topic Re: Multiple States in State tax filing

Multiple States

kathleenv2 — Thu, 16 Jan 2025 03:29:54 GMT

My daughter lives with me in PA but is moving to upstate NY for a year, renting an apartment, to work for a company in NY. Because she is only there for a year and returning to her PA permanent home at the end of the year, how should we handle income taxes? Does she have to pay taxes to both PA and NY? Does she need to file a full year resident return for NY and a full year resident return for PA? Thank you in advance!

Re: Multiple States

Opus 17 — Thu, 16 Jan 2025 05:13:36 GMT

That depends on whether she is changing her domicile. Briefly, domicile is a person's permanent home and you can only have one domicile at a time. See here for PA and NY rules on residency.

https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax/determining-residency.html

https://www.tax.ny.gov/pit/file/nonresident-faqs.htm

If your daughter is changing her domicile (residency), then she owe a resident tax return to PA for income paid while she is a PA resident, and she owes tax to NY for income paid while she lives in NY. Assuming she doesn't move exactly on December 31, she would file as a part-year resident of each state.

However, you describe that she is not changing her permanent residence (domicile). That means she must file a PA tax return to report all her world-wide income, even if it was paid while she was living elsewhere. Then she is either a NY non-resident or an NY statutory resident. She is a non-resident if NY is not her permanent home and she lived in NY less than 183 days of the year. She would file a non-resident NY return that only reports NY income, and a PA resident return that reports all her worldwide income, including her NY income. PA will give her a credit against taxes paid to NY on the same income.

But, if she is a statutory resident of NY, she would file as an NY resident and report all her worldwide income for the year, as well as filing a PA resident return reporting all her worldwide income. PA may give her a credit but this is more complicated when a person has two states of residence. NY considers you a statutory resident (resident by law, if not in fact) if you live in NY at least 184 days AND maintain a permanent abode for "substantially all of the taxable year". An abode is a permanent dwelling that has a kitchen and bathroom and is suitable for year round living, even if you don't live there year round. So an apartment is an abode even though it is rented, but a lake cabin or hotel room is not a place of abode.

So you need to look at when she moves. As long as she is not in NY for "substantially all of the taxable year", then you would not need to worry about her being a NY resident, she would be a non-resident. She should have NY tax withheld, and she may need to make estimated tax payments to PA, depending on what her other income is that is not NY income (like investments, gambling, bank interest and so on.)

Re: Multiple States

Hal_Al — Thu, 16 Jan 2025 10:53:14 GMT

Her intent to only be in NY temporarily is a factor. From what you describe, she should file a NY non resident return and a PA resident return. She will pay tax to both states. But, PA will give her a credit, or partial credit, for the tax paid to NY. Prepare the non resident return first.

In taxes, a temporary absence is described as one expected to last less than one year. As the other reply indicates, other factor could come into play.

Re: Multiple States

TomD8 — Thu, 16 Jan 2025 15:28:36 GMT

@kathleenv2 --

For state income tax purposes, your daughter has a situation of dual residency.

She is a statutory resident of New York because she will be in New York for 184 or more days of the tax year, and she will maintain a permanent place of abode in New York for substantially all of the taxable year.

https://www.tax.ny.gov/pit/file/nonresident-faqs.htm

She is a domiciliary resident of Pennsylvania, because she intends to return to her permanent home there after her year's temporary absence. Therefore she has not changed her domicile.

She must file a resident tax return in both NY and PA. He domiciliary state of PA will grant her an "other state credit" for the taxes paid to NY. The credit may not exceed her taxes due to PA. In TurboTax, she should file her returns in this order: federal > NY > PA.

Re: Multiple States

Opus 17 — Thu, 16 Jan 2025 17:13:44 GMT

@kathleenv2

@TomD8

I indicated that in my answer, but I do think there is some leeway depending on when the daughter moves to NY. For example, if the job is from June 1, 2025 to May 31, 2026, she would be living in NY more than 183 days, but I don't think you could reasonable argue that 7 months is "substantially all of the taxable year." So I think the timing matters, which we weren't given.

(I think the "substantially all of the taxable year" rule is mainly meant for snowbirds who keep a house or apartment in NYS but live in warmer states for much of the year. The idea is that even if you are a domiciliary resident of--let's say--Florida, but you keep an apartment in NYS all year, you will be treated as a full year resident if you are in the state 184 days. It's not clear to me how that rule would apply to a 1 year temp job, but I think the "substantially all" phrasing could have some effect.)

Re: Multiple States

TomD8 — Thu, 16 Jan 2025 17:28:42 GMT

Valid point. NY audit policy is that "substantially all" means "a period exceeding11 months." See page 63 of this reference:

Nonresident Audit Guidelines

So the daughter's move-in date definitely does matter.

If she does not meet the 11-month guideline for the year, then she would file a non-resident NY tax return and a resident PA return, completing the returns in that order in TurboTax.