own devices I’d prefer to claim I was a resident in the old state until 8/2 and delay new state incomes taxes until then.

Does anyone know how to fix a date, or can I legally choose any date until 8/2? I assume if I call and ask, both states will tell me I was a resident as long as possible and we’ll potentially owe income taxes in both states for six weeks...

 

[MichaelB]

I must be entering the wrong search terms, but I can’t find anything definitive. I’ve also read the state income tax instructions for both states, not definitive re: specific dates either that I found. They require a date, but don’t provide guidance on residency date determinants.

We closed on our new home (new state) on 6/19 but didn’t actually arrive and take steps toward residency until 7/2. Closing on our old home (old state) was just completed on 8/2. So we owned homes (and still have bank accounts) in two states for just over 6 weeks. Incomes taxes are higher in the new state, so left to my own devices I’d prefer to claim I was a resident in the old state until 8/2 and delay new state incomes taxes until then.

Does anyone know how to fix a date, or can I choose any date until 8/2?

You decide. Choose the date that makes the most sense, reflects your intentions, and can be documented and supported.


Not your search skills, there is nothing definitive, states leave this deliberately fuzzy.

 

[LRDave]

My research indicated it is fairly loose and arbitrary. I chose 1/1/2019 to avoid two state filings in one tax year.

HR VP at my former employer (that employs lots of folks in many different states) told me: "It's what ever date you say it is. We will change the tax withholding based on whatever you tell us." As the PP was monthly, this was easy for everybody.

 

[JDARNELL]

I sold the McMansion on 27 June. Moved into what will be our summer place for 6 weeks. Will move to new location in two weeks. I intend to use the day after I arrive which is when I will get my license and change my voter registration as the start of the new residency.

 

[W2R]

Haven't lived outside of Louisiana for 23 years.

IIRC, I used a date within a month after my actual move. A date that I felt was defensible and made sense. Maybe 7/2 meets that description in your case.

I didn't consider tax implications when making this decision; that said, my previous state (Texas) had no state taxes. My main objective was to avoid an audit or getting into any trouble with state tax authorities here. My viewpoint is that life is too short to spend much of it wrangling with bureaucracies like that, if such can be avoided.

 

[akidagain2018]

Residency for state income tax purposes generally is based on the number of days you spend/live in a state. More than 50% of 365, you’re typically a resident but check state regs, state tax return instructions or the like. Pretty simple, plus tax regulators look at mailing addresses for bills, property tax mailing address for example, as well as banking relationships, which Seems harder to ID to one state nowadays. Each state has specific rules re residency for state income tax filing that will require some judgement but the biggest thing is generally number of days you live in the state. For example, a former colleague in consulting had a home in NJ but his work caused him to sleep more than 183 days in Michigan consulting at for one of the auto makers inDetroit for one or a few years, making him a resident in MI for state tax filing purposes for those years. Good luck!

 

[friar1610]

Arbitrarily pick 6/30. Makes your taxes easier. 6 months (50% of the year) in each state. KISS.

 

[SecondCor521]

If I arrived in a new state and slept in my new home from 7/2 onward, I'd use 7/2 even though I still owned a home in my previous state of residence, and even though I may not have met the other formal requirements for residency (DL, voting, etc.).

If you went back and forth between the new state and the old state between 7/2 and 8/2 (other than to sign closing papers or visit old friends or retrieve belongings), then maybe a later date is reasonable.

I understand the desire to optimize, but the delta on one month's worth of income between any two state's income taxes can't be all that much, can it?

You may be able to prorate your income between Old State and New State based on number of days in each state rather than when income was actually received. This may or may not help your situation, though. It's certainly easier to fill out tax returns that way, though.

Good luck!

 

[Midpack]

I’d like to use 8/2. But I’ll use 7/1 as it’s the most easily defensible date, and when we actually began life in a new state. As friar noted, it works out to an even 6 months old state, 6 months new state - and a month won’t make a big $ difference. I suspect it wouldn’t be challenged anyway as tax instructions are vague.

 

[MichaelB]

We closed on our new home (new state) on 6/19 but didn’t actually arrive and take steps toward residency until 7/2. Closing on our old home (old state) was just completed on 8/2. So we owned homes (and still have bank accounts) in two states for just over 6 weeks. Incomes taxes are higher in the new state, so left to my own devices I’d prefer to claim I was a resident in the old state until 8/2 and delay new state incomes taxes until then.

The closing date is definitely an acceptable date to choose as residency change date. From a tax perspective, it's a clear demonstration of intent, which is what matters.

On that date were you were still using your old state drivers license's and not yet registered to vote in new state? Even more solid.

 

[Bamaman]

The date my head hits the pillow in the new home is the date I'd use.

