30 Mar We own two places. Will extra visit mess with residency?
Q. We live in another state but we also have a place in New Jersey. Can my wife come up to New Jersey for a weekend for a wedding shower even if it puts her over the time to prove residency in another state?
— Traveling, sometimes
A. There’s a lot to consider here.
When determining whether or not you are considered a resident in a particular state, it is important first to note the difference between domicile and residency.
While the terms tend to be used interchangeably, in the eyes of the IRS, there are two distinct definitions, said Melissa Raimundo, a certified financial planner with Beacon Trust in Morristown.
”Domicile is the place and state you consider your permanent home — the place where you intend to return after a period of absence, such as from a vacation, business assignment or educational leave,” she said. “While a person can only have one domicile, they can have multiple residences.”
She said domicile is based on intent. This means you can establish your domicile by showing your intent to have a place be your “home base.”
This intent can be demonstrated and established by changing your driver’s license, registering to vote, registering your legal mailing address, changing your bank account addresses, and showing where you keep things “near and dear” to you such as pets, doctors and more, Raimundo said. Individuals domiciled in a state are automatically considered state residents for tax purposes, she said.
While domicile is based on intent, residency is based on time spent in a state, she said.
“In New Jersey, if New Jersey is not your domicile but you maintain a permanent home and spend more than half of the year, specifically, more than 183 days in the state, you are considered a statutory resident,” she said. “As such, you would therefore need to file a New Jersey tax return and be subject to income taxation by the state on all of your income regardless of whether it was earned within the state or elsewhere.”
An exception to note: If in the case that your joint gross income does not exceed $20,000 — $10,000 for single filers or married filing separately — you would not need to file a New Jersey state return, she said.
“The first condition in the residence determination for New Jersey is whether the place you own in New Jersey is considered a permanent home. This is defined as a place a person can live, that is maintained permanently as a household,” she said. “If this is true, then you satisfy the first half of the state residency test.”
The second condition is referred to as the 183-Day Rule.
Under the 183-Day Rule, any amount of time can count as a day with only very few exceptions.
“Even if your wife is just in New Jersey for a couple of hours to attend the shower, the entire day will count, and if in New Jersey past midnight, then two days will count,” she said. “One of the only exceptions to this rule is if a person is boarding a plane, train, ship or bus in New Jersey for a place out of the state. However, if you do anything other than just board the vehicle, it would count as a day.”
In your case, it is also important to note that each spouse’s residency is considered separately, Raimundo said. Therefore if you did not spend more than 183 days in New Jersey but your wife did, only she would be considered a statutory resident and would be able to file her New Jersey tax return as married filing separately.
“The most important thing is to ensure you and your wife are keeping detailed records and receipts of your time spent in each state and working with a qualified tax professional to help guide you through the options and determine the most beneficial way to file,” she said.
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This story was originally published on March 30, 2022.
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