Bloomberg Tax
Oct. 22, 2020, 8:00 AMUpdated: Oct. 23, 2020, 2:56 PM

When Down the Hall Becomes Across State Lines—Part 1 (1)

Lee Allison
Lee Allison
Ropes & Gray LLP
Kathleen Saunders Gregor
Kathleen Saunders Gregor
Ropes & Gray LLP
Andrew Yarrows
Andrew Yarrows
Ropes & Gray LLP

In March and April, as restrictions began to intensify in response to the Covid-19 pandemic, many people relocated to a state other than their usual place of residence. Many assumed the relocation would be temporary and short-lived. This story reflects the lived realities of countless individuals who may have retreated to another state, either to what they had previously considered a “pied à terre” or to a family or childhood home. However, as we collectively surpass more than six months since the pandemic caused such drastic changes to everyday life, individual taxpayers who find themselves still in another state, perhaps with no precise end in sight, should consider the potential for their presence in a different state to lead to residency for personal income tax purposes. It is possible that two states could each assert taxing authority over an individual, with one state taxing based on principles of domicile and another state taxing based on principles of statutory residency.

Taxpayers who may have accidentally become subject to taxation by two states should consider the implications of any potential double taxation on wages and on unsourced income, including capital gains. These taxpayers will have to balance several competing considerations as they weigh the implications of double taxation with a tax regime that may be modified in 2021 and beyond, if a blue wave rises in the elections.

In Section I, this article summarizes the relevant tax laws in several northeastern states, where interstate movement is common: a. Connecticut, b. Massachusetts, c. New Jersey, d. New York, and e. Vermont. In Section II, this article explores the potential for taxation by multiple states and for part-year statutory residency. A second article, to be published shortly, explores common fact patterns and the impact of certain variables that may affect outcomes.

I. State Tax Residency Rules

An individual’s state of residence, for tax purposes, is significant because states may impose tax on their residents. (See Oklahoma Tax Comm’n v. Chickasaw Nation) Residence is commonly thought of as a person’s domicile—the place that a person considers to be their permanent home. While the concept of tax residency includes domicile, tax residency is typically broader. Many state statutes define “resident” to include both individuals who are domiciled in the state and individuals who spend a significant amount of time and maintain a residence there. In effect, this makes it possible for an individual to be subject to personal income tax in their state of domicile and also in a second state that considers them a resident.


This section explores the residency rules of Connecticut, Massachusetts, New Jersey, New York, and Vermont. Given that the rules for determining New York City residence are identical to those of New York State, the New York rules discussion applies equally to the state and city. With the exception of several notable differences, discussed below, these jurisdictions all approach the concept of tax residency in a similar fashion. In each state, a tax resident is, generally speaking, a person that is either (1) domiciled in the state or (2) not a domiciliary, but maintains a permanent place of abode in the state and is present in the state for more than 183 days during the taxable year. This latter category is referred to hereinafter as statutory residence.


In broad terms, domicile is the state of one’s permanent home and the place one intends to return to after an absence. Connecticut, New Jersey, and New York have statutory exceptions from domicile if an individual meets certain requirements for a given taxable year. In those three states, a person who is domiciled in that state will not be considered a resident for tax purposes if they (i) did not maintain a permanent place of abode in that state for the entire taxable year, (ii) maintained a permanent place of abode outside of that state for the entire taxable year, and (iii) spent less than 30 days in that state during that year. Alternatively, in Connecticut and New York, the individual may meet certain requirements for spending time abroad in another country or countries. (N.Y. Tax Law Section 605(b)(1)(A); Conn. Gen. Stat. Section 12-701(1) (2018); N.J. Rev. Stat. Section 54A:1-2(m)(1))

Many factors determine a person’s domicile, and no single factor is conclusive. In Massachusetts, for instance, the site of a person’s family relations, business connections, social activities, health care, and other “major life interests” are considered. (Technical Information Release (TIR) 12-10) In New Jersey, the Division of Taxation will examine the taxpayer’s intent, where they are registered to vote, where their vehicle is registered, the location of bank accounts, and the location of family ties, among other factors. (New Jersey Informational Memo GIT-6) Similarly, Vermont considers the location of items that the taxpayer holds “near and dear,” such as family heirlooms. (Code of Vermont Rules Section 1.5811(11)(A)(i), Section 3(c)) Connecticut may also consider the individual’s location of domicile in prior years and the amount of time that person spends in Connecticut. (Conn. Agencies Regs. Section 12-701(a)(1)-1(d)(8)) New York examines a person’s use of a New York home, active business involvement, time spent in New York, the location of significant personal items (such as an art collection), and the location of family connections. (N.Y. Tax Law Section 605(b)(1)(A); Non-Resident Audit Guidelines Section 5).

