topic Re: Residency in State tax filing

Residency

nikkiliz — Thu, 04 Mar 2021 20:47:23 GMT

I lived in NM and went to school in AZ until September when I moved to CA to stay. I have income from all three states. I was physically present in NM for 159 days, AZ for 87 days, and CA for 119 days. I know I am a nonresident for AZ. I thought I was a resident of NM for 2020 taxes and a Part-Year Resident in CA. NM was my domicile while I was in AZ, but I was not physically present in NM for 185 days. To be a resident of NM it needs to be your domicile (which it is no longer) or you have to have been physically present for 185 days or more. For tax purposes, am I resident of CA or NM?

Re: Residency

ErnieS0 — Thu, 04 Mar 2021 23:18:12 GMT

The short answer is that your state residency does not matter if you did not earn any income in New Mexico, Arizona or California. You do not have to file any state tax returns. Since you moved to California to stay in September 2020, you would file a California resident return next year.

We would need you to clarify your situation to determine your residency for 2020. I’m not sure what you mean by “lived in NM and went to school in AZ.” Going to school is considered a “temporary absence.” Students retain their permanent residency. If you lived with your parents in NM or had a permanent place there, you would be a NM resident until September and a CA resident for the rest of the year. AZ would not count.

Otherwise you would be a part-year resident in all three states, if you did not have a “permanent home” in New Mexico.

Re: Residency

nikkiliz — Fri, 05 Mar 2021 00:23:04 GMT

For clarification, I had income from all three states. My parents live in NM and when I was not in school in AZ I lived with them in NM.

Re: Residency

DianeW777 — Sun, 07 Mar 2021 14:06:17 GMT

You have residency in two states, NM where you lived until you completed school and then CA when you moved there after school.

If the filing requirements are met then you must file a return in all three states. Although the time in AZ does require a tax return due to earning money there, you were staying there temporarily while attending school and did not change your residency from NM.

NM as a part year resident until your move to CA, claim a credit for taxes paid to another state ONLY for the AZ income if there is tax liability charged in AZ for the income earned while going to school there.
CA as a part year resident - no credit for taxes paid to another state
AZ as a nonresident - no credit for taxes paid to another state.

Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed will be the lesser of:

the tax liability actually charged by the nonresident state, OR
the tax liability that would have been charged by your resident state

As per @ErnieS0 you must make the final determination about your residency. If you decided you were a part year resident in all three states, then you would file as such on all three states. The information provided above seems the accurate based on your specific situation.