It’s not unusual for CPAs dealing with wealthy clients or executives to encounter individuals with multiple homes.
And with multiple homes, there is the potential for a problem concerning whether the individual is a New York resident. In November, several Tenenbaum Law attorneys discussed residency issues at a presentation at the National Conference of CPA Practitioners, 2015 Long Island Tax Professionals Symposium. Our topic was “Two Castles, One Home: The View from Albany on Residency Audits.” We have been recapping some of the top questions that arose during the presentation. This week we’re discussing the impact of time spent in New York versus time spent outside of New York with respect to New York State Residency Audits.
There is often confusion as to how time spent in and out of New York is viewed in determining one’s domicile as opposed to the 183 day bright-line rule for Statutory Residency. Under the Domicile Test, a residency audit compares the time spent in New York to the time spent in the purported domicile outside of New York. For Statutory Residency purposes, the auditor looks at whether the taxpayer was in New York for more than 183 days. A taxpayer can potentially be found to be a resident of New York for income tax purposes under either test. Therefore, even if the taxpayer is able to show that he or she was not in New York for more than 183 days for purposes of the Statutory Residency test, the taxpayer may also be asked to show that he or she was at home in the out-of-state domicile for more time than he or she was in New York.
It’s important to note that for both the Domicile Test and the Statutory Residency 183-day rule, any time spent in New York during a day makes the entire day a New York day, with limited exceptions for travel and medical necessity.
Concerned about a New York residency audit? Contact us to schedule a consultation.
Submitted by Jaime Linder on Wed, 01/20/2016 – 10:25