State Residency Rules for Digital Nomads and Remote Workers

Quick overview

State residency rules decide which state(s) can tax your income, require you to file returns, or access benefits like in-state tuition. For digital nomads and remote workers who move frequently, those rules can be the difference between a simple single-state return and multiple-state filings or even an audit.

I’m a Certified Financial Planner (CFP®) with over 15 years of experience helping clients figure out residency questions. In my practice, missed documentation and unclear domicile changes are the two most common causes of surprise state tax bills.

How states typically determine residency

States use two main concepts — domicile and physical presence — plus a set of objective ties to decide residency.

• Domicile: Your domicile is the place you intend to make your permanent home. Changing domicile requires both a physical move and clear evidence of intent (e.g., selling or ending a lease, changing voter registration and driver’s license, transferring bank accounts, and establishing social ties).

• Physical presence (statutory residency rules): Many states use a days-based threshold (commonly 183 days) so that spending more than that number of days in a state can create residency or a statutory-resident obligation. However, how that test is applied varies by state.

• Objective ties: Courts and tax agencies examine facts such as where you keep a primary home, where your family lives, vehicle registration, voter registration, professional licenses, and where you receive mail.

Authoritative examples:

• New York defines a statutory resident as someone who maintains a permanent place of abode in New York and spends more than 183 days in the state (NY Dept. of Taxation and Finance).
• California focuses on whether you are in the state for a temporary or transitory purpose and evaluates multiple factors — domicile and the character of your presence matter (California Franchise Tax Board).

(See state pages linked in the Sources section below for current, state-specific language.)

Why this matters for digital nomads and remote workers

1. State income tax rates vary. Being treated as a resident of a high-tax state (e.g., New York or California) rather than a no-income-tax state (e.g., Florida, Texas) can increase your annual tax bill substantially.
2. Multi-state filing obligations. If you work in or spend time in other states, you may need to file nonresident returns there and claim credits to avoid double taxation.
3. Withholding and employer issues. Employers may withhold state tax based on your reported residence or work location; incorrect withholding can leave you owing taxes and penalties.
4. Audit and residency challenge risk. States audit high-income mobile taxpayers; weak documentation of a domicile change increases audit risk.

How it works in practice: two client vignettes

• Client A: A software contractor based in California spent six months traveling internationally and three months in other U.S. states. Because California treats domicile and the character of your presence as a residency test, the state still considered Client A a California resident. They were surprised by a California tax bill. The solution: gather evidence of intent to abandon California (leased elsewhere, updated voter registration and license, ceased California bank accounts) before making the move.

• Client B: A remote employee moved from New York to Florida and believed three months of travel while working remotely would prevent New York residency. New York’s statutory-residency rule (permanent place of abode + >183 days present) creates exposure unless the taxpayer demonstrated they no longer maintained a permanent place of abode in NY. We helped document domicile change (lease termination, Florida driver’s license and voter registration, primary bank in Florida) and created a contemporaneous travel log to support the switch.

These examples show the difference between merely being physically absent and legally abandoning a domicile.

Common state-specific traps (what to watch for)

• Maintenance of a “permanent place of abode.” A spare bedroom, storage of belongings, or retaining a leased apartment can keep your former state claiming domicile.

• Short, frequent returns to the original state. Repeated visits can be treated as evidence you never truly left.

• Employer withholding based on employer location rather than your work location. Remote employees may be subject to unusual withholding rules depending on state law.

• Treating 183 days as universal. Not every state uses 183 days in the same way and some rely more on domicile and facts-and-circumstances.

Practical steps and recordkeeping (my recommended checklist)

1. Track your days. Use a travel-log app, calendar notes, or spreadsheet and keep proof (boarding passes, receipts) to document days in each state. Day counts are the single most useful piece of evidence.
2. Create a domicile-change kit. If you plan to change domicile, do these things promptly: sign a residential lease or buy a home, register to vote, get a driver’s license or ID, update bank accounts and professional licenses, move primary family members, update tax withholding and beneficiaries.
3. Close or reduce ties to the old state. Sell or terminate leases where feasible; limit the use of a former residence; move personal effects; and change medical and legal service addresses.
4. Maintain contemporaneous evidence. Keep dated copies of documents that show your intent and presence, such as lease agreements, utility bills, employment records, and travel logs.
5. Coordinate with your employer. Ensure payroll withholding matches your residence and the states where you actually perform work.
6. Consult a tax professional before a permanent or semi-permanent move. Multi-state tax rules are fact-intensive and planning reduces audit and tax surprises.

Sample residency comparison table (high-level guidance)

Notes: This table gives high-level points only. Always confirm with the state tax authority for current rules.

When multi-state filing becomes likely

You’ll often need to file:

• A resident return in your domicile state for all income (with credits for taxes paid to other states where allowed), and
• Nonresident returns in states where you earned income while physically present.

Certain states have reciprocal agreements or special rules for telecommuters; see employer and state guidance and consider the FinHelp article on Handling Multistate Withholding for Telecommuting Employees for practical withholding steps.

If you’re uncertain about domicile vs. residence, our guide on Residency vs. Domicile for Tax Purposes explains the difference and what evidence states consider.

For an overview of state residency concepts and verification, this site’s State Tax Residency page is also a helpful companion.

Common mistakes and how to avoid them

• Mistake: Assuming moving your mail or phone number is enough. Fix: Demonstrate a clear pattern of life change (housing, family, banking, registrations).
• Mistake: Not tracking days. Fix: Keep contemporaneous travel records and receipts.
• Mistake: Ignoring employer withholding. Fix: Coordinate with HR/payroll and, if necessary, ask for corrected withholding.
• Mistake: Waiting until an audit to assemble proof. Fix: Build and maintain your documentation proactively.

Frequently asked questions

Q: Can I be a resident of more than one state?
A: Yes — two states may each consider you a resident under their laws. In those cases, states may allow credits for taxes paid to other states or you may need professional help resolving dual-residency claims.

Q: Does changing my mailing address legally change my residency?
A: No. Address change helps show intent but must be supported by a pattern of life and actions that demonstrate abandonment of the old domicile.

Q: Do federal rules decide my state residency?
A: No. State residency is decided by state law. The IRS handles federal tax residency; state residency governs state income tax obligations.

Next steps and when to get help

• Start tracking your days today. Even 12 months of clear logs is powerful evidence.
• If you intend to establish a new domicile, execute the checklist above within a short timeframe around the move.
• Consult a tax advisor experienced in multi-state residency, especially before long-term travel or moves. In my practice, early documentation and proactive changes cut audit risk and often save clients thousands in state tax.

Sources and further reading

• New York State Department of Taxation and Finance — Residency rules and statutory residency guidance. (NYS DTF)
  https://www.tax.ny.gov/pit/file/residence.htm

• California Franchise Tax Board — Residency and domicile guidance. (Cal. FTB)
  https://www.ftb.ca.gov/file/personal/residency/determining-residency.html

• Multistate Tax Commission — Guidance for multistate taxpayers. (MTC)
  https://www.mtc.gov

• Federation of Tax Administrators — State tax sites and links. (FTA)
  https://www.taxadmin.org

• FinHelp resources: Handling Multistate Withholding for Telecommuting Employees, Residency vs. Domicile for Tax Purposes, State Tax Residency (see links above).

Professional disclaimer

This article is educational and does not constitute legal, tax, or financial advice for your specific situation. Rules change and states apply facts to facts-and-circumstances. Consult a qualified tax professional before making residency decisions.

Author: I am a Certified Financial Planner (CFP®) with 15+ years advising clients on domicile and multi-state tax issues.