Background and why residency rules matter
State residency rules decide where you owe state income tax. They matter whether you’re moving between states, working remotely from different locations, retiring to a new state, or spending substantial time outside your state of domicile. In my 15+ years advising clients as a CPA and financial planner, unclear or poorly documented residency changes are the single biggest cause of unexpected state tax bills and residency audits.
State governments examine domicile and statutory presence to prevent what they view as tax avoidance. Two states commonly cited for strict rules are New York and California: both look at days present and broader connections to decide if you’re a resident for tax purposes (see Tax Foundation and state guidance for details).
Authoritative sources: IRS guidance on state tax matters and analyses by the Tax Foundation and Tax Policy Center provide overviews of how states treat residency and related credits (IRS; Tax Foundation; Tax Policy Center).
How do the different residency tests work?
States generally apply one or a combination of three concepts:
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Domicile (your legal home): Your domicile is your permanent home — where you intend to return after absences. Evidence of domicile includes where you own or rent a home, where your family lives, your voter registration, driver’s license, and where you keep primary financial accounts. Changing domicile requires clear, consistent actions over time.
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Statutory residency (day-count tests): Many states have a bright-line test: spend more than a specified number of days in the state (commonly 183 days in a calendar year) and you may be treated as a resident for tax purposes, even if your domicile is elsewhere. States vary in how they count days and apply the test; some use a full-day count, others count part-days, and some apply a ‘consecutive-day’ rule.
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Non-resident and part-year status: If you move during the year, you’ll often be a part-year resident of both states. Nonresidents generally owe tax only on income sourced to that state (for example, wages earned working there). Resident states tax worldwide income, with credits for taxes paid to other states in many cases.
Because states differ in definitions and thresholds, it’s important to check the rules for the specific states involved and preserve documentation that supports your claimed status.
Real-world examples and common state rules
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New York: Uses domicile and a statutory residency test. You can be a statutory resident if you maintain a permanent place of abode in NY and spend more than 183 days in the state. New York also considers broader connections when assessing domicile status.
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California: Treats you as a resident if your “principal residence” is in California or if you are in the state for other than a temporary or transitory purpose. The state is fact-specific and looks at intent and connections as well as time spent.
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No-income-tax states (Texas, Florida): These states do not tax individual wage income at the state level, but establishing a domicile there still requires steps (license, voter registration, ties) to withstand scrutiny from a former resident’s previous state.
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Reciprocal agreements: Some neighboring states have agreements (for example, certain pairs of states) that simplify withholding for commuters. Where such agreements exist, you typically only file where you live rather than where you work. Check state revenue sites for current reciprocal agreements.
For state-specific guidance, consult the state revenue department website or guidance documents and reputable analyses from the Tax Foundation and Tax Policy Center.
Who should pay attention today
- Remote and hybrid workers who split time across states
- Individuals relocating for a job or retirement
- Snowbirds and seasonal residents who split time between states
- High-net-worth taxpayers with homes or significant ties in multiple states
- Anyone audited for residency by a state revenue department
If you fall into any of these categories, residency planning and documentation should be part of your annual tax planning.
Practical steps to determine and document your residency
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Track your days: Keep a contemporaneous day log (paper or digital). Smartphone location history, calendar entries, and travel receipts are useful substantiation. Many states expect a precise day count if residency is contested.
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Centralize evidence of intent and ties: Update driver’s license, vehicle registration, voter registration, and mailing address to reflect your claimed domicile. Move primary banking relationships, physician relationships, and professional licenses when possible.
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Maintain consistent actions: A single change (e.g., new driver’s license) helps, but a pattern of consistent actions across categories is what establishes intent.
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Understand income sourcing: Know which portion of your income is sourced to which state (wages, business income, rental income). Income sourced to a nonresident state can be taxable there even if you’re not a resident.
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Use tax credits appropriately: Most states offer a credit to residents for taxes paid to another state on the same income. The rules and calculation methods differ — follow state instructions or consult a tax advisor.
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If you intend to change domicile, do it early in the year when possible and document steps carefully to reduce ambiguity for that tax year.
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In contested cases, consider a protective return strategy: file resident and nonresident returns where applicable and include an explanation and supporting documentation.
Common mistakes and audit triggers
- Relying on a single action (such as buying a home) without changing other ties
- Not tracking days or failing to keep supporting evidence (receipts, entries, itineraries)
- Assuming remote work automatically creates residency in the work state — employment location, employer withholding, and physical presence all matter
- Ignoring state-specific rules (e.g., New York’s permanent place of abode test)
- Overlooking credits or failing to file part-year returns, leading to unnecessary double taxation or penalties
States may audit residency claims, request phone records, travel logs, utility bills, and third-party data like credit reports. In my practice I’ve seen smartphone GPS logs and credit card statements play a decisive role in resolving residency disputes.
Strategies and planning tips
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Pre-move checklist: change voter registration, driver’s license, mailing address, and bank relationships; sell or rent prior residence if feasible; notify professionals and community organizations of the new address.
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Day-count planning: If you want to avoid becoming a statutory resident, structure time spent in the higher-tax state to stay below the relevant day threshold, and document exceptions.
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Consult a CPA before a cross-state move or a major change in work location. Multi-state tax rules are complex and vary by taxing jurisdiction.
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For retirees and snowbirds, document primary medical providers, where durable relationships exist (church, clubs), and where family lives — these factors influence domicile determination.
Filing considerations: split-year, part-year, and credits
When you change residency midyear, you will usually file as a part-year resident in both states: each state taxes income earned while you were a resident there. Resident states typically tax all income earned while a resident, then allow credit for taxes paid to another state on the same income. The rules and forms vary by state — consult state forms and instructions or a tax professional for the correct calculations.
Frequently asked questions (brief)
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How many days make you a resident? Many states use a 183-day rule for statutory residency, but state-specific counting rules vary. See your state tax agency for exact counting rules.
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Can I be a resident of two states at once? You can be treated as a resident by more than one state. Resolving dual-residency often involves domicile tests and reciprocal credits; when disputes arise, tie-breaker rules or negotiated settlements can apply.
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What evidence convinces a state you moved? Driver’s license, voter registration, vehicle registration, sale or rental of a prior home, and consistent financial and social ties are persuasive.
Internal resources and related guides
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For step-by-step actions to make a move defensible, see our guide on State Residency Planning: Steps to Legitimize a Tax Move.
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If you need practical factors and risks when establishing a new state tax residency, see Establishing State Income Tax Residency: Key Factors and Risks.
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For rules about owing taxes to multiple states and how to avoid surprises, see State Residency Rules: When You Owe Taxes to Multiple States.
Sources and further reading
- Internal Revenue Service — state and local tax topics (see IRS guidance on state taxation and residency)
- Tax Foundation — state residency analyses and state-by-state summaries
- Tax Policy Center — briefings on state tax policy and residency issues
- Relevant state revenue department publications (search the revenue site for the states involved)
Professional disclaimer
This article is educational and general in nature and does not constitute individualized tax advice. State tax laws change and are fact-specific. Consult a qualified CPA, enrolled agent, or state-tax attorney about your specific circumstances before relying on the material above.
Author
This article was prepared by a CPA and financial advisor with 15+ years of experience helping clients navigate multi-state tax issues, residency changes, and audit defenses.
