State Taxation of Non-Resident

State Taxation of Non-Resident:

So you live in State A, but have some contacts in State B. If your contacts and involvement in State B are sufficient, State B might be able to tax some of your earnings. In a recent New York case, the court found the tax authorities went a tad too far. Occasionally spending the night at your paramour's apartment, or a business apartment, should not suffice as a tax hook. The court stated that the tax authorities have the burden of proving that the taxpayer had established a New York place of residence displacing his prior permanent home in another state. What apparently triggered the audit was the listing of a NY address on several tax forms (the little stuff always matters!). Matter of Craig F. Knight, DTA No. 819485.  The court distinguished a prior case which looked at several similar facts. Aetna National Bank v. Kramer (142 App Div 444). In Aetna the change in domicile was acknowledged to have occurred, and the only issue was when it occurred.


Instead of calculating maintenance, repair, depreciation and other costs for using your car in business, you can simply multiply the business miles drive by an IRS allowed rate to simply calculate your deduction. The expense which you can deduct for each mile drive for business purposes has increased to 48.5 cents/mile for 2007. Rev. Proc. 2006-49, 2006-47, IRB 2006-168. If you reimburse your employees at this rate and the reimbursement is tax free if the employee corroborates the time, place, business purpose and mileage of each trip.

Pension Sub-Trust:

Time to kiss them goodbye? Pension sub-trusts were a plan to give taxpayers the opportunity to have their cake and eat it too. Use pre-tax pension dollars to buy life insurance and then have the policy owned by a sub-trust of the pension plan to keep it out of your estate. A recent TAM stated that a sub-trust may disqualify the entire pension plan.

Our Consumer Webcasts and Blogs

Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.

Ad Space