 

[timbervest]

Be careful. New York and California are notoriously aggressive about doing residency audits for former residents fleeing to low income tax states. They'll want to see your credit card charges, where you buy gas, what organizations you're involved in and activities, etc. etc.etc. They're bloody ruthless and will come after you if they thing you are trying to game the system to avoid paying their egregious state taxes

 

[RobbieB]

50-50 works for me and I bet it'll work for you too.

 

[Aerides]

Be careful. New York and California are notoriously aggressive about doing residency audits for former residents fleeing to low income tax states. They'll want to see your credit card charges, where you buy gas, what organizations you're involved in and activities, etc. etc.etc. They're bloody ruthless and will come after you if they thing you are trying to game the system to avoid paying their egregious state taxes

New York is very very particular and will dictate the maximum earliest start date. This might be a question for a local cpa or tax expert. It's definitely not something to determine from experience in other states.

 

[RetireBy90]

To note, Virginia will asses you for partial residency based on number of days in Virginia. Seems to me targeted at snowbirds that spend over half the year in another state.

 

[MichaelB]

Be careful. New York and California are notoriously aggressive about doing residency audits for former residents fleeing to low income tax states. They'll want to see your credit card charges, where you buy gas, what organizations you're involved in and activities, etc. etc.etc. They're bloody ruthless and will come after you if they thing you are trying to game the system to avoid paying their egregious state taxes

Midpack lives somewhere in the Midwest.

I've been audited 5 (or was it 6) times by NY State for residency challenge. My employer transferred me temporarily (1-2 years) to New York 3 times, and each time, when we moved out, I was audited. All but the last one were were handled by PriceWaterhouse as part of my employment contract. On residency end date and related taxes PWC prevailed 2 of 2, and I handled the 3rd audit and also won (I even got a letter of resolution). The other residency audits (income subject to NY State tax) PWC only paid once, and it was a nit. I was (and still am) amazed at what they were able to defend.

NY is a tough state for taxes, but a favorable application of the tax code can be had, as long as one has solid reasoning and excellent supporting documentation.

 

[Midpack]

We used to live ’somewhere in the Midwest’ - a Chicago suburb. We’re not in CA or NY, so I’m not worried. I’ve read the income tax instructions in the new state and they don’t give any guidance at all - the form just has blanks to enter a date. So I’ll enter 7/1 or 7/2. I like to legally minimize taxes, but the difference between states for one month isn’t that much - especially compared to buying almost an entire household of new furniture. Happy wife, happy life...

 

[steelyman]

I live in North Carolina and rented when I moved from the midwest. I used the starting date of the lease as the starting date of residency. It didn’t cause any problem on either end but two state tax returns that year.

 

[Senator]

You can delay until the end of the year if you want, especially since you are not working.

You can be a resident of a state and never step foot in it. OTOH, if you actually reside in a state 183 days, you are likely a resident.

When did you get a new DL in the new state? That would likely be a clue. You can get a DL after the residency start date, but once you get the DL you are likely considered a resident.

I am going through the same thing, transferring my residency to FL. I purchased a FL home in 02/2018, sold my MN home to the DGF in 06/2019 and declared my residency as of 01/2019.

 

[Kim451]

I've changed state residency several times and used the dates I moved in; no one ever checked or asked about anything. The only state I am leery of is VA - they're pretty aggressive about collecting taxes.

 

[tb001]

Be careful. New York and California are notoriously aggressive about doing residency audits for former residents fleeing to low income tax states. They'll want to see your credit card charges, where you buy gas, what organizations you're involved in and activities, etc. etc.etc. They're bloody ruthless and will come after you if they thing you are trying to game the system to avoid paying their egregious state taxes

YES! I was coming in to post exactly this. I know two people who made the move from NY to CA and both were dragged through a forensic accounting exercise documenting where they were on any given date. Since they were traveling back and forth for work regularly, it was a huge process.

After living through that experience with DH, my advice would be to make it as clear cut as possible and keep clean records.

 

[pb4uski]

Arbitrarily pick 6/30. Makes your taxes easier. 6 months (50% of the year) in each state. KISS.

+1 In many cases it is a process.... more of an art than a science... but it sounds like 7/1 from what you wrote... 6 months old and 6 months new.

 

[RunningBum]

I'd do whatever I'd feel comfortable with explaining to an auditor in a face to face interview and assuming they'd have access to credit card info for purchases of groceries, gas, etc. Seems pretty clear to me this is July 2, which I see you've said you'll do (or July 1 for simplicity).

 

[GravitySucks]

Wait.
You moved TO NY?
You'll completely confuse the tax auditors. No one else has ever retired to here.

Congrats on the move and welcome neighbor.

 

[RunningBum]

Wait.
You moved TO NY?
You'll completely confuse the tax auditors. No one else has ever retired to here.

Congrats on the move and welcome neighbor.

Where did you get that?

OP only said he did not move FROM NY (or CA).

From other threads it is known that OP moved to NC.