New York Taxation

So how much of your income might NY tax? Lots more than one couple thought. First a little background then we’ll review a recent case that will send tax shivers up your spine.  You can be domiciled in one state under its tax laws, and simultaneously be deemed a statutory resident in another state under its tax laws. You can be taxed in both. Ouch. While sometimes one state will offer a credit for tax you paid to another state the credits are not always available and the offset is not always perfect. ■John Barker worked in investments in NYC more than 183 days of every year. ■ The couple owned a vacation pad in the Hamptons and spent a mere 19 days or less each year, what the court called “brief sojourns.” ■The court found that the house was more than a mere “camp or cottage” under 20 NYCRR 105.20(e) that would exempt it. The court found that the vacation house was useable year-round and the Barkers maintained “dominion and control over the dwelling.” See Matter of Roth, Tax Appeals Tribunal, March 2, 1989. ■ These factors supported the court concluding that the house was a “permanent place of abode.” ■The combo of work and house proved costly and the Barker’s got a $1M tax bill from the NY! ■By determining that the Barkers were “resident individuals” for NY tax purposes they were taxable on all income, not just NY source income. ■The court remanded to an administrative law judge to determine if penalties for filing false tax returns should be assessed too. Matter of Barker, 822324. ■ In New York if you have a permanent place of abode which serves as a living quarters for more than 11 months a year and you’ll be deemed domiciled in NY for tax purposes. Some folks will try to rent the apartment for two months or more in a year to avoid that property or apartment from being characterized as a “permanent place of abode.”  Sate tax auditors will look at what happened to your stuff, whether the tenant was unrelated, whether a real rent was paid, and any other relevant fact to determine if the lease should be respected. ■If you have a vacation home in NY and have been filing as a non-resident, call your CPA fast.