When it comes to residency status, there is often a lot of confusion. This is because the laws relating to residency are not the same from state to state. In fact, each state has its own rules for classifying a place of residence. As a result, payroll taxes can be complicated when relating to residency.
In general terms, you are an official resident of a state if you don’t have intentions of staying there temporarily. It might help to think of it as a place you would return to after school, business travel, or vacation.
In the context of taxes, you are a nonresident if you have worked in the given state in the interim, with no intention of making it your home. An example of this would be an internship for a specific duration of time or commuting from one state to another for contract based work.
Below are a few examples to help determine your individual status for residency. Keep in mind these are generalizations and may not relate to your state. Each state has their own rules for determining residency.
- You live in Idaho for the majority of the year but each winter you vacate to another state, let’s say Arizona. For tax purposes, you would be a resident of the state you spend the majority of your time. In this case, Idaho.
- You live and work in Colorado during the winter months, but depart each summer to work in a neighboring state. In this case, you would need to file a return in each state to represent the income you have earned. You are not a resident of the neighboring state.
With this said, it is crucial you check your state residency laws and taxes before filing any paperwork pertaining to your residency and tax stipulations.
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.