Who Is a New York City Resident for Tax Purposes?

A New York City resident for tax purposes is someone who is domiciled in New York City or who has a permanent place of abode there and spends more than 183 days in the city. These two tests for residency are complicated and look at multiple factors to determine whether you should be taxed as a city resident. Because of the city’s high tax rate, it is important to understand the residency rules to avoid paying taxes if you don’t have to do so. The best course of action is to contact a New York tax attorney for help.

Why Is Residency Important?

Taxpayers determined to be New York City residents must pay city income tax on all their worldwide income, regardless of where it is sourced. Nonresidents are not liable for New York City personal income tax.

What Are the Tests for New York City Residency?

There are two tests for residency: the Domicile Test and the Statutory Residency Test. Note that New York State has the same residency tests as the city.

The domicile test determines the one place you intend to have as your permanent home. This is a subjective test but auditors will look at objective factors to determine your intent, such as how the use, maintenance, value, and size of your New York City home compares to your other homes; where you conduct your business activities; where your family resides and you keep special items (photos, jewelry, pets, etc.); and how much time you spend in the city versus outside the city. If these are not conclusive in establishing your domicile, the city will look at other factors as well. Notably, even if you do not spend significant time in the city, it can still be considered your domicile.

The second test is the statutory residency test. Under this test, an individual who is not domiciled in New York City can still be a resident if he or she maintains a permanent place of abode in the city for substantially all of the year and spends more than 183 days in the city. A permanent place of abode is defined as a residence (building or structure in which a person can live) that is maintained by the taxpayer and is suitable for year-round use. Under day count rules, generally, a partial day counts as a full day, with some limited travel and medical exceptions.

Have You Changed Your Residency?

Typically, residency audits occur when taxpayers change their residency from New York City to another location. However, under state and city residency rules, your domicile does not change until you can demonstrate with clear and convincing evidence that you have abandoned your city domicile and established a new domicile outside New York City.

Note that under both tests, auditors will review information demonstrating your activities, including bank and ATM records, landline and cellphone records, credit card bills, appointment calendars, EZ-pass records and other data to establish your whereabouts. New York State audits are document intensive and personally invasive. You should get experienced legal advice from a New York tax attorney to help you present your case in the most favorable light.

If you have changed your residency or altered your pattern of activities in New York City in such a way that it could put you at risk of an audit, contact us for assistance. If you have received a residency audit questionnaire, call us before responding. Our tax lawyers have been helping taxpayers facing residency audits for over 25 years.

For additional background information on New York residency issues, download our FREE eBook on SURVIVING A NEW YORK STATE RESIDENCY AUDIT. Note again that New York City and New York State have the same residency tests.