How to pay taxes if you moved to another state during a pandemic

It has been 5 months since the coronavirus was struck by the US and forced millions of people to stay home. The pandemic has forced some Americans to leave their primary residence and move to other places, whether a second home or the home of relatives. Many had changed state of residence, writes CNBC.

Как платить налоги, если вы переехали в другой штат во время пандемии

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Indeed, according to the Pew Research Center, just over 1 in 5 adults, or moved because of a pandemic, or know someone who has moved. In June, the organization interviewed 9 654 people.

The duration of the pandemic begins to raise difficult issues with families who have moved to other States: whether they were considered residents of the new state? Can be required to pay taxes in both States?

“People are leaving new York, said mark Klein, a tax attorney and partner at Hodgson Russ in new York. – Before they moved to Florida, but now it’s Wyoming, Texas, Tennessee. People from California move to Nevada”.

Meanwhile, as state budgets have suffered greatly, individuals suddenly claiming residency in a favorable tax location can expect that their former home state will resist.

“States are caught between a rock and a hard place,” said Klein, noting that the persecution of these taxpayers may be simpler than raising taxes on residents or reduce costs.

“I think the auditors will be much closer, he said. – States are likely to be really aggressive.”

Not only 183 days

In the States there are usually two ways of determining residency, if we are talking about taxation. To be considered a resident according to the law and be taxed as a resident of the state, you have to spend 183 days during the year, and you must have permanent residence in this state.

The test for place of residence considers five key aspects.

Here are five, according to Klein: your domicile is your true home and not just a place where you live. Also take into account the location of your business conducted in the state of time, a location dear to you things that your family.

Your new home favorable tax region may seem permanent, but your home state is unlikely to leave this statement in force.

“Many people misunderstand the 183 day rule, said Jon Bonk, accountant and Director of tax and business in Marcum LLP. – If you have a permanent home in California, and you go to Nevada because Covid-19, it doesn’t change the fact that you still need to pay taxes in California.”

“Leaving for six, seven or eight months in most cases does not change the answer to this question,” said Bonk.

According to him, you will have to reinforce its position not only in the sale of a primary residence, but also the change in register you as a voter, enrolling children in a new local school and a demonstration that you’ve settled in a new place.

“Move out of the house for millions of dollars in a house on the beach – not necessarily a permanent move, said Bonk. There are many things you need to do if you pass the audit on behalf of the state.”

The tax burden at home

Not only people who dream about moving to another state, faced with tax problems.

For example, some new Yorkers left the city in Connecticut to wait out the pandemic and work remotely until the end of the year. In this case, as you earn income from working at home, and new York, and Connecticut want to get their fair share of taxes, said Klein.

According to him, if you spend more than 183 days in Connecticut, you will be subject to income tax there.

“Connecticut says: “We have the right to charge you tax as if you were a resident, because you use our services,” said Klein. So, you pay taxes in new York and Connecticut, because you live in new York and live in Connecticut.”

Although Connecticut provides residents a credit for income tax paid to another state credit is limited to the lesser of the amount of tax paid to another state, or tax, which Connecticut levies on wages outside of the state.

Several States – some tax returns

Even those who work remotely from another state, but not intends to stay there for a long time, are faced with tax challenges. It can be employees who are visiting family in another part of the country or open a remote office.

“I know young people who came to new York to work and live, but because of what is happening with Covid, they went home to other States,” said Michael Goodman, a CPA and founder of Wealthstream Advisors in new York.

“Some went to California to live with their families, he added. – Where will they pay taxes?”

In this case, these workers may have to pay additional taxes and to file tax returns non-residents while they are working remotely.

Some States have pacts with other nearby jurisdictions in order to minimize duplicative taxes and allow tax return non-residents for foreign workers. There is such an agreement between new Jersey and Pennsylvania, as well as between States in the Middle Atlantic.

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