Ropes & Gray

Typically, an individual will continue to remain domiciled in a state until they establish domicile in a new jurisdiction, and the burden is on the taxpayer to prove abandonment of the prior domicile. For instance, in Massachusetts, a court may look to whether a taxpayer has made “genuine efforts to abandon [their] domicile in Massachusetts.” (Brew v. Commissioner of Rev., C293964 (Mass ATB August 24, 2010)) New Jersey requires individuals to show an intent to abandon one’s domicile and establish a permanent home in another jurisdiction. (Goffredo v. Director, Div. of Taxation) In New York, a taxpayer may continue to be domiciled there even if they sell their home in New York and register and vote in a different state. (20 N.Y. Comp. Codes R.& Regs. 105.20(d)(2)) Accordingly, taxpayers who left their home state for another due to Covid-19, but who intend to return to the first following the pandemic, would typically not be considered to have given up domicile in the first.

Statutory Residence

A taxpayer that has not given up domicile in their home state may be considered a statutory resident of another state for tax purposes. Generally speaking, the states discussed herein will assert taxing authority over an individual that maintains a permanent place of abode in the state and is present in the state for more than 183 days during the year. Within these various states’ definitions of statutory residency, it is crucial to understand how each state interprets “maintaining a permanent place of abode” and counts days.

A. Connecticut

Connecticut residents include any persons who maintain a permanent place of abode in Connecticut and spend, in the aggregate, more than 183 days of the taxable year in Connecticut. (Conn. Gen. Stat. Section 12-701(1) (2018)) Connecticut’s income tax return instructions specify that statutory residents must have maintained a permanent place of abode for a full year. (Instructions to 2019 Form CT-1040 NR/PY) A permanent place of abode is a residence that is permanently maintained by a person or that person’s spouse, regardless of whether they own or lease. It does not include a “mere camp or cottage” that is suitable and used only for vacations or a structure that does not contain cooking and bathing facilities. In addition, a residence is not considered permanent if an individual stays there temporarily to accomplish a particular purpose, such as a work assignment, for a “fixed and limited period,” even if that “fixed and limited period” is for more than one year. (Conn. Agencies Regs. Section 12-701(a)(1)-1(e)(1); Nonresident Alien) However, if the stay is for an “indefinite” period of time, such as a work assignment without a fixed length, the residence will be considered permanent, rather than temporary. (Conn. Agencies Regs. Section 12-701(a)(1)-1(e)(1))

Any part of a day spent in Connecticut counts toward the 183-day total. The only exception allows individuals not to count a day in which they passed through Connecticut while in transit to a destination outside of the state. (Conn. Agencies Regs. Section 12-701(a)(1)-1(c))

B. Massachusetts

Similar to Connecticut, in Massachusetts, a permanent place of abode is a residence that a person continually maintains, regardless of whether that person owns the property. (Mass. Gen. Laws Chapter 62, Section 1(f); TIR 95-7) It also includes a residence owned or leased by a person’s spouse. A residence will be considered maintained on a temporary, rather than permanent, basis if it is used for a stay that is predetermined in length, does not exceed one year, and is maintained for the accomplishment of a particular, documented purpose. For instance, a person who is domiciled elsewhere but rents an apartment in Massachusetts during a predetermined six-month work assignment would not be considered a resident. (TIR 95-7) In contrast, an apartment rented in Massachusetts by another state’s domiciliary for a work assignment lasting more than one year was considered a permanent place of abode in Massachusetts. (Letter Ruling 08-11) However, these rules will not apply to a “place of abode” that lacks kitchen and bathing facilities and is not winterized.

In guidance, the Department of Revenue (DOR) has suggested that a person “maintains” a residence when the individual contributes to living expenses or if the individual has a right to immediate occupancy of the residence. For example, the DOR noted that a university student who lived in an off-campus apartment and shared living expenses (such as utilities) with his roommates was considered to have a “permanent place of abode” in Massachusetts, despite the fact that he intended to leave the state upon graduating. (TIR 95-7) In another example, taxpayers maintained a residence in Massachusetts while their house was for sale. Because it remained fully furnished, the DOR found the house “remain[ed] available for their immediate occupancy.” The taxpayers no longer “maintained” the residence once an offer was made on the home and they had their furniture shipped to their new home out-of-state. (TIR 95-7)

Finally, for the purpose of determining days spent in Massachusetts, individuals must count any days during which any part of the day was spent in Massachusetts “for whatever reason.” (Mass. Gen. Laws Chapter 62, Section 1(f)) The DOR has not provided an exception for time spent passing through Massachusetts while in transit.

C. New York

In New York State and New York City, “resident” includes an individual who maintains (or whose spouse maintains) a permanent place of abode in New York for substantially all of the taxable year and spends at least 184 days in New York during the year. (N.Y. Tax Law Section 605(b)(1)(B); 20 CRR-NY 295.3(a)) A residence will only constitute a “permanent place of abode” if it is physically suitable for year-round use. (Tax Bulletin IT-690) The presence of utilities such as heat, electricity, telephone services, hot water, cable, and internet indicate that a home is “habitable and comfortable year round.” (Matter of John J. & Laura Barker) It generally must contain typical residential facilities such as cooking and bathing. (Tax Bulletin IT-690) In addition to the physical features of a residence, “permanent” also refers to the individuals’ connection to the residence, but it does not require the individual retain a property right in the residence. For instance, a person’s permanent place of abode may be the apartment where they live, even if that person is not named in the lease, if that person shares living expenses, moves furniture there, and does not reside there merely on a “temporary condition or assignment.” (Matter of Evans v. Tax App. Tribunal of St.)

