{ Banner Image }

FG Law Blog

How to Determine Your Tax Residency
How to Determine Your Tax Residency

Answers to questions you need to know if you spend time in two states

Florida is a great state for New Jersey and Pennsylvania residents to escape to during the winter months. Florida has more than 800 miles of treasured and beautiful beaches to enjoy and the average temperature in January is almost 70 degrees. But what rules apply when it comes to paying your taxes if you have one home on the Delaware River or at the Jersey Shore and one home on the Gulf of Mexico?

We’ll try to break down some frequently asked questions about tax residency when you have homes in two states. However, this is just a general look at common tax residency questions. We recommend contacting a New Jersey or Florida tax attorney to help you navigate the complex matter of owning homes in two states because there are many factors involved to determine residency.

How do you determine State tax residency?

First, state tax residency is determined by the rules set by the state you are leaving. Most states will consider you a resident for tax purposes if you spend 183 days or more in that state. But, details matter, while the process starts with the 183 Day Rule, there is additional criteria that most states use to determine if someone should be a resident in a state for tax purposes even if they are not in that state for more than 183 days.

What is Statutory Residency and the Statutory Residence Test?

Statutory residency means you have a permanent “place of abode” in Pennsylvania or New Jersey and are physically present in the state for more than 183 days.

To determine your statutory residence, you can take the Statutory Residency Test which examines your presence within a state and often focuses on the number of days spent in the state over a specific period, typically a calendar year. Many people think that if you are living in another state more than 183 days, or in other words, you are not in New Jersey or Pennsylvania more than 183 days, that means you are not a NJ or PA resident and can’t be taxed there. However, this isn’t necessarily true.

The best way to examine your presence is to keep a log of your days in each state. Click here to download a log spreadsheet. Partial days equal full days and there are exceptions for hospital stays and transiting through the state.

It’s important to make sure your log agrees with the following items:

  • Cell phone records
  • EZ Pass records
  • Credit card and ATM receipts
  • Airline and train tickets
  • Theater, sports, or museum tickets, etc.

It is your responsibility to keep and produce the records and receipts that verify your proof of residency in case you are ever audited.

What’s a Domicile and Permanent Place of Abode?

This terminology is important to know when discussing tax residency. Your domicile is the place you maintain as your permanent abode and the place you intend to return whenever absent, for instance after a hospital stay or even a vacation abroad. Intentions matter. You may only have one domicile at any one time.

Your permanent place of abode is your house, apartment, or other building maintained as a dwelling place for an indefinite period of time, whether you own it, lease it, or it’s being loaned to you. It must be maintained for year-round habitation, including facilities for bathing and cooking.

How do you determine domicile when you have two homes?

If you have two homes, your domicile is determined by two factors:

(1) Which is the one place where you have the greatest connections for the taxable year?

(2) Which place do you intend to be your domicile?

To answer these questions, the State will examine what you do to prove intent – hard evidence.

States give primary importance to five factors when evaluating domicile: what you consider your home, where is your active business involvement, the amount of time in various locations, where you keep those items "near and dear," and your family connections. It is the overall weight of all primary factors, each weighted in the context of the facts of that case, with secondary factors (i.e. driver’s license) thrown in to break a tie if necessary.

The State looks at your “general habits of life” and where you have substantial ties. Primary and secondary factors include:

  • Spending the greatest amount of time
  • Supporting a spouse and children
  • Purchasing the necessities of life
  • Having doctors, lawyers, and accountants
  • Pets
  • Active banking accounts
  • Regularly worship
  • Social, fraternal, or athletic organizations
  • The location of works of art, furniture, family portraits or heirlooms
  • Local tax obligations
  • Place of employment
  • Owning real estate fit for year-round living
  • Driver's license and vehicle registration
  • Professional licenses
  • Union memberships
  • Hunting or fishing licenses, income tax returns or school tuition
  • Conducting business
  • Postal mail
  • Unemployment compensation
  • Insurance policies, deeds, mortgages, leases, passport, federal and local tax returns, etc.
  • Safe deposit boxes
  • Cemetery plots
  • Claiming a homestead exemption
  • Telephone directory listing
  • Gathering location for family and social events
  • TV and Internet connections
  • Address for bills
  • Where you vote

It’s important to note that to establish a domicile in Florida for example, the presence of secondary factors don’t help much unless the primary factors are indecisive. But their absence from Florida will always hurt.

As Albert Einstein said "The hardest thing in the world to understand is the income tax” so be sure to contact our New Jersey, Pennsylvania, or Florida tax attorneys to help you navigate this complex matter.

Determining the correct residency for paying taxes can be tricky, but with the correct intentions and the right planning in place, can save you money in the long run.

Recent News

In light of recent changes to data protection laws, we have updated our Privacy Policy and Terms & Conditions, which explain how we collect, use, maintain, and secure your information. By using this site, you agree to our updated Privacy & Terms of Use Policies