hot tub depreciation

[Nev4tax]

@DanielV01 

Daniel - one more question.

If I moved to Florida from NY and changed my domicile, also spent more than 184 days in Florida and changed my sourced income outside of NY, then if I travel to NY 100 days a year let’s say, will NY count those 100 days as sourced income to NY and I will be subject to NY state tax for those days? 

[DanielV01]

@Nev4tax.  That also depends.  If while you are physically present in New York you conduct business, fulfill gainful employment, or generate income from a New York source, New York will want you to pay tax on that income specifically, as a nonresident.  It won't depend on how many days you were actually in New York, but rather how much income you earned while physically being in New York or from New York sources.

Example:  You were present in New York for 100 days, but only worked for 2 days while you were in New York, and earned $5,000 in those two days.  In this case, you will pay New York tax on $5,000.  But you will pay New York state tax only because you are not a resident of New York City.  (The tax rate will be determined by your overall income, however.

[Nev4tax]

@DanielV01 

hi Daniel - happy new year. one more question as it relates to NY taxes.

As a reminder I moved and bought a place in Florida and also permanently sold my apartment in NYC in 2021. In addition, during 2021 I spent more than 200 days in Florida and do not have any residence or place of abode in NY state or NY city anymore.

I am considering of getting a rental in Jersey City which I would use when I come to Tri-state area for work. Last, my office moved my headcount to our Florida office, therefore removing my “Sourced Income” from our NYC office (to help on convenience rule) 

1) My question is do you think NY could argue my domicile never changed out of NY since I have places in both Florida and Jersey (even tho I find it hard they could if I have no residence or abode in NY)?. Assume I split my time between Florida and Jersey equally. 

2) also - Do you think they could argue my “sourced income” is still NY if I visit the NY office (40 days a year). My plan would still be to report and pay NY state tax on those 40 days of course

But I wanted to see if you think they could argue my domicile never changed or my income is still NY sourced. 

thank you 

[Carl]

See https://www.alperlaw.com/florida-asset-protection/florida-residency/

One important thing is to actually file a declaration of domicile in whatever Florida county you intend to call your permanent home.

[Nev4tax]

@DanielV01 

i did file a declaration of domicile. See my questions I wrote above however. 

[DanielV01]

@Nev4tax  I've been away for the long weekend, so I'm just getting back to you but saw your questions.  They are two separate questions (literally one has nothing to do with the other), so I'll answer both separately.

1.  Can New York argue that your domicile never changed from New York?  Not under the facts you provide, no.  If you are no longer maintaining a domicile in New York (and you state you sold the apartment), then New York has zero claim of residency.  (However, New Jersey might.  I'll address that at the end.)  How much physical presence you maintain in New York is moot for residency purposes if you do not have an "abode" in New York.

2.  Will your income be "New York sourced income"?  To the extent that you derived the income from New York, yes.  This can become very much "gray area", especially with how New York handles this.  But let me put forth a simple explanation.  Let's say your overall income is $100,000 for the year, derived predominantly from your work from your bona fide Florida work office.  However, it was necessary to conduct certain business physically in New York.  If your Form W2 comes from the New York office (which is likely), then you will likely see that all of the income is reported to New York.  This is a New York requirement, because they do not allow employers to assume how much of the income is "New York-sourced" and how much is not, in part because of the convenience principle.  On the New York return, the allocation form is used (New York IT-203-B), which determines how many "working days" you worked in New York divided by overall working days for the year.  That resulting percentage will be multiplied the overall income (100,000) and the result will be what New York is allowed to tax.

3. Bonus question:  Could New Jersey claim your income is taxable there?  Yes, if you pass the test to be considered a statutory resident of New Jersey.  To be considered a statutory resident of New Jersey, you would need to:

• Have a permanent home in New Jersey
• Spend more than 183 days in New Jersey

A permanent home does not have to be a house.  It can be a rented residence that you maintain permanently as your residence.  It does not have to be your domicile.  (Your domicile is your Florida home).    If you sign a lease for your NJ apartment, or maintain the apartment for at least 1 year, you could be creating an issue for New Jersey taxation if you spend 183 days or more in New Jersey.  If you do all of your income is taxable in New Jersey.  Since your domiciliary residency is Florida, you probably want to avoid this result.  If you feel you might end up spending more than 183 days in New Jersey, you may want to look into options that do not require you to pass the "permanent home" threshold.  That could be a temporary residence (which your job may even reimburse with nontaxable income).  However, if you know you will be safely under the 183 day threshold, then New Jersey residency will not be an issue because New Jersey is not your domicile.  This article discusses this:  New Jersey Residency Audits

[Nev4tax]

@DanielV01 

thanks Daniel.

