Taxation issues with more than one state of residence?

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TresBelle65
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Taxation issues with more than one state of residence?

Post by TresBelle65 » Tue Jan 14, 2020 12:45 pm

I'll be retiring in a couple of months and moving to another state for retirement. I am expecting that nearly all of my earned income for 2020 will be earned in the state I live in now. I expect to have mostly passive income in my new state.

How does that work for tax purporses ? (I have lived in the same state for 30+ years, so I am not versed in this)... I assume I will be filing tax returns for 2020 in both states? Will I pay the tax rates of my current state on the income earned here? Is there some kind of determination based on residency dates? number of days spent in each state based on 365 days/year? or some other method?

Any enlightenment in this regard is most appreciated.

Thanks

livesoft
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Re: Taxation issues with more than one state of residence?

Post by livesoft » Tue Jan 14, 2020 12:58 pm

I am not a resident of NY, but file a NY tax return every year. That's because I earn consulting income in NY.

Every state that has an income tax has a non-resident tax-return which is often conflated with a part-year resident tax return. So you can look this stuff up via google for all the states that you will deal with. It is so common that there should be plenty of info on the state government's web sites for you.
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rooms222
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Re: Taxation issues with more than one state of residence?

Post by rooms222 » Tue Jan 14, 2020 1:09 pm

It is state specific. What are the two states?

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TresBelle65
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Re: Taxation issues with more than one state of residence?

Post by TresBelle65 » Tue Jan 14, 2020 6:35 pm

New York

Virginia

Thanks

hachiko
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Re: Taxation issues with more than one state of residence?

Post by hachiko » Tue Jan 14, 2020 7:02 pm

Which one are you moving out of?

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TresBelle65
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Re: Taxation issues with more than one state of residence?

Post by TresBelle65 » Tue Jan 14, 2020 7:27 pm

Leaving Virginia for New York later this year.

hachiko
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Re: Taxation issues with more than one state of residence?

Post by hachiko » Tue Jan 14, 2020 9:18 pm

When are you moving? When will you first have a home/apartment/similar available to you in New York (whether owning, renting, borrowing, etc.)? Will you be physically present in New York for more than 183 days (including any second of a day) in 2020?

Generally speaking, you pay tax to your state of residence on all of your income while you're a resident of that state. You also pay tax to other states on income that is sourced to that state. You then generally get a credit for the tax you paid to that other state from your state of residence (or less than that if the rate in your state of residence is lower).

If you have $150 of Virginia source income during the part of the year you're a Virginia resident, and $100 of New York source income during the part of the year you're a New York resident, you would pay tax on $150 to Virginia and tax on $100 to New York.

If you have a permanent place of abode in New York for substantially all of the taxable year and spend more than 183 days in the state, you may be a full year resident of New York instead of a part year resident.

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beyou
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Re: Taxation issues with more than one state of residence?

Post by beyou » Tue Jan 14, 2020 10:17 pm

And they day NY is losing it’s population.
A win for NYS, welcome !

NYS is used to trying to capture revenue from those leaving. Wonder if they have a clue what to so in your case ;-)

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grabiner
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Re: Taxation issues with more than one state of residence?

Post by grabiner » Tue Jan 14, 2020 11:07 pm

Most states determine residency primarily by your domicile, the location of your permanent home; they may also tax you as a resident if you maintain a home and spend a certain number of days in the state, even if your domicile is elsewhere Doing things such as no longer having a place you can live in the old state, moving your belongings, and registering to vote in the new state can be used to establish that you have changed domicile. (In contrast, if you maintain homes in both states and live in each state for part of the year, your old state may claim that you never gave up your domicile).

If you do change domicile and are no longer considered a resident of the old state, you will file part-year returns for both states. Each state will tax you only on income earned while you were a resident of that state, or on income with a source in that state. (For example, if you move to your new state, and then sell your old home for a taxable capital gain, the gain will be taxed by both states). If income is taxed by both states, you can usually take a credit against your resident tax for the non-resident tax imposed on the same income. (But check the rules carefully; some states limit when you can do this, and VA reverses the direction of the credit with some states, so that you take your VA resident tax as a credit on the non-resident tax of the other state.)
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Katietsu
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Re: Taxation issues with more than one state of residence?

