NY City Residency - Tax Issues
01 Aug 2020 - Nuruddin Pethani
Photo Credit: Jason Krieger
“Noor, we are moving out of our apartment on the Westside and going to Westchester. What are the tax consequences?” one client asked.
One of the consequences of the COVID Pandemic has been that more and more people are considering moving out of their apartments in NY City and moving to Westchester or Long Island or Connecticut.
The NY City residency rules are very complicated. The existing laws are in favor of the Tax department. NY City taxes are approximately 4% of your worldwide income.
Who is considered to be a NY City resident?
1) If your ‘Domicile’ is NY City:
In general, your domicile is:
- the place you intend to have as your permanent home
- where your permanent home is located
- the place you intend to return to after being away (as on vacation, business assignments, educational leave, or military assignment)
You can only have one domicile. Your New York City domicile does not change until you can demonstrate that you have abandoned your New York domicile and established a new domicile outside New York City.
If you have a domicile in NY City, then even if you have another house in Westchester or Long Island, you are considered a NY City resident if you spent 30 days or more in NY City. Even part of the day is counted as one whole day.
It is not necessary to live in the NY City Apartment or house. Even if you had coffee at a Starbucks in Queens, you are considered to have been present in NY City for that day.
2) If your Domicile is Not NY City:
If NY City is not your Domicile as per the definition even then; If you maintained a permanent place of abode for over 11 months (like an apartment of a house) in NY City and are present in the City for over 183 days then you are considered a NY City resident. In this scenario too, your presence in NY City for any reason is counted as one day.
Generally, for people who are working in the City, they are present in the City for over 183 days. If you have an apartment that you are using for weekends etc., you are still considered a NY City resident. If you rent your apartment to someone else then you have a good case to prove that you possibly couldn’t have stayed in the apartment.
What documents do you have to produce in case of the NY City Residency Audit?
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Rental agreement or lease if you have rented your apartment to someone else.
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Documents of purchase of your house outside NY City (e.g. Westchester)
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Address on the Driver’s license.
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Your cell phone records.
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Your credit card statements.
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Your EZ pass statements.
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Your children’s School Records.
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Your official mailing address with your bank statements etc.
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Copy of your W-2 with your address.
The above documents are routinely asked in an audit. The department themselves in most cases contact the Cellphone companies to obtain your records.