Introduction

Residency tests govern where and how you pay income tax. At the federal level, the Internal Revenue Service decides whether someone is a resident or nonresident alien using the green card test and the substantial presence test (see IRS Publication 519). States apply separate standards—domicile, statutory resident (often a 183‑day rule), part‑year resident, or other special rules—to determine state tax responsibility. How you classify yourself affects which income is taxable, which credits you may claim, and the returns you must file.

Why this matters (real impact)

  • Federal classification controls how worldwide income is taxed for resident aliens; nonresident aliens report only U.S.‑source income taxed under special rules (IRS Publication 519).
  • State residency controls state taxable income, residency exemptions, and whether you owe tax to multiple states.
  • Mistakes lead to double taxation, incorrect withholding, eligibility losses (e.g., Earned Income Tax Credit), and audits.

In my practice helping clients move between states and countries, clear documentation and an early residency plan regularly prevent costly audits and unexpected tax bills.

Federal residency tests: green card and substantial presence

1) Green card test

  • You are a U.S. resident for tax purposes if you are a lawful permanent resident (you hold a green card) at any time during the calendar year. If you meet this test, you’re treated as a U.S. tax resident even if you spend little time in the United States (IRS: Green Card Test).

2) Substantial presence test

  • You meet the substantial presence test for a year if:
  • You are physically present in the U.S. for at least 31 days during the current year, and
  • The total of: all days present in the current year + (1/3 of days in the prior year) + (1/6 of days in the second prior year) equals 183 or more.
  • Short visits, certain medical absences, and days as a teacher, student, or certain diplomats can carry exceptions—check IRS Publication 519 and the IRS substantial presence rules for exclusions.

IRS sources: see “Green Card Test” and “Substantial Presence Test” pages at IRS.gov and Publication 519 for details and exceptions (https://www.irs.gov/individuals/international-taxpayers/resident-alien).

State residency tests: domicile, statutory days, and special rules

States use multiple, sometimes overlapping, concepts:

  • Domicile: Your permanent home—the state you intend to return to. Factors include where you vote, driver’s license, family location, primary home, and where you receive medical care. Domicile lasts until you clearly abandon it for another state.

  • Statutory resident (time‑based tests): Many states treat you as a resident if you spend a set number of days in the state during the year, commonly 183 days. Some states count any part of a day as a day present; others have special counting rules.

  • Part‑year resident: If you moved during the year, most states allow you to file part‑year returns and apportion income earned while you were a resident.

  • Convenience‑of‑employer and remote‑work rules: A few states apply employer‑location or convenience rules for remote workers (New York’s convenience of the employer rule is a notable example). These rules can require nonresidents who work from another state for their convenience to pay taxes as if they were working in the employer’s state.

Because rules vary widely, always check the specific state tax agency guidance.

State examples and internal resources

Examples to clarify

  • Example 1 — Substantial presence (federal): Maria spent 130 days in the U.S. in Year 3, 120 days in Year 2, and 120 days in Year 1. Calculation: 130 + (1/3 * 120) + (1/6 * 120) = 130 + 40 + 20 = 190 → Maria meets the substantial presence test and is a resident alien for Year 3.

  • Example 2 — State domicile change: John moved from Ohio to Florida on April 1 and took clear steps to change domicile: sold his Ohio home, registered to vote in Florida, changed driver license, moved family and physician. Florida has no state income tax, so establishing Florida domicile may eliminate Ohio taxable residency for the remainder of the year, but John should keep documentation to show intent to abandon Ohio domicile.

  • Example 3 — Dual‑state issues for remote workers: A remote worker lives in State A but is employed by a company in State B. If State B enforces a convenience rule or if State A taxes based on residency, the worker may need to file returns in both states and claim credits to avoid double taxation.

Documentation and recordkeeping (practical checklist)

  • Daily calendar or travel logs showing where you slept each night.
  • Copies of leases, closing statements, utility bills, and calendar entries tied to addresses.
  • Power of attorney, voter registration, driver’s license, vehicle registration dates.
  • Employer records showing work location and any telework agreements.
  • Medical records and school records for dependents (to show family ties).

In my practice, a simple dated spreadsheet and scanned receipts often resolve disputes quickly.

Common mistakes and myths

  • Myth: Owning property equals residency. Owning a vacation home does not automatically make you a resident. Residency focuses on where you live and your intent.
  • Mistake: Relying on a single factor. States weigh many factors; no single item automatically determines domicile.
  • Mistake: Ignoring treaty or dual‑status issues. International taxpayers must consider tax treaties, dual‑status years, and the special treatment of resident aliens.

How to handle a move during the tax year

  1. Determine the federal classification early (green card or substantial presence). This affects withholding and tax planning.
  2. For state purposes, determine the date you changed domicile and keep proof. File part‑year resident returns where allowed and apportion income.
  3. If both states claim residency, look for credits for taxes paid to another state and consider professional help.

Audit red flags and how to avoid them

States often audit taxpayers who suddenly claim residency in a tax‑friendly state after years in a high‑tax state. To reduce audit risk:

  • Make substantive changes (sell or rent the old house, move family, change primary banking and healthcare).
  • Keep a contemporaneous record of moves and tie‑breaking actions (voter registration, license changes).

When to get professional help

  • You have substantial income or state tax at stake.
  • You face potential dual residency between two high‑tax states.
  • You’re an international taxpayer with green card or substantial presence issues.
  • You are subject to special state rules (convenience‑of‑employer, statutory residency peculiarities).

Frequently asked practical questions

  • Do I need to file in multiple states? Possibly. You may file resident, part‑year, or nonresident returns depending on where you earned income. Use credits to reduce double taxation.

  • How many days count if I fly in and out? Most states and the IRS count any day present for tax day counting; check the specific state counting rules.

  • What about tax treaties? Treaties can affect federal residency and withholding for nonresidents. Consult IRS guidance and your treaty text.

Authoritative sources

Internal links

Professional disclaimer

This article provides general information and is not individualized tax advice. Rules change and states differ—consult a qualified tax professional or state tax agency for guidance tailored to your specific facts.

About the author

As a senior financial content editor with over a decade of advising clients on residency and multi‑state tax matters, I use practical recordkeeping and early planning to prevent dual‑state surprises and audits.