Residency audits are common in New York because both New York State and New York City have their own state and local income taxes, complicating the tax code that most already find very difficult to navigate. One of our clients recently underwent a Residency audit, having New York claim that she was a full-time resident, despite her career as an itinerant doctor. Residency audits can be particularly costly because of the tax liabilities for living in NY, especially NYC, are higher than most other states. The residency audit will determine whether a taxpayer is a full-time resident, a nonresident, or a part-year resident, having significant implications on the taxpayer’s state and local tax obligation. This tax liability can be a considerable sum based on the amount and source of one’s income (particularly investments).

During an audit, New York State will request the dates of move-ins, documentation of leases/mortgages, moving expenses, insurance policies, and paystubs. This is all to create a
clear picture to determine whether the taxpayer is a New York resident, nonresident, or part-year resident.

Residency audits can be particularly intrusive. In our client Maria’s case, the state auditor went so far as to inquire about the purchase details of her furniture such as whether she leased or bought her furniture. The auditor also requested information about the types of items moved into her residence in order to determine whether or not her home was properly “domiciled.” These types of audits are particularly intimidating and require close, detailed reports. A receipt for just a few dollars can arise suspicion of a taxpayer’s whereabouts and ultimately their residency in these cases!

While Maria is still navigating the audit process, with the help of 212 Tax she has the support she needs to move forward confidently. If you’re facing a New York State and/or NYC residency tax audit, contact us today to talk about your options. Tax audits are intimidating, and it’s important to have a team of experts at your side every step of the way.