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youcandoit76
New Member

Full year resident of NY state? living in foreign country...

my wife and I lived in a foreign country in 2016. We were out of the US for more than 330 days. We are both GreenCard holders and put our foreign address in the "personal info" section.
in "state taxes": what is our residency? full year residency? or non-resident? part time? For some reason, this is not clear. None of the categories seem to fit. Turbotax initially recommended full year resident, I think...
Your help is highly appreciated.
1 Best answer

Accepted Solutions
GeoffreyG
New Member

Full year resident of NY state? living in foreign country...

Generally speaking, living abroad temporarily (where the word "temporary" here can mean a period from as short as a few days to as long as an indefinite number of years) does not change someone's legal domicile (a well-established legal concept).  Thus, moving abroad doesn't normally change a United States taxpayer's responsibility to file and pay taxes to their "home" state.

However, New York is something of an exception to these otherwise normal rules.  Please allow us to explain this.

Typically, New York taxpayers living and working in another state, or in a foreign country, have to pay taxes to New York state on all of their earnings, wherever in the world they earn income.  Moreover, they do not change their full-year New York resident status by simply living in another state or country -- as long as they maintain their New York domicile.

However, New York does allow some exceptions to this, in contrast to the tax practices of most other states, for those New York residents who live overseas for an extended period of time.

It seems that you could very well qualify for such an exception, if you've been living abroad "long enough."  In order to determine that with certainty, however, and to help you define your own residency status for New York state tax purposes, please refer to the following New York Department of Taxation & Finance document (you can click on the link to open it):

https://tax.ny.gov/e-services/training/preparer/pdf/Residency%20and%20Allocation%20Rules%20for%20NYS...


In particular, please see Pages 6 through 10 (Slides #'s 5 - 9).

See also Pages 13 through 23 (Slides #'s 11 - 21), and the discussion there on "Nonresident Domiciliaries."  It is possible that you may qualify for this tax benefit.  New York state nonresident tax status, for income tax reporting purposes, is granted to those otherwise New York residents living overseas, even if they maintain their permanent legal domicile in New York and will eventually return to it, if they can satisfy the tests described therein.

If you can meet those tests, by virtue of living in another country, then you can qualify as New York nonresidents for state tax purposes (although you still are required to file a US federal tax return; although you could also take the foreign earned income tax exclusion).  In such an event, you may not even have to file a New York tax return if you don't want to.  For more information on the requirement to file a New York tax return while classified as a nonresident, please see the following webpage:

https://www.tax.ny.gov/pit/file/nonresidents.htm


To the extent that the New York information above conflicts with the TurboTax software recommendation, you should side with the facts provided by the New York Department of Taxation and Finance rules.  While TurboTax is a wonderful tool, its in-program suggestions are not always right in every single instance, especially where unusual filing issues and unique state exceptions to them (like NY and overseas taxpayers) are involved.

Thank you for asking this important question.

View solution in original post

8 Replies
youcandoit76
New Member

Full year resident of NY state? living in foreign country...

Thank you. I really appreciate it. Now, just for clarification: I might be confusing something here: For a permanent resident (GreenCard holder) it is not allowed to declare yourself as a non-resident on your tax return, but I guess this is applicable on a different section of Turbotax right? (personal info etc) I double checked and I filled out the regular 1040 form as a US resident. The NY state tax form is a different thing right? Technically declaring myself as a non-resident on the NY state tax is not jeopardizing my permanent resident (greencard) status. Am I correct? Sorry, I am being super paranoid about this but it is very important to me not to jeopardize my GC status. Also, at the end, Turbotax asks me if it is correct that my address is in a foreign country but I am a full time resident of NY. This seems to be a conflict in the software? But when I continue everything works... I will declare NY full time resident (it will make no difference - money wise)  but I am just curious how all of this works for the future and in general. Please be kind. This is my first time not using a tax accountant and everything is a bit new... Thanks again!
GeoffreyG
New Member

Full year resident of NY state? living in foreign country...

Hello youcandoit76:

Thank you for your kind words, and for your follow-up questions.

You should be able to file a Form 1040 federal tax return as a permanent resident (a.k.a. a Green Card holder), and then file a NY nonresident tax return (or a resident tax return if you would prefer), all without jeopardizing your federal immigration status.  In fact, whatever you end up doing with New York state won't affect your federal status in any way -- as they are two completely separate things.  And no, I don't think that you're being unduly paranoid at all.  In fact, I can absolutely appreciate your caution and thoughtfulness on this issue.

With respect to the TurboTax program:  yes, you're probably going to run into that issue regarding a program recommendation on which NY state return to file.  As explained in my original answer, while the TurboTax guidelines may be correct for 99%+ of all users, it is not necessarily "right" in every single case . . . especially when it comes to unusual issues like this regarding residency.  That said, if you qualify for the (federal) Foreign Earned Income Exclusion (Form 2555 on your federal return) by virtue of living overseas, then it really won't matter which NY state tax return you file, because NY will honor the federal income exclusion anyway.

Thanks again.
youcandoit76
New Member

Full year resident of NY state? living in foreign country...

Thank you TurboTaxGeoffreyG! I really appreciate your help!
thiagar3
New Member

Full year resident of NY state? living in foreign country...

