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I routinely help with tax prep for friends, family, etc, most of whom are lower income graduate students, medical residents, etc. I've come across a situation which is unfamiliar to me.

Husband lives and works in new york city. Wife works full time in new jersey, and maintains an apartment there. She lives there 5 days a week, and comes 'home' to NY on weekends and vacations.


They are both full-year residents of NYS and NYC, paying resident income tax rates on all income. She is resident due to the domicile rules, that is, she returns to NY after every temporary absence. She probably also qualifies as a resident by spending more than 184 days in NY (assuming she returns to NY on Friday evening and leaves on Monday morning). Wife may be able to establish NJ residency for her income, but there probably is no advantage to her in doing so.

Is there any simple way to figure out state residency from this info?

What I've learned is that they are required to file in New york state as full time residents due to the fact that she COULD live in the NY home if she wanted. And the fact that husband lives there too year round obligates them anyway to file as nys residents as far as NY is concerned.


She is not obligated to file as NY resident solely on account of being married to a NY resident. It is theoretically possible for one spouse to be a nonresident (for instance if the situation were reversed and the family home were in NJ. Husband would be NY resident by maintaining apartment in NY.) If they could establish that she were not a resident of NY, she would file a non-resident return and he would file a resident return.

But for new Jersey, the wording in the instructions is vague, and implies that they can prorate the NJ income for the amount of time spent in jersey, as if they were part year residents.

Part-year residency occurs when you move into/out of a state. It doesn't cover her situation. However, as a non-resident, she could prorate her NJ employment income for days she was working outside of NJ (eg., business trips).

But it's only HER that is part-time in Jersey. Is it even possible to file as residents of more than one state?

She's not part-year in NJ as explained above. Yes, it is possible for one person to be a resident of more than one state simultaneously. It all depends on how each state defines residency.

Such that they pay NY taxes on NY income, and NJ taxes on NJ income and then can get credits from each state for the taxes paid to the other? I'm not sure i'm phrasing that so that it makes sense.

You're phrasing it so that it makes sense, but the reality is actually quite different. She could be deemed to be a resident of both states and have to pay taxes to each state on all of her income. and not just the portion earned within the state.

Bottom line, anyone care to offer some advice as to how to approach this, while I spend time looking at NY/NJ tax instructions very closely.

Thanks!


This is definitely a situation where they should get professional assistance. Not only do they need to unravel the residency/domicile issues, they will also have to deal with two very different state tax systems with some very peculiar interactions. There may be elections related to filing status which can affect their overall tax liability.

Ira
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