AZ nonresident who lived in the state several months

[hoga]

My wife & I lived in Texas for 10 years.  In 2022, she went to Arizona for about 6 months (<9) to complete an internship in pursuit of a degree.  After the internship, she is returning to TX.  That relocation is legitimately temporary and it has always been our intent for her to return to her domicile with me in TX.  As such, I believe she is legitimately a “nonresident” filer in AZ for 2022, and when I prepare a return in TT claiming only her “Arizona source” income there is zero tax due (it's not much income).   

Two questions:

 1) Do you agree that she qualifies in AZ for nonresident filing status?

 2) If so, with zero tax liability, does AZ even require that we file a state return for her?

Thanks for your help! 

MH

[ErnieS0]

Yes. Your wife was an Arizona non-resident because she was in the state for a temporary and transitory purpose. Additionally, I’m assuming you did not go to Arizona and maintained a permanent joint residence in Texas (“she went to Arizona”) so she maintained her Texas residency.

In the state of Arizona, full-year resident or part-year resident individuals must file a tax return if they are married and filing jointly and gross income is greater than $25,900. For non-resident individuals, the threshold numbers above are prorated based on the individual's Arizona gross income to their federal adjusted gross income.

Without seeing your return, it’s not possible to say whether you are required to file. A zero balance due indicates no tax due. It’s possible you are still required to file with a $0. However, tax penalties are based on unpaid tax, so there would be no penalty for not filing a $0 balance return.

[hoga]

Thank you for the help Ernie!  Very much appreciated. 

v/r

MH 

[hoga]

Continuing from previous discussion above regarding “AZ nonresident” status:

> Facts from before: 

“My wife & I lived in Texas for 10 years.  In 2022, she went to Arizona for about 6 months (<9) to complete an internship in pursuit of a degree.  After the internship, she is returning to TX.  That relocation is legitimately temporary and it has always been our intent for her to return to her domicile with me in TX.”

> New info: 

When my wife relocated to AZ temporarily, she got an AZ driver’s license and registered one of our three vehicles there.  The AZ DOT website indicates that Arizona requires vehicle registration and driver’s license are required if you live there for 7 months (she was there 7 months 11 days in 2022).  Our other two vehicles remained registered in the state of our domicile, Texas.

However, when my wife got her driver’s license, she also registered to vote in AZ and at some point in 2022 she did vote in AZ.  Voter registration is one of many considerations used to evaluate residency status.  It’s my understanding that “the question of residency for state income tax purposes cannot be answered by a general rule, but depends largely on the circumstances of each case.  Generally, no one single factor is controlling, but all relevant facts must be considered in determining residency.”  

I believe the totality of the facts and our actions still substantiate that Texas is and has always been our domicile.  That has certainly always been our intent.  She only went to Arizona because that is where the internship she needed was located, and conveniently her sister has a house that we rented for her time there.  Voter registration was a mistake; should have simply voted in TX via absentee ballot.  The action of registering and then voting could certainly be interpreted differently and the state might conclude that voting made her a resident. 

To quickly assess “actions”(indicators) of intent that are listed:

 1 - we registered one of three vehicles in AZ; the other two remain in domicile(TX).

 2 - she lived in AZ for 7 months

 3 - she got an AZ driver’s license

 4 - bank accounts: did not get any in AZ

 5 - home purchase: did not..rented in AZ

 6 - real estate tax: did not pay/owe any

 7 - AZ income tax: did not estimate/pay any

 8 - employment/income within AZ:  none

 9 - voter registration:  she registered/voted

-----  also relevant  ------

 - her husband (me) remains in domicile of TX

 - two vehicles remain registered in TX (we are both on the titles)

 - we have lived in TX for 10 years

 - we filed Federal return as “married filing jointly”, claiming TX address/domicile

 - her intent has always been to leave AZ following the internship

Question to expert: 

1) Given the additional information, do you still think my wife qualifies as a “nonresident” in Arizona?  

[ErnieS0 · Accepted solution]

A driver’s license and vehicle registration carry very little weight in a residency audit contrary to popular impression. Getting a new license or registration does not automatically make you a resident.

In my opinion, the main factor in your case is that your wife went to Arizona for an internship with no intent to permanently live there. She probably should not have voted in AZ but that’s just one fact.

This article deals (“What To Expect In A Residency Audit”) deals with New York, but the information is applicable to any state. Read The Five Factors, particularly Near and Dear and Family.

[hoga · Accepted solution]

The article helps clarify.  Without suffering you to more details, I believe the 'five primary' factors favor our situation, as well as most of the 'other' factors.  Since voter and vehicle registration are mitigated as being more peripheral and only one of many, I think we are on solid ground. 

Thanks again Ernie. 

v/r

MH