Wisconsin residency and taxes

[Le_nene]

I obtained a green card mid October 2022. I arrived in Wisconsin where I have an address and where I issued a driving license (I don't own, rent, or otherwise have any financial interest/obligation in the house where my address is registered). I stayed for 41 days till I received my green card, and then off to my residence abroad I went.

1. Am I a part-time resident or a non resident?

2. All my income is foreign; mostly wages for which I claim Foreign Tax Credit, and bank interest which I pay a small tax for on the federal return. When filling 1-NPR, all my Wisconsin columns are zero. Is that right? Or am I making a mistake?

3. Is my foreign bank interest taxable in Wisconsin (it has been taxed federally)? And just to be sure, taxes generally are taken on interest, not on the original amounts in my bank, correct?

[MarilynG1]

If you earned little or no income during your short stay in Wisconsin, you probably don't have to file a Wisconsin State Return as a Part-Year Resident.

Otherwise, you would Allocate a % of your income to Wisconsin based on time of residency (which you would have to calculate yourself), but the amount may fall below Wisconsin Standard Deduction amount of $2,000 for a Part-Year Resident/Non-Resident.

If not, here's more info on Allocating Income for a Part-Year Resident.

@Le_nene 

[Le_nene]

Thanks MarilynG1,

When you mentioned my income during the short time I was in Wisconsin last year, did you mean Wisconsin/US sourced income? Or all income (including foreign)?

Part-time residents are supposedly taxed on income from all sources during the time they were residents. Nonresidents are only taxed on WI sources. Is my understanding correct? If so, then this is really a question of which residence status I belong to. I am not domiciled in Wisconsin, I don't know where I will end up in the US when I eventually make the move. Is this enough to establish that I am a nonresident in WI?

Thanks again...

[ErnieS0]

“Nonresident” has a different meaning for federal and state taxes. For federal taxes, a nonresident is someone who does not qualify to be a resident alien.

For state taxes, a nonresident is someone who does not live in the state, usually because they commute to work from another state or live in another state and have Wisconsin income from property or a business, for example. There is no physical presence test or exempt periods.

If you lived in Wisconsin, you would be a part-year resident unless you maintained a permanent domicile elsewhere, e.g. you owned and maintained a house in another country.

The fact that you don’t know where you will end up in the U.S. implies that Wisconsin is your home at present because you have no other home.

See Legal Residence/Domicile which includes a Legal Residence (Domicile) Questionnaire.

[Le_nene]

Thanks ErnieS0

I rent (not own) an apartment in a foreign country which I maintained and to which I returned in 2022 after my short stay in Wisconsin. Am I or am I not domiciled in WI for 2022 tax determination?

[DawnC · Accepted solution]

Since you maintained a domicile overseas all of 2022 - I don't think you would be considered a resident of WI for any part of the year.   Did you have any WI source income?

According to the WI tax authority:   A part-year resident is an individual who was domiciled in Wisconsin for part of the taxable year.  Part-year residents file Wisconsin Form 1NPR.

Domicile is the individual’s true, fixed, and permanent legal home, the place the individual intends to remain permanently and indefinitely, and the place to which the individual
intends to return whenever absent. An individual can have only one domicile at any one time. Once established, the domicile is never lost until all three of the following occur or exist.

• The individual specifically intends to abandon the old domicile and takes actions consistent with such intent,
• The individual intends to acquire a new domicile and takes actions consistent with such intent, and
• The individual is physically present in the new domicile.

Temporary absences do not change an individual’s domicile.  It does not appear you ever had a domicile in WI and your stay there was temporary and no WI tax return would be required.

[Le_nene]

Thank you DawnC

I did not have any WI or otherwise US source income. I maintained an apartment overseas, to which I returned before the end of 2022. I believe I am a non-resident then and should not file a tax return with WI. Please let me know if you disagree.

Since we are at the topic of residency, I have a smoehow related question for federal tax purposes this time Form 8939. I stayed in WI in 2022 for 41 days, so I would not pass the physical presence test (second bullet below) to determine that I live abroad. The other test is the bona-fide test, but I am not sure whether I qualify for that either! Here is an excerpt from the instructions:
"Presence abroad. You satisfy the presence abroad test if you are one of the following.
• A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
• A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported."

First, I am a green card holder, not a citizen. Does this mean that I cannot claim bona fide residence abroad (notice that, unlike the first bullet point, the second bullet point explicitly mentions citizen or resident).

Second, The apartment abroad I am living in is located in country X in Europe; I moved to that country in February. I moved there from another European country, Y. Moreover, I have my family's home in my country of origin Z.

Which threshold applies to me for Form 8939? The lower threshold for a US tax resident who lives in the US, or the higher threshold for a US tax resident who lives outside the US?