Michigan Resident asked to work in NY for 2 years

[pmcgrath]

Hello,

I am a Michigan resident.  I have owned my home in Michigan since 2019.  My company is located in Dearborn Michigan.  I have been asked to live in NYC for 2 years.  I plan to keep my House in Michigan to come home to during breaks and long weekends.  My son will be living there and watching over it.  My company will be leasing an apartment in NYC on my behalf where my wife and I will live and work out of while supporting my NY client.  What should I do to minimize tax liability in both states?  What measures should I take?

[Cindy4]

Limiting you days present in NY to 183 days or less would help you avoid being classified as a NY statutory resident.  Any part of a day counts as a whole day.  Even though your company is leasing the apartment, it could still be considered a permanent place of abode, if you go over the 183 day rule. 

You will still be a MI resident due to maintaining your domicile there along with things like your drivers license.  NY would tax any sourced income earned within the state (https://www.tax.ny.gov/pit/file/nonresidents.htm) . MI would also tax, but would give a credit of taxes paid to NY. 

Record keeping is important.  Be sure to document your days spent in and out of NY and keep receipts from both places while conducting both personal and company business.

Hope this helps!

Cindy

[pmcgrath]

Thank you Cindy.  I will not be able to limit my days in NYC to 183 days.  Will I be double taxed and have to file MI, NY, NYC and Federal Taxes?  What can I do to limit may tax exposure as a Michigan home owner and follow tax laws?

[Cindy4 · Accepted solution]

You will have to file NY, NYC, and MI tax returns.  New York and New York City will tax all of your income as a statutory resident.  MI will tax you on all of your income and provide a credit for the taxes paid to New York and New York city.  This will reduce your MI tax liability to help avoid double taxation.  

MI, NY, and NYC all tax residents on all income so it is required you report all of your income.  Essentially, you will end up paying the highest tax rate but will be given a credit by MI for the taxes paid to NY and NYC.  You could make sure your employer is also doing NY and NYC withholding on your behalf.  

Michigan does offer other credits, but there are qualifying factors such as income level and taxable value of the home.  

Thank you for joining us today!

[rjs]

There is no separate tax return for New York City. The NYC income tax is included in the NY state tax return.

You also have to be aware that the amount your employer pays for the apartment that you live in is taxable income to you, the same as if they increased your salary by that amount. That could be a significant increase in your income.

[Mike9241]

you should consider talking to your company about adjusting your compensation.  you will certainly have increased expenses living in NYC while maintaining the Michigan residence.  also, the cost of living in NYC is substantially more than Dearborn. this would have a ripple effect on your income taxes federal and state. 

however, if this lead to a substantial promotion it might be worth it to bite the bullet.