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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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Multi-state tax question for 2012 tax prep: Taxpayer & Spouse

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Multi-state tax question for 2012 tax prep: Taxpayer & Spouse live in MA (own a home there). Taxpayer travels to NYC and works there 4 or 5 days per week (for all of 2012). In June 2012, taxpayer started renting apartment in NYC instead of staying in NY hotels. Taxpayer travels home to MA every weekend. Is Taxpayer a NYC resident for 2012 and a MA nonresident? What about spouse residing in MA throughout the whole year?

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

They are both MA residents and Husband is a NYC Non-Resident.

Stephen G :

Unless he had the intention of becoming a NYC resident and acted accordingly - where is he registered to vote; where is his car registered, what state driver's license does he have; what other social functions or clubs does he belong to; where does he maintain a permanent residence; where is his family located; where does he get his mail;

Stephen G :

This situation does not seem that questionable; renting an apartment where you work, doesn't make you a resident of that state;

Stephen G :

That's the only thing you mentioned that even is a consideration of his residency; it is considered a minor point, clearly only as a result of his job, and carries no weight in the residency determination.

Stephen G :

Questions/Comments?

Stephen G :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.

You may get a short survey from the site; if it isn't too much trouble please answer it; thanks, SEG

Customer:

I appreciate your opinion but that is not my understanding of how to proceed with this. Please pass my question to another expert. Thank you for your time.

Stephen G :

I'll be happy to opt out, but I can tell you that having practiced as a

Stephen G :

CPA in Massachusetts for over 40 years, and working extensively with estates & trusts where residency issues are far more complicated that in the income tax area & dealing with pseudo Florida residents who live in Massachusetts, I can assure you, that based upon the facts as you presented them, there really isn't any question as to residency in your example. The taxpayer will pay NYC & NYS taxes on his earned income in NYC as a non-resident, and that's it.

I am opting out at the customer's request.

Hi.
It sounds like you are concerned about the New York law that CONSIDERS you to be a NY resident under certain conditions.

Under section 605(b)(1) of the Tax Law, an individual who is not domiciled in New York is considered a resident for personal income tax purposes if that individual maintains a permanent place of abode in the state and spends more than 183 days of the taxable year in the state.

A quick calculation indicates you probably spent more than the 183 days in the state.

Under section 605(b)(1)(A) of the Tax Law, a taxpayer who is domiciled in New York State is a resident for personal income tax purposes unless the taxpayer meets all of the following rule:

30-day rule
• The taxpayer did not maintain any permanent place of abode in New York State;
• the taxpayer did maintain a permanent place of abode elsewhere; and
• the taxpayer spent 30 days or less in New York State during the tax year.

The state revoked a portion of the law that stated you did not consider the apartment a permanent place of abode if you had another abode in another state. So in your case, with the amendment, the facts that you rented a NY residence AND you were in the state more than 183 days in 2012 makes you a New York Resident for state tax purposes.

Customer: replied 3 years ago.

Yes, that's my understanding ---so file NYS/NYC tax return as a resident for 2012 but what about residency status in MA then. Permanent home is in MA and you can't claim "resident" status in NY AND MA right?

Actually, you and your wife will need to file state as Married Separate. You may otherwise elect for both of you to file as NY residents, but it probably is not in your favor.

NY and MD allow you to elect a different filing status than federal if you have different states of residency. She is MD; you NY. You cannot have more than one resident state.
Customer: replied 3 years ago.

It is MA not MD but the same rule should apply to MA right? How does the credit for taxes paid to other jurisdictions play out if we file separate returns at the state level? Taxpayer W-2 shows most withholding attributed to MA and some attributed to NY. Seems like it should have been reversed....with most withholding going to NY and little to non going to MA.

Sorry MA, yes. Mass. allows you to pick a different filing status than federal under any circumstance.

Both states offer a credit for taxes paid to a non-resident state. So for you, you file as Resident in NY, do this return LAST. Do Mass first and take the tax amount paid to NY as a credit. you will file a MA NON-resident MFS return.





Customer: replied 3 years ago.

Thank you for your help. That makes sense. If I wanted to get a legal viewpoint on my question, is there any way to get this question to the legal section of JustAnswer? I want to give you credit for answering me but I guess I'd like to also get a legal opinion on the residency.



Very interesting subject. My answers were from the Massachusetts standpoint. Unfortunately, New York still hasn't passed a law to eliminate the double taxation.

If the situation were reversed, ie. the taxpayer was domiciled in New York and worked in Massachusetts, there would be no double taxation as Massachusetts rules would eliminate the double taxation.

Perhaps you would find it informative to read the following referenced article discussing the subject, particularly at the end as well as the multi-state agreement reproduced as the first appendix. This agreement includes both Massachusetts and New York, except New York hasn't turned the provisions into law as Massachusetts has.

So while we (Massachusetts) have eliminated the double taxation for individuals domiciled in New York, New York hasn't done the same thing for Massachusetts domiciled individuals.

The article does an excellent job of explaining the difference between domicile and residency. You can have only 1 domicile but multiple residencies.

Unfortunately some states tax based upon domicile, and some states tax based upon residency. Nobody questions the fact that earned income is first taxed in the state that it is earned in. It is the unearned income that is primarily the problem.

Here's the link:

http://www.lanepowell.com/wp-content/uploads/2012/05/PTXL1205_Gadon1.pdf

Perhaps this will assist you with what you are looking for as all 3 of the authors are attorney's. I doubt you will find anything more on point than this summary of the applicable laws.

Hope this helps and my thanks to both you & Randall for straightening me out on the current situation with respect to New York. It doesn't surprise me that we (Massachusetts) are in conflict with New York. All you need to do is look at the Celtics and the Knicks or Red Sox & the Yankees.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 6450
Experience: Extensive Experience with Tax, Financial & Estate Issues
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Customer: replied 3 years ago.

Hmmm...I really need to move on from this issue but want to get it right. If I file as NY/NYC resident (statutory resident) for 2012 and nonresident of MA (domicile), there does seem to be a resident tax credit on the NY return via Form IT-112-R. Couldn't I claim the MA taxes withheld on that NY form? That would eliminate the double taxation issue on the wages but I suppose there would still be double taxation for interest/dividends, etc.? Thanks for your help. Just wanting to know if that NY resident tax credit will apply to my situation.