So you have decided to move out of New York and make your primary home in another state or country. You may expect to reduce your income tax liability since New York taxes all income earned by its residents but only taxes nonresidents on income derived from New York sources or allocated to days worked within the state. Obtaining nonresident status could yield substantial savings as New York’s marginal income tax rates can be as high as 10.9% (without even considering separate New York City income taxes). But are you a nonresident? The New York Department of Taxation and Finance has a sophisticated residency audit program that frequently audits taxpayers who claim to have relocated.
The Subjective Domicile Standard
An individual’s domicile determines status as a resident or nonresident for New York tax purposes. Domicile is the fixed and permanent home to which a person intends to return whenever absent. Where an individual has multiple homes or travels frequently, determining domicile can be highly subjective, often requiring a fact-intensive inquiry to form a picture of intent.
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