Post by Katietsu » Tue Jan 14, 2020 11:30 pm

Since you will be a part year resident of each state, you will need to divide your income by your period of residencies. Sometimes this is easy. For instance, if all your wages are earned in Virginia and all your pension while in NY, you will have no problem allocating the income between states. And income sourced to a particular state is probably going to be clear in your situation.

But, what if you have a taxable brokerage account producing dividends, interest and capital gains? You will need to go through your monthly statements/transactions to determine how much was received while a resident of each state. Similarly, if there are certain deductions allowed by each state, you will need to allocate those. I would recommend you start your record keeping now for these type of things so you do not need to track it all down next year at this time.

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grabiner
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Re: Taxation issues with more than one state of residence?

Post by grabiner » Tue Jan 14, 2020 11:59 pm

Katietsu wrote:
Tue Jan 14, 2020 11:30 pm
But, what if you have a taxable brokerage account producing dividends, interest and capital gains? You will need to go through your monthly statements/transactions to determine how much was received while a resident of each state. Similarly, if there are certain deductions allowed by each state, you will need to allocate those. I would recommend you start your record keeping now for these type of things so you do not need to track it all down next year at this time.
And if you have an international fund, you have another issue; you have to prorate the foreign tax credit. If you received dividends of $100, $200, $200, and $300 from a mutual fund, and $80 was withheld in foreign tax, the 1099-DIV will report $880. If you moved mid-year, it is not correct to just total the dividends in each state, which would be $300 and $500 leaving $80 unreported; the numbers should be $330 and $550. (This is an easy mistake to make with software such as Quicken; if you make a chart of income by category paid between 1/1 and 6/30, it will show $300 in dividends.)
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TresBelle65
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Re: Taxation issues with more than one state of residence?

Post by TresBelle65 » Wed Jan 15, 2020 12:05 pm

If you have a permanent place of abode in New York for substantially all of the taxable year and spend more than 183 days in the state, you may be a full year resident of New York instead of a part year resident.

I was planning to move this coming June, so I may want to reconsider a few days.

Thanks

MarkNYC
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Re: Taxation issues with more than one state of residence?

Post by MarkNYC » Wed Jan 15, 2020 12:25 pm

TresBelle65 wrote:
Wed Jan 15, 2020 12:05 pm
If you have a permanent place of abode in New York for substantially all of the taxable year and spend more than 183 days in the state, you may be a full year resident of New York instead of a part year resident.

I was planning to move this coming June, so I may want to reconsider a few days.
NY generally considers "substantially all of the taxable year" to be 11 months or more.

J45
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Re: Taxation issues with more than one state of residence?

Post by J45 » Wed Jan 15, 2020 1:25 pm

Wow! Congratulations on the move :happy Usually its other way but I guess NY is still tempting! Hey I love upstate!

Few things I have learned from my experience:

Your income in NY will be state taxed at NY rate and VA will be taxed at their rate if you still have income in VA. It can be beneficial since NY taxes are lot higher especially property taxes! If you are retiring in few months, then just wait to change all your info to NY till you retire. You can wait for at least 6 months to change everything even if you live in NY.

And Don't forget the STAR rebate if you own a home in NY!

Buying car in VA is much beneficial. But you don't pay yearly car tax in NY, a little relief.

NY does not allow you to invest in Lending Club :D

If you have any property in VA, that will be done in VA tax laws e.g. rental income goes with VA.
Also, VA 529 does not give you any tax benefit in NY which is probably true in other states too.

rooms222
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Re: Taxation issues with more than one state of residence?

Post by rooms222 » Wed Jan 15, 2020 2:05 pm

TresBelle65 wrote:
Wed Jan 15, 2020 12:05 pm
If you have a permanent place of abode in New York for substantially all of the taxable year and spend more than 183 days in the state, you may be a full year resident of New York instead of a part year resident.

I was planning to move this coming June, so I may want to reconsider a few days.

Thanks
https://www.eisneramper.com/part-year-r ... blog-0518/

Also, New York has changed their law to count days in NY prior to becoming a NY Resident.

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TresBelle65
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Re: Taxation issues with more than one state of residence?

Post by TresBelle65 » Wed Jan 15, 2020 6:38 pm

Therefore, a part-year resident taxpayer would need to be present in the State for more than 183 days during the non-resident period to be classified as a statutory resident. This legislation amends the New York tax law to provide that the 183-day test includes all the days in the year, both pre- and post-domicile change. The change, as enacted, is effective as of 2019.

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