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Tax News: NYS Will Seek Taxes From NYC Resident Exodus

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A hallmark movement of the COVID-19 pandemic in the Northeast was the mass exodus from New York City during it's rain as the virus epicenter. Many NYC residents left with the intention of remaining outside of NYC/NYS for more than half the year, and thereby avoiding NYC/NYS taxes. However, this is not as easy as most believe. The city levies its own income tax of as much as 3.876% in addition to the state’s top rate of 8.82%.

New York state uses five primary criteria to determine a taxpayer’s residency status:

  1. Domicile;
  2. Business ties;
  3. Amount of time spent;
  4. Family connections; &
  5. “teddy bear test” (where they keep the items near and dear to them like artwork, heirlooms and pets.)

To be considered a non-resident for tax purposes, taxpayers must prove they cut ties with NY in a permenant way. Issuance of a new state's  driver’s license or registering to vote somewhere else generally isn’t enough. Enrolling children in a new school, however, could improve your case. Another issue is that audits of 2020 aren’t likely to occur for a few years, by which time many taxpayers could undercut their case by returning to their pre-Covid residences.

For any questions or assistance, please contact the Tax Attorneys at Fazzio Lawwe are in your corner!

Category: Tax

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