I have a similar question. My permanent address is in a which is my parents address. I lived and worked in NY for 8 days and left and lived in a foreign country for more than 330 days and hence claiming FEIE. Do I have to file Georgia state return as a nonresident though I had 0 income for that state just for having the permanent address there
GeoffreyG
New Member

Full year resident of NY state? living in foreign country...

Generally speaking, living abroad temporarily (where the word "temporary" here can mean a period from as short as a few days to as long as an indefinite number of years) does not change someone's legal domicile (a well-established legal concept).  Thus, moving abroad doesn't normally change a United States taxpayer's responsibility to file and pay taxes to their "home" state.

However, New York is something of an exception to these otherwise normal rules.  Please allow us to explain this.

Typically, New York taxpayers living and working in another state, or in a foreign country, have to pay taxes to New York state on all of their earnings, wherever in the world they earn income.  Moreover, they do not change their full-year New York resident status by simply living in another state or country -- as long as they maintain their New York domicile.

However, New York does allow some exceptions to this, in contrast to the tax practices of most other states, for those New York residents who live overseas for an extended period of time.

It seems that you could very well qualify for such an exception, if you've been living abroad "long enough."  In order to determine that with certainty, however, and to help you define your own residency status for New York state tax purposes, please refer to the following New York Department of Taxation & Finance document (you can click on the link to open it):

https://tax.ny.gov/e-services/training/preparer/pdf/Residency%20and%20Allocation%20Rules%20for%20NYS...


In particular, please see Pages 6 through 10 (Slides #'s 5 - 9).

See also Pages 13 through 23 (Slides #'s 11 - 21), and the discussion there on "Nonresident Domiciliaries."  It is possible that you may qualify for this tax benefit.  New York state nonresident tax status, for income tax reporting purposes, is granted to those otherwise New York residents living overseas, even if they maintain their permanent legal domicile in New York and will eventually return to it, if they can satisfy the tests described therein.

If you can meet those tests, by virtue of living in another country, then you can qualify as New York nonresidents for state tax purposes (although you still are required to file a US federal tax return; although you could also take the foreign earned income tax exclusion).  In such an event, you may not even have to file a New York tax return if you don't want to.  For more information on the requirement to file a New York tax return while classified as a nonresident, please see the following webpage:

https://www.tax.ny.gov/pit/file/nonresidents.htm


To the extent that the New York information above conflicts with the TurboTax software recommendation, you should side with the facts provided by the New York Department of Taxation and Finance rules.  While TurboTax is a wonderful tool, its in-program suggestions are not always right in every single instance, especially where unusual filing issues and unique state exceptions to them (like NY and overseas taxpayers) are involved.

Thank you for asking this important question.
jenjenjenjenjen
New Member

Full year resident of NY state? living in foreign country...

Hi @GeoffreyG , hoping you can help as you seem so knowledgable on this. I did try to read the PDF you linked to but the link is broken.

 

A couple of quick facts -

My husband and I got married August 2019

He moved from NYC to London October 2018

I moved to from NYC to London October 2019

My husband is British with a US green card

I am American with a UK Residence Permit

 

We have been told that he needs to pay new york city and state tax on HIS income from 2019 when he was working soley in the UK even though he only worked 2 weeks in NYC. The reasoning is because I worked in NYC that year and we got married and since he moved from NYC within a certain timeframe. We can't believe this is the case. We know we will have to pay US taxes since he is a green card holder but paying NY state and city tax for him we think is crazy. Hoping you can help!

SusanY1
Employee Tax Expert

Full year resident of NY state? living in foreign country...

Your husband will need to file a New York return that includes all of his income, but the tax will be prorated to represent the share of it that was earned while he was in New York.  

 

The state uses the entire amount of income to determine the tax rate, but then uses a formula to prorate the tax based on the proportion earned inside the state. 

 

Because of the way the tax is calculated you will see all of the income on the tax return, but the amount of tax will be relatively small if only two weeks of the income was New York source income. 

 

 

@jenjenjenjenjen

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kristinelbly
Level 3

Full year resident of NY state? living in foreign country...

I just came across this, it sounds like the person may not have understood that in 2019 you and your husband could have separate filing statuses at the State level.

 

Your filing would have depended on if you were a statutory resident of NYS in 2019- did you have a permanent place of abode in NYS and spend > 183 days here? If the answer is yes, you need to file a married filing separate full-year IT-201 return, even though you moved to London before the end of the year. 

 

If you are not a statutory resident, you can file a married filing joint IT-203 nonresident return. In the NYS column, you prorate all of the income you earned, or otherwise accrued to you, while you were a resident. You exclude all of your husband's non-NY source income reported in the federal column. 

 

You would do the same on form IT-360.1 if you were a part-year City resident. Attach a statement with your return that breaks down your income and your husbands income, as if you were filing separate tax returns. 

 

Domicile changes to a foreign country are especially difficult to prove. You have some good facts. You can seek coverage under the 548-day rule in any given year you are concerned about an audit risk. More about that here: https://www.hodgsonruss.com/media/publication/[social security number removed]%20The%20Nuts%20and%20...

 

Best of luck and enjoy London. 

Kristine L. Bly, EA
Co-Founder & Managing Partner PEAR Consultants, LLC

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