1) I agree on point #1 related to domicile 

2) On point #2 related to “NY sourced income”, I am part of our Florida office so don’t have any NY tax withholding for state or city (my W2 sourced income is Florida). For the days I physically worked in NY I would just allocate those days to NY state. For example, if I went into the NY office 50 days a year I would report that and pay tax on that. But I would never be asking for a refund since I have no withholding as part of the Florida office. I would just pay NY for the days I went in.

In this case, Do you see a case where they would try to challenge that all my income in NY? 

[DanielV01]

If you do not have New York tax withheld, then you are correct that you would only pay New York tax.  Can they challenge?  They can always challenge.  The key is documentation and keeping records.  They likely will not challenge if the information presented to them is reasonable.  (There are many people who have a work situation similar to yours in New York).  

And as far as how I explained New York Nonresident taxation, allocation is the method that New York prefers to use.  So even if they don't withhold New York tax (which you may wish for them to do when working in New York), this method will reconcile the correct amount that is taxable to New York, if the office doesn't provide a specific number.

Remember that a tax return is a reconciliation.  The return compares how much income is taxable, the tax amount due on that income amount, and how much tax you've paid in.  If you have paid in more than what the reconciliation reveals you needed to pay, that's where you get a refund from.  Otherwise, you pay the balance due (unless you paid exactly the right amount).

[Nev4tax]

@DanielV01 

daniel - one follow up question on #1 related to NY challenging the change in Domicile to Florida.

If I claim my domicile is Florida as I bought my apartment here, have driver license, bought my car, registered to vote, have my family her, declared Florida as my official domicile etc, but I also have a rental in New Jersey and use New Jersey frequently (say 2/3 of the time) 

I also sold my NY apartment and have no residence there. However, can NY challenge and say your domicile never changed to Florida as you never “landed” and still spending significant amount of time in NJ? And therefore, your domicile never changed and are still NY 

[DanielV01]

@Nev4tax  Given the facts you provide, New York would not have a legitimate challenge.  You are not "maintaining an abode" in New York.  New Jersey is not New York, so if you have an apartment in New Jersey, New York does not have a basis for saying that you are either a domiciliary resident (because your domicile is now Florida), nor are you a statutory resident (you do not have an abode in New York no matter how many days you are present there.)  So New York does not have a basis to tax all of your income.  However keep in mind these two points (as I've brought out previously):

• New York does have the right to tax New York sourced income.  As you are willing to concede, New York can tax your income you earn while physically in New York for work.  Given your previous facts, they cannot legitimately claim that your income in Florida is New York sourced.

• New Jersey (instead of New York) could claim that you are a statutory resident of New Jersey.  If you meet the test to be a statutory resident of New Jersey, they can tax all of your income, even though you actually live in Florida and are predominantly working out of your Florida office.  Also keep in mind that even if you do not maintain a permanent home in New Jersey (or are physically present less than 183 days in New Jersey), you would still have to pay New Jersey tax on any income earned while working in or from New Jersey.  (Example:  if you telecommute to your Florida office from your New Jersey apartment, this is income taxable to New Jersey as a nonresident).

[Nev4tax]

@DanielV01 

thanks Daniel. Instead of keeping New Jersey apartment, what if someone stayed in NYC and split time between 2-3 different friends apartments? 

In that case could NY argue you are domiciled in NY or have a permanent place of abode? Assume facts about Florida property and supporting documentation is still true 

[DanielV01]

@Nev4tax  New York probably cannot legitimately claim that you are "maintaining an abode" under those circumstances.  Please see this website that has additional information:  Income tax definitions - Department of Taxation and Finance.  On that website, there is a document entitled Rules for undergraduate students that gives a bit more detail.  In essence, you "maintain an abode"  if you either own or lease the place you plan to stay while in New York on business.  If you do not, then the abode is not yours to maintain.  The article specifically mentions school dorms as not being a place of abode.  Likewise, hotels (even long-stay hotels) do not qualify as abodes.  So even if you pay a rent to your friend while you stay there, it is not "maintaining an abode" if there is no lease.  Again, any documentation that you can maintain in case the state questions your position would be a good idea.