Why this matters

State residency rules decide where you owe state income tax, how much you pay, and which returns you must file. For people who move mid‑year, split time between states (snowbirds), or work remotely for an out‑of‑state employer, residency can change your tax bill materially.

How residency is commonly determined

  • Domicile (intent): Your permanent home and the place you intend to return to. States ask where you keep your primary home, where your family lives, and which state you treat as home for voter registration, driver’s license, and banking.
  • Statutory/residence tests: Many states use a day‑count test (commonly a 183‑day or part‑year threshold) to declare you a resident for tax purposes, though thresholds and counting methods differ by state.
  • Sourcing rules: Nonresidents generally pay tax on income earned in the state (wages for services performed there, rental income from property located there, etc.).

In practice: common scenarios

  • Remote worker who moved: If you relocate from a no‑income‑tax state to a state with income tax and establish residency there, that state will typically tax your income, even if your employer is elsewhere.
  • Snowbird: Spending winter months in a second state can trigger residency questions—where you maintain ties and your declared domicile usually controls.
  • Mid‑year move: You may file part‑year returns in both states and allocate income to each period.

Real-world example (from practice)

In my practice advising clients who relocate, I’ve seen remote employees move from a no‑tax state to a high‑tax state and face unexpected withholding and state tax liabilities because they established domicile and met the local presence test.

Dealing with dual‑state residency and avoiding double taxation

  • Resident credit: Most states provide a credit for taxes paid to another state on the same income. You usually claim this on the resident state’s return (check state forms and rules).
  • Allocation and sourcing: When you’re a part‑year resident, you report income earned while a resident to the resident state and income earned in another state while a nonresident to that other state.
  • Agreements and reciprocity: Some neighboring states have reciprocity or commuter agreements that simplify withholding for cross‑border workers.

Documentation to keep

Keep clear records of days spent in each state (calendar, travel logs, receipts), lease or deed, voter/driver registrations, utility bills, and employment records. These are the primary evidence used in residency audits. (See our guide on proving domicile: “State Residency Audits: How to Prove Your Domicile”.)

Employer withholding and compliance

Tell employers the correct state for withholding. Employers may be required to withhold for the state where you perform services, even if your home state differs. Remote employees should confirm payroll withholding aligns with their residency status and should consult their payroll or HR team.

Common mistakes to avoid

  • Overlooking part‑year filing requirements when you move mid‑year.
  • Assuming a single 183‑day rule applies in every state—some states use different day counts or weigh ties differently.
  • Failing to update driver’s license, voter registration, and mailing address when you change domicile.

Where to get state‑specific guidance

Because rules differ, consult state tax departments for precise tests: for example, California’s Franchise Tax Board explains residency and statutory resident tests (https://www.ftb.ca.gov/) and New York State’s Department of Taxation and Finance has guidance on residency rules (https://www.tax.ny.gov/).

Authoritative background reading

Helpful FinHelp resources

Professional tips

  1. Establish (or sever) domicile deliberately: update your driver’s license, register to vote, change mailing addresses, and move bank accounts to reflect your intended domicile.
  2. Track days: use a simple spreadsheet or phone location log and save evidence of travel and work location.
  3. Get a tax pro’s help for complex moves: a CPA or state tax attorney can draft a residency memorandum and advise on credits and allocation.

FAQ (brief)

Q: Can two states both treat me as a resident?
A: Yes. If that happens, you may owe taxes to both but can often use credits or amended filings to avoid double taxation. See our guide on resolving dual‑state residency.

Q: Does federal tax law decide state residency?
A: No. State residency is governed by state law; federal rules don’t determine state‑level residency for income tax purposes.

Professional disclaimer

This article is an educational overview, not individualized tax advice. State rules change and vary widely—consult a qualified CPA or state tax counsel for decisions that affect your tax liability.

Sources and further reading