What's my residency?

[Vb1985]

In 2021, I will have lived in Costa Rica for January/February, Mexico for March, California for April, New York for May-July, and Boston for August-December.  My apartment is in New York, and I will be permanently relocating to Boston in August.  What should I claim as my residency?  And does partial-year residency change my taxes at all considering the various tax rates in each of these places?

[dclick]

Hello and thanks for reaching out with this excellent question!

Typically, an attempt to establish residency is required to establish a taxable nexus in a new state. Each state has slightly varying definitions of what constitutes residency.

For example, in Virginia, like most states, we have the 183 days rule:

However, typically, you would not be considered a residence if you were merely taking temporary absences / vacations in various states and working from them.

Actions that contribute to establishing residency:

Here are some actions that can help you establish domicile in a new state:

• Keep a log that shows how many days you spend in the old and new locations. 
• Change your mailing address.
• Get a driver’s license in the new state and register your car there.
• Register to vote in the new state. (You can probably do this in conjunction with getting a driver’s license.)
• Open and use bank accounts in the new state. Close accounts in the old state.
• File a resident income tax return in the new state, if it’s required. File a nonresident return or no return (whichever is appropriate) in the old state.
• Buy or lease a residence in the new state, and sell your residence in the old state or rent it out at market rates to an unrelated party.
• Change the address on important documents, such as passports, insurance policies, and wills or living trusts.

The more time that elapses after you move to a new state and the more steps you take to establish domicile in that state, the harder it will be for your old state to claim that you’re still a resident for tax purposes.

I would suggest keeping a record of your locations and dates for review at the end of the tax year. If you do not establish permanent residence, get state level identification, or make other major moves towards establishing a permanent residence you will likely not owe income tax in a state due solely to a short term visit.

Based on your post, it sounds like you had residence in New York, so if you did not establish residence in these short term stays you would have the New York Residence and the Massachusetts residence as part year returns based on a current residence and an establishment of new residence.

I hope this helps!

-Dennis

[DemiW]

Greetings @Vb1985!  Your travels sound exciting.

Great info @dclick!

@Vb1985 Keep in mind that residency is the location of your home where you intend to live when you return from a vacation or temporary business travel.  Like @dclick  indicated, you are considered a resident of the state if your main home is in that state.    Depending on the nature of your business in California, will determine if you need to file a nonresident return for California.  

The best news is that TurboTax will help you calculate how much you owe to the multiple states where you earned income.   The records that @dclick advised to keep will definitely assist in allocating your income correctly.

[Vb1985]

Thanks, Dennis!  What are the rules for part-year New York residency?  If I assume I was a New York resident even while abroad and in California, I'm guessing I'll have "lived" here for about 195 days.  In that case, would I be a part-year resident in both New York and Massachusetts?

[dclick]

Great question!

Based on the information you have provided, it sounds like you would need to file a Part-Year Resident New York and Massachusetts return at the least as you had established residence in New York and are establishing permanent residence in Massachusetts. The intent is often a key part as well, so the steps generally associated with establishment of residency above are a handy pocket reference!