Overview

Determining residency for state income tax blends two concepts: domicile (your permanent home and intent to return) and statutory or physical-presence tests (days spent in a state). States use variations of these tests to decide whether you are a resident, part‑year resident, statutory resident, or nonresident for tax purposes. That status then controls which income is taxable in which state and whether you qualify for credits to avoid double taxation (Tax Foundation; Tax Policy Center).

Why this matters

If you move mid‑year or work remotely across state lines, small recordkeeping gaps can trigger audits, withholding errors, or unexpected state tax bills. In my practice advising remote workers and mid‑year movers, the most common issue is poor day‑count documentation — which often decides a statutory residency outcome in audit situations.

Key residency tests (what states look for)

  • Domicile: Where you intend your permanent home to be. Evidence includes driver’s license, voter registration, primary address on federal returns, and where you keep personal items. States frequently examine your intent when your physical presence is close to the threshold. See our guide on proving domicile for audits: State Residency Audits: How to Prove Your Domicile.
  • Physical‑presence/statutory tests: Many states use a days test (commonly 183 days) to trigger statutory residency. Rules and exemptions vary by state.
  • Part‑year classification: If you move during the year, most states require a part‑year return reporting income earned while you were a resident and sourcing rules for income earned while a nonresident.
  • Employer withholding and nexus: Employers may need to withhold for multiple states depending on where work is performed and where the employer has withholding obligations (see our article on remote worker withholding): State Tax Rules for Remote Workers: Residency, Withholding, and Reporting.

Common scenarios and how states typically treat them

  • Mid‑year mover (example): Move from California to Texas on June 1. California will generally tax income earned while you were a resident; Texas has no individual income tax, so after you establish Texas residence you aren’t taxed there on wages. You’ll file a part‑year resident return in California reporting only the income sourced to CA while resident.
  • Remote worker splitting time: A New York resident working remotely for an out‑of‑state employer who spends >183 days in another state could create statutory residency in that other state or lose resident status depending on domicile and intent rules.
  • Daily commuter or frequent traveler: Many states provide sourcing rules for wages tied to work done physically in the state; track your work locations to apply the correct allocation.

Documentation checklist (what auditors want)

  • Day log or travel calendar (dates in and out of states)
  • Lease agreements, closing statements, or property tax records
  • Driver’s license and voter registration changes
  • Utility bills, cell phone records, and bank statements showing local activity
  • Employer records (W‑2s, payroll location, withholding notices) and time sheets

Filing and credit strategies

  • File the correct combination of resident, part‑year, and nonresident returns. Use state instructions to allocate income earned while a resident vs nonresident.
  • Claim credits when taxed twice. Most states give a credit for taxes paid to another state on the same income; read the state instructions carefully to avoid misclaimed credits.
  • Check for reciprocity or special rules. Some nearby states have agreements that reduce withholding or eliminate certain filing requirements for commuters.

Practical tips I give clients

  1. Start a day‑count log on day one — contemporaneous records beat reconstructed calendars.
  2. Change only what you intend when you move (license, voter registration, primary bank) and document intent (job offer, school enrollment).
  3. Ask employers about withholding options; sometimes employers can adjust withholding based on employee declarations.
  4. When in doubt, consult a tax pro for multistate returns — small errors compound quickly.

Common mistakes to avoid

  • Assuming mailing address alone changes tax residency.
  • Neglecting to track temporary stays (vacations or business trips can add up toward statutory days).
  • Overlooking sourcing rules that tax income by where the work is performed, not just where you live.

Short FAQs

  • How many days make me a resident? Many states use 183 days as a threshold, but rules vary. Check the specific state statute or guidance.
  • If I owe tax in two states, can I avoid double tax? Often yes — through credits or allocations — but you must file the appropriate state returns and claim the credit properly. See our practical overview of multistate filing: Multistate Filing Basics: Residency, Sourcing Income, and Credits.

Authoritative sources and further reading

  • IRS — federal residency guidance (for federal filing context) (IRS.gov).
  • Tax Foundation and Tax Policy Center — state rule summaries and research.
  • State revenue department websites — for the exact statutory tests and part‑year filing forms.

Professional disclaimer

This content is educational and not individualized tax advice. Residency rules are state‑specific and change over time; consult a qualified tax professional or your state revenue department for guidance on your situation.

Related FinHelp articles

  • State Tax Rules for Remote Workers: Residency, Withholding, and Reporting
  • Multistate Filing Basics: Residency, Sourcing Income, and Credits
  • State Residency Audits: How to Prove Your Domicile

(Links above point to FinHelp glossary pages cited throughout the article.)