State Residency and Domicile Question

[The 585]

Hey guys, I recently returned to the US from working overseas for almost two years. My state residence was Virginia before leaving, but I no longer have any ties there (except a driver's license) -- I even unregistered myself to vote.

I'm staying temporarily with my parents in Upstate NY but still not certain where I want to end up more permanently. I'm going down to visit Florida for at least a month and was considering claiming domicile and getting a driver's license, and then registering for a mail forwarding service like Escapees to keep a residential address... but now I'm second guessing that in case I end up back in NY or somewhere else. Plus it doesn't seem very legitimate or ethical to me to do that unless I were to physically remain in Florida long-term.

What should I do about my domicile? Claim it as NY and get a driver's license with my parent's address? Or keep the Virginia driver's license until I figure things out more? If I stay in NY for too long, am I subject to NYS taxes (on dividends etc.... not currently employed) and mandated to get a driver's license? I may want to avoid that if I end up going back overseas again, because then I'm stuck paying even higher NY taxes! Thanks in advance!

[ZaraThustra]

Every state has its own domicile rules. These rules are based on the time you physically spent in a state, regardless of which state's name is written on your driver's license.

Hypothetically speaking, if a person in a similar situation was to ponder this issue, they might ask: When you receive a 1099-DIV for 2021, which state will be on the address line?

[stoaX]

Does your health insurance play a role in this decision?   With my Blue Cross plan I have in-network providers around me but if I break my leg in Alaska, for example, I'm only covered for emergency services. 

[The 585]

Every state has its own domicile rules. These rules are based on the time you physically spent in a state, regardless of which state's name is written on your driver's license.

Hypothetically speaking, if a person in a similar situation was to ponder this issue, they might ask: When you receive a 1099-DIV for 2021, which state will be on the address line?

Right, physically spent in a state, so if I were to "domicile" in Florida but return to New York for most of the year, the drivers license would mean nothing, even if I use a mail address in Florida?

And do I need to count the days in each state to determine what I should file taxes for, even though at the time it's just passive income from dividends? And what if I do a roth conversion?

[The 585]

Does your health insurance play a role in this decision?   With my Blue Cross plan I have in-network providers around me but if I break my leg in Alaska, for example, I'm only covered for emergency services.

For the remaining months in the year I plan to use a healthshare enrollment for emergency medical expenses which would cover me anywhere.

[reeshau]

Every state has its own domicile rules. These rules are based on the time you physically spent in a state, regardless of which state's name is written on your driver's license.

Hypothetically speaking, if a person in a similar situation was to ponder this issue, they might ask: When you receive a 1099-DIV for 2021, which state will be on the address line?

Right, physically spent in a state, so if I were to "domicile" in Florida but return to New York for most of the year, the drivers license would mean nothing, even if I use a mail address in Florida?

And do I need to count the days in each state to determine what I should file taxes for, even though at the time it's just passive income from dividends? And what if I do a roth conversion?

Yes, while most states care about residency vs. domicile for state taxes, NY is famously strict.  Spend 184 days per year there, and they will consider you a NY resident.  A driver's license is a piece of evidence, but there is no definitive primary piece of evidence.  If you were in court with NY over your income taxes, and presented your FL driver's license as evidence, they could present your credit card bills (listing places charged) as evidence of your actual presence. In addition, of course, to asking you directly.

Now, if your credit card statements showed you were in a foreign country, or in no state for more than 30 days, than the official documents like driver's license, mailing address, voter registration, and the "teddy bear test" have more weight.

https://www.tax.ny.gov/pit/file/pit_definitions.htm

Note that there are other potential civil or misdemeanor penalties for having an out-of-state driver's license for too long.

https://nysdmv.custhelp.com/app/answers/detail/a_id/427/~/new-residents-who-do-not-have-a-new-york-state-driver-license-or-new-york-state

[The 585]

Every state has its own domicile rules. These rules are based on the time you physically spent in a state, regardless of which state's name is written on your driver's license.

Hypothetically speaking, if a person in a similar situation was to ponder this issue, they might ask: When you receive a 1099-DIV for 2021, which state will be on the address line?

Right, physically spent in a state, so if I were to "domicile" in Florida but return to New York for most of the year, the drivers license would mean nothing, even if I use a mail address in Florida?

And do I need to count the days in each state to determine what I should file taxes for, even though at the time it's just passive income from dividends? And what if I do a roth conversion?

Yes, while most states care about residency vs. domicile for state taxes, NY is famously strict.  Spend 184 days per year there, and they will consider you a NY resident.  A driver's license is a piece of evidence, but there is no definitive primary piece of evidence.  If you were in court with NY over your income taxes, and presented your FL driver's license as evidence, they could present your credit card bills (listing places charged) as evidence of your actual presence. In addition, of course, to asking you directly.

Now, if your credit card statements showed you were in a foreign country, or in no state for more than 30 days, than the official documents like driver's license, mailing address, voter registration, and the "teddy bear test" have more weight.

https://www.tax.ny.gov/pit/file/pit_definitions.htm

Note that there are other potential civil or misdemeanor penalties for having an out-of-state driver's license for too long.

https://nysdmv.custhelp.com/app/answers/detail/a_id/427/~/new-residents-who-do-not-have-a-new-york-state-driver-license-or-new-york-state

You mention spending 184 days in the year in New York, which I actually expect to be under, with spending the first part of the year in Europe, a month in Florida, as well as various other road trips planned. In that case would I NOT be liable for any sort of income tax for NY?

[reeshau]

You mention spending 184 days in the year in New York, which I actually expect to be under, with spending the first part of the year in Europe, a month in Florida, as well as various other road trips planned. In that case would I NOT be liable for any sort of income tax for NY?

I am not an expert on N.Y; know a little directly from work experience, and by reputation.

If you are under 184 days, then you are not a full time resident; they would still consider you a part-time resident under that, and so pro-rated your pain taxes.

Check out the links I included; they include some edge cases.  You might get lucky, at least in the first year, coming from overeas.

[hooplady]

Now, if your credit card statements showed you were in a foreign country, or in no state for more than 30 days, than the official documents like driver's license, mailing address, voter registration, and the "teddy bear test" have more weight.

I've been out of the multi-state tax arena for several years now but wanted to thank you for reminding me of the famous "teddy bear test"!