Non-resident vs. Part-year Resident

I seem to have an answer to the root question from my corporate accountant. He says that undergraduate students are exempt from the 183 day rule and are full-year residents of their domicile state. (However, I found a State of Virginia web site that claims students are not exempt from the 183 day rule - but I am dealing with DC not Virginia.)

-- Vic Roberts Replace xxx with vdr in e-mail address.

It appears that what we have here is someone who is living and working in the D.C. who is maintaining his NY domicile. He is a resident of the D.C. and he is a resident (not part-year) of New York unless he meets the three conditions that make him a nonresident. One of those conditions is the

30 day rule you mention and the other two are he doesn't maintain a permanent place of abode in NY in the tax year and he does maintain a permanent place of abode in another place for the whole year. That said, it sounds as though he is also a NY resident because he can not meet all 3 conditions. He would file his D.C. resident return and pay his taxes to the D.C. As a NY resident he would file the NY resident return and then complete the NY form or schedule that computes a credit for taxes he has to pay the D.C. on the same income that NY is taxing.

-- Alan

Victor Roberts wrote:

In words of one syllable: No.

Under the conditions you describe, your unfortunate son is a full year resident of New York. If he is domiciled in NY, there is no provision for him to be a part-year nonresident; he's always a resident as long as his domicile remains there, unless he meets one of the statutory exceptions (30-day or foreign presence). He is also a full or part year resident of DC, depending on when he went there. If he was working in DC for the entire year, then he is a full year resident of DC. If he went there at some point during the year, he is a part-year resident from then on. Your son meets the definition of a resident in both states. This is not as uncommon as you might think. In fact, anyone who is domiciled in a state with a definition similar to New York's, where virtually all domiciliaries are considered residents, and spends more than half the year in a state with a 183-day or similar rule for nondomiciliaries like DC's, will end up being a resident of both states at the same time. (In fact, the two states' statutory definitions of residence for tax purposes are virtually identical. The only difference is that for non-domiciliaries, DC defines a resident to include anyone who maintains a place of abode in the district for 183 days or more, while NY requires BOTH maintenance of a place of abode AND presence in the state for 183 days or more.) You can only have one DOMICILE at a time (although two states may disagree as to which is your domicile), but you can be a tax RESIDENT of more than one state. New York will allow credit for the tax your son pays to DC on his DC-source income. Unless he has a significant amount of income from intangibles (interest, dividends, capital gains on stocks, etc.), he shouldn't be subject to any double taxation. However, he'll end up, net, paying tax on his DC earnings at the higher of the two states' average rates for his filing status, income level, etc. You cannot be a part-year resident of each state, though. Doesn't work that way. You are a part-year resident only if you move from one state to another during the year. I presume your son is an adult. If he is going to be working in DC for a while, he should abandon his NY domicile. I gather he does not maintain a home of his own in NY, but stays with you when he is there. All he needs to do is move his driver's license, voter registration, vehicle registrations, memberships, bank accounts, etc. to DC and make that his home. Katie in San Diego

The foregoing is intended for educational purposes only and does not constitute legal or professional advice.

I must be getting better at this as my answers are starting to look like yours. (:D

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I must thank you again Katie for a very clear and complete explanation, and wonder how you know so much about NY and DC tax regs way out west in San Diego :-) The "full year resident of both states" was the part I really didn't understand before reading your note. As I said in my original note, I expect that 99% of college students do not know that they may be residents of two states and just ignore taxes in the state where they are going to school. My son's W-2 and non-government 1099-INT income is too low to trigger income taxes in either state. He does have

1099-INT income from EE Bonds, but they are exempt from NY taxes and I assume DC taxes. So, it is just a matter of filing the forms, not paying any more tax. He is currently an undergraduate. Once he graduates I expect him to change his domicile to where he is living.

-- Vic Roberts Replace xxx with vdr in e-mail address.