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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4540
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I currently live in NY, but will be traveling outside of the

Resolved Question:

I currently live in NY, but will be traveling outside of the US for 2014 and will likely be moving to Washington State upon my return at the end of the year. I will be receiving a large payment in early January and would love to avoid NY state taxes on that income. Is it possible to have no residence in the USA for 2014 even if I am travelling for most of the year (i.e. no permanent residence abroad). Or is there a way to show residence in Washington state without buying/renting an apartment for the year?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Lane :

So sorry to have to be the messenger here, but NY will argue that you're a NY resident now ... See this:


Nonresident Audit Guidelines - Department of Taxation and Finance

Lane :

Here's how they put it:


A New York State resident taxpayer is responsible for reporting and paying New York State
personal income tax on income from ALL sources regardless of where the income is generated,
or the nature of the income.

Lane :

Is this income from NY sources?

Lane :

As far as showing residency in WAno, not withouth geting mail there, having a driverslicense, etc

Lane :

Here's what Washington shows in terms of THEIR residency:

Lane :

The Department of Revenue presumes that a person is a resident of this state if he or she does any of the following:



  • Maintains a residence in Washington for personal use;

  • Lives in a motor home or vessel which is not permanently attached to any property if the person previously lived in this state and does not have a permanent residence in any other state;

  • Is registered to vote in this state;

  • Receives benefits under one of Washington's public assistance programs;

  • Has a state professional or business license in this state;

  • Is attending school in this state and paying tuition as a Washington resident or is a custodial parent with a child attending a public school in this state;

  • Uses a Washington address for federal or state taxes;

  • Has a Washington State driver's license; or

  • Claims Washington as a residence for obtaining a hunting or fishing license, eligibility to hold public office or for judicial actions.


Persons may rebut the presumption of residency if they provide other facts which show that they do not intend to reside in this state on either a temporary or permanent basis. A Washington resident who intends to move at a future date, however, will be considered a Washington resident.

Customer:

It is for selling a book to a publisher. I live with my boyfriend whose apartment it is, so technically I do not have a lease showing my residence in NY. I could have written this abroad or in another state, but of course do not have any permanent residence elsewhere to show.

Lane :

Is the publisher in NY?

Customer:

Yes.

Customer:

But if I lived in another state, it shouldn't matter where the publisher is

Lane :

K, that's part f the puzzle ... NY will say this is NY source income

Customer:

Why would the location of the publisher impact this? It shouldn't.

Lane :

the WA residency (if you could establish something there for more than half a year MIGHT be a strategy ... yes "Source Income" is a tax term of art. means the money was earned from doing business in NY

Lane :

If you had no residency established elsewhere AND earned the money from a NY publisher they will want to tax it ... Now, if you could establish residency elsewhere ...

Customer:

I am originally from Oregon and my parents still live there. How would that impact my state taxes vs. NY state taxes for this income?

Lane :

Here's an excellent piece called avoiding the NY Residency tax trap, (NY Law firm ofAckerman): http://www.akerman.com/documents/res.asp?id=1089

Lane :

If you can establish residency in Oregon, then you would pay income there

Lane :

and if NY still tries to tax you ... and they might, then you WILL get a credit on your Oregon for the tax paid on your NY non-resident tax return

Customer:

If I can establish some link to WA state before the end of the year that would last for at least 6 months into 2014, and I get the payment in February, can I still avoid state taxes in NY?

Customer:

Establish a link - i.e. one of the items you listed for WA residence

Lane :

regon imposes a personal income tax on all residents of the state under the authority of ORS § 316.037(1)(a) (2010). By statute, an individual is a resident of Oregon under two scenarios.


A. An individual who is domiciled in Oregon, unless he a) does not have a permanent place of abode in Oregon; b) maintains a permanent place of abode in a place other than Oregon, and c) spends less than 31 days of a taxable year in Oregon. ORS § 316.027(A)(i)-(iii).


B. If an individual is not a domiciliary, they may be a resident if he maintains a permanent place of abode in Oregon and spends more than 200 days of a taxable year in Oregon unless the individual can prove he is in Oregon for a temporary or transitory purpose. ORS § 316.027(B).


Oregon modeled ORS 316 after New York residency rules. Ramsey v. Dept. of Rev., 7 Or. Tax 478, 482 (1972). The residency requirements were changed in 1969 to grant tax relief to individuals who do not receive the benefits and protections of the state and to ensure that those who do receive the benefits and protections contribute to the support of the State. Id.

Lane :

What multistat issue always come down to is (1) looking at the tax rates of the two states and seeing which will be less (again, please don't shoot the messenger here:), but neither Oregon noe NY are great income tax states ... both HAVE an income tas and both are relatively high (compared to some other states)

Lane :

If you ave more ties to oregon, and IF you filew a return there, youmay ever hear from NY

Lane :

but NY is pretty agresive... you can bet that the publisher will report the payment so that they get their tax DEDUCTION

Lane :

just trying to help you "see around some corners"

Customer:


If I can establish some link to WA state before the end of the year that would last for at least 6 months into 2014, and I get the payment in February, can I still avoid state taxes in NY?







Establish a link - i.e. one of the items you listed for WA residence



Customer:

I appreciate the help! I understand that the publisher will deduct the payment as their expense, but that shouldn't say anything about where the payment was EARNED. If I open a bank account in OR or WA, and deposit there, it should be fine, no?

Lane :

The Department of Revenue presumes that a person is a resident of this state if he or she does any of the following:



  • Maintains a residence in Washington for personal use;

  • Lives in a motor home or vessel which is not permanently attached to any property if the person previously lived in this state and does not have a permanent residence in any other state;

  • Is registered to vote in this state;

  • Receives benefits under one of Washington's public assistance programs;

  • Has a state professional or business license in this state;

  • Is attending school in this state and paying tuition as a Washington resident or is a custodial parent with a child attending a public school in this state;

  • Uses a Washington address for federal or state taxes;

  • Has a Washington State driver's license; or

  • Claims Washington as a residence for obtaining a hunting or fishing license, eligibility to hold public office or for judicial actions.

Lane :

That's Washington

Lane :

Pretty open ended, relatively speaking ... the tax year IS 2014

Lane :

Just may work

Customer:

I understand how they consider someone a resident, but I'm trying to clarify that if I can show residence using one of the items listed in WA before the start 2014, can I get out of NY taxes for income earned before the 6 month requirement?

Customer:

Or do they consider it only at the end of the year, which will satisfy the 6 months

Lane :

No... first everything is done on a TAX year basis ... you'll receive the $ in the tax year 2014 ... if you can establish residency in WA for 2014... you're there

Customer:

Ok, great. Thank you.

Customer:

If you can answer this last question, we're all set:

Customer:

I appreciate the help! I understand that the publisher will deduct the payment as their expense, but that shouldn't say anything about where the payment was EARNED. If I open a bank account in OR or WA, and deposit there, it should be fine, no?

Lane :

No it doesn't other than (1) the address they have n file for where they send your 1099 ... and again simply opening a ban k account in WA alone, won't do it... youi need to complete AS MANY things on that list as possible

Lane :

they WILL report to IRA that they paid you ... a Washing address on that 1099 might go a long way

Lane :

sorry "...IRS that they paid you."

Customer:

Okay, thank you!!

Lane :

your federal return information will flow to whatever state you file a return for

Lane :

YW

Lane :

If this has helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only I get credit for the work.


However, if you need more on this, please come back here, so you won't be charged for another question.

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4540
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks much!

The links I provided will stay there.

Feel free to come back for reference.

Lane

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Lane
Lane
JD, MBA, CFP, CRPS
3667 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986