State Residency Tests: How to Determine Where You Owe State Taxes

How states decide who owes state income tax

Every U.S. state (and the District of Columbia) has its own rules to decide who counts as a resident for state income tax. In general:

• A resident is taxed on all income (often called “worldwide” income) by their resident state.
• A nonresident is usually taxed only on income sourced to that state (wages earned there, rental income from property in the state, business income, etc.).
• Many taxpayers are part-year residents or file in multiple states when they move or work across state lines.

States make residency determinations using a mix of three common tests: domicile, physical presence, and statutory residency. Which test matters depends on the state and your facts.

The three primary residency tests (what they mean)

• Domicile test: Domicile is your permanent home — the state you intend to return to. Courts and tax agencies look at where you keep your closest ties: your family, your primary residence, where you vote, your driver’s license, and where you receive critical mail. Domicile is about intent as much as physical location.

• Physical presence (day-count) test: Several states use a day-count rule—commonly 183 days or more in the tax year—to presume residency. If you spend more than the stated threshold in the state, you may be treated as a resident for tax purposes.

• Statutory residency test: This combines the two ideas. A common statutory rule (for example, New York’s) says you are a resident if you maintain a permanent place to live in the state and spend more than a specified number of days (usually 183) there. The specific language and thresholds vary by state.

Note: Not all states use the 183-day threshold and some apply more complex formulas for determining part-year and statutory residency. Always check the state’s tax website for the exact rule (for example, New York Department of Taxation and Finance and the California Franchise Tax Board publish guidance on residency).

What residency status means for your tax bill

• Resident: File as a resident and report all income to that state. You may get credits for taxes paid to other states to avoid double taxation, but the resident state still expects a full accounting of worldwide income. (See state-specific guidance and the IRS on multistate filing.)

• Nonresident: Typically file a nonresident return reporting only income sourced to the state. States provide allocation rules to determine what portion of your income is taxable.

• Part-year resident: File as a resident for the portion of the year you lived there and as a nonresident for the rest. This often requires two calculations—income earned while a resident and income sourced to the state while a nonresident.

How states verify residency—and audit triggers

States use many data sources to detect residency issues. Common signals include:

• Driver’s license and voter registration changes.
• Property ownership and utility records.
• School or daycare enrollments and medical provider records.
• Cell-phone and credit-card location data, social media, and IP addresses.
• Employer withholding and W-2/1099 filings showing pay tied to the state.

Audits often start when a state receives inconsistent information (for example, a mailbox in one state but large payroll reported to another), when refunds or credits trigger reviews, or when third-party data suggests you spent time in the state.

In my practice, the most common audit trigger I’ve seen is a mismatch between a client’s claimed domicile and readily discoverable public records (property deeds, vehicle registrations, or social media posts). That’s why documentation matters.

Practical documentation checklist to support your residency claim

If you change residency or split time across states, build a file that proves your facts. Keep the following records for at least three to seven years (states differ on statute-of-limitations periods):

• A daily travel log with dates and destinations (smartphone calendar entries, photos with timestamps, or mileage logs).
• Copies of utility bills and lease/mortgage documents showing where you live and when.
• Change-of-address confirmation from the U.S. Postal Service.
• Driver’s license and voter registration dates.
• Employer correspondence and paystubs showing work locations and withholding.
• Records of bank account openings, credit-card statements, and primary care physician or dentist with dates.
• Evidence of severed ties to your old state: sale of a home, rental agreements, canceled local memberships, and closing statements.

Documenting intent matters: if you moved to a new state, take affirmative steps such as registering to vote, getting a state driver’s license, changing your vehicle registration, and updating estate documents.

Common scenarios and how tests apply

• Snowbirds: Retirees who winter in a no-income-tax state (Florida, Texas) but maintain a home in a taxing state can trigger statutory-residency rules in their original state. To succeed in changing residency, you must both establish domicile in the new state and demonstrate severed ties to the old one.

• Remote and hybrid workers: Your employer withholding does not automatically define residency. You may owe tax where you live (resident state) and where you work if your presence creates a tax nexus. Track days worked in each state and use employer withholding adjustments when appropriate. See our State Tax Residency Checklist for Remote and Hybrid Workers for a practical worksheet.

• High-net-worth individuals and business owners: States may scrutinize wealthy taxpayers more closely. Consider working with advisors to document relocation steps and to analyze where business activities create state tax obligations. Our glossary piece on State Residency and Tax Implications for High-Net-Worth Individuals covers common pitfalls.

Professional strategies I use with clients

• Establish a clear timeline and supporting evidence before and after a move. Courts and auditors look for contemporaneous proof of intent.
• Limit dual ties: sell or rent out the old home, move essential records and banking, and close local memberships unless you can justify them.
• Use a travel log app or maintain calendar entries showing where you were each day. I recommend clients capture at least three independent forms of evidence for critical dates (e.g., a flight itinerary, credit-card charge, and calendar entry).
• If a state threatens audit or assessment, seek a professional who can negotiate and, if necessary, request a formal residency determination or an appeals conference with the state taxing authority.

Common mistakes and misconceptions

• Relying on the 183-day rule as a universal safe harbor. Not all states use 183 days, and many apply additional tests.
• Thinking that changing a mailed address alone is sufficient. States look for real-life ties (family, home, business).
• Ignoring withholding: failing to change employer withholding after moving can create unpaid tax exposure.

What to do if you discover a problem

• Don’t ignore correspondence from a state tax agency—open and respond.
• Assemble your documentation and, if possible, file amended returns promptly if past returns were incorrect.
• Seek professional help—state audits and estimates can be costly to unwind without representation.

Helpful resources and internal links

• State tax agencies (examples): New York Department of Taxation and Finance and California Franchise Tax Board publish clear explanations of domicile and statutory residency on their websites.
• For remote workers, start with our State Tax Residency Checklist for Remote and Hybrid Workers.
• If you just moved, see our guide on Establishing Residency for Tax Purposes After a Move.

Authoritative sources (general guidance): IRS (https://www.irs.gov), New York Dept. of Taxation and Finance (https://www.tax.ny.gov), California Franchise Tax Board (https://www.ftb.ca.gov), and the Tax Foundation (https://www.taxfoundation.org). Always check the state agency website for the current rules in the year you’re filing.

Quick action checklist

1. Track your days: keep a contemporaneous travel log.
2. Build a residency file: utility bills, lease/mortgage, voter registration, driver’s license.
3. Sever old-state ties and create new-state ties (banking, medical, club memberships).
4. Review employer withholding and update where necessary.
5. If audited or uncertain, consult a tax attorney or CPA who specializes in multistate issues.

Professional disclaimer

This article is for educational purposes and does not constitute tax, legal, or financial advice for your specific situation. States’ residency rules and guidance can change; consult a licensed tax professional or counsel for personalized advice.

In my practice I’ve seen well-documented, contemporaneous records resolve many residency disputes. Build your file now—proof matters more than a single preference or anecdote when a state examines your status.