Prior to Jan. 1, 2010, New York regulations provided that a place of abode would not be considered permanent if it was maintained only during a temporary stay for the accomplishment of a particular purpose. The stay must have been for a fixed and limited period. These regulations were amended in 2009 to omit this exception. Therefore, individuals asserting that they did not maintain a permanent place of abode in New York cannot rely on the fact that their stay was temporary in nature. (20 CRR-NY 105.20(e)(1) (2009))

An individual is considered to “maintain” the residence if they do “whatever is necessary to continue [their] living arrangements in that place.” (Tax Bulletin IT-690) Typically, this includes paying rent or owning the place where one lives. It can also include other contributions to the residence, such as providing money or services. The fact that an individual does not pay for most operating expenses, including a mortgage, repairs, and/or utilities, does not in itself mean the individual has not “maintained” the abode, particularly where the individual shares in other living expenses. (Matter of Evans v. Tax App. Tribunal of St.) The taxpayer must actually utilize the abode as their residence. For example, a taxpayer who owned an apartment building and allowed his parents to live there, but who himself did not reside there, was not considered to have maintained a permanent place of abode in New York because he did not possess a “residential interest” in the property. (Matter of Gaied v. NYS Tax Appeals Trib., 2014 NY Slip. Op. 01101 (2014))

Additionally, a resident must have maintained the permanent place of abode for “substantially all” of the year. (N.Y. Tax Law Section 605(b)(1)(B)) This is interpreted to mean more than 11 months during the year. (20 CRR-NY 105.20(d)) Even if a person does not occupy the residence for all 11 months, they will be considered to maintain it for any period of time during which they may freely access the residence. For instance, a person who owns and lives in their home in New York for six months out of the year, but who rents the house to an unrelated tenant for the remaining six months, would not be considered to maintain the residence for more than 11 months. Even though the individual owned the home for the full year, they were not entitled to access the residence for more than 11 months during the year. (Tax Bulletin IT-690) Accordingly, if a person purchased or began renting a residence in New York in February, they would not meet the 11-month threshold for the first year of presence in the state.

For purposes of calculating days spent in New York, a day includes any part of any day during which the taxpayer was present in the state. (20 CRR-NY 105.20(c)) There are several exceptions. First, a taxpayer is not considered to be present in New York on a day that the taxpayer traveled through New York to reach an out-of-state location, or was only present in New York to board a plane, ship, train, or bus for travel outside of New York. Second, a person who seeks medical treatment in New York is not considered to be present in the state during any days in which that person is confined to a medical facility for treatment. This exception does not extend to days a person spends visiting or caring for their spouse who has been hospitalized. (Stranahan v. NYS Tax Comm’n,; Matter of Brush, DTA 817204 (April 12, 2001); Non-Resident Audit Guidelines Section 5).

D. New Jersey

New Jersey has a similar statutory definition of residents who are not domiciliaries. A permanent home does not include residences that are maintained only during a temporary period to accomplish a specific purpose, such as a temporary job assignment. Similarly, a home only used for vacations is not considered permanent. (N.J. Rev. Stat. Section 54A:1-2(m)(2); GIT-6; Instructions to 2019 Form NJ-1040NR)

The New Jersey Tax Court has found that individuals who attempted to sell their New Jersey house and resided in it for less than half of the year still maintained a permanent place of abode in New Jersey for that year. (Samuelsson v. Director, Div. of Taxation)) The Court has also found that an individual maintained a permanent place of abode in New Jersey when the taxpayer owned the home jointly with his wife, who lived in the home while the taxpayer temporarily lived abroad. There, both the taxpayer and his wife maintained bank accounts in the same municipality as the residence, they executed a homestead rebate claim during the year at issue, and the taxpayer testified that it was his “permanent home.” (Quick v. Taxation Div. Director)

New Jersey has not offered guidance on how taxpayers should calculate days spent in the state.

E. Vermont

Vermont’s definition of a resident similarly includes persons who maintain a permanent home in Vermont and are present in the state for more than 183 days. In a release addressing filing status of taxpayers, the Vermont Department of Taxes has stated that a resident must establish a permanent place of abode “in which the individual was present for more than 183 days.” (TB-55) The Vermont Department of Taxes has not otherwise interpreted this aspect of the statute, nor have any state courts expounded upon it. (32 Vt. Stat. Section 5811(11)(A)(ii))

II. Taxation in Multiple States

In the event an individual is considered taxable as a resident in two states, one state because of domicile and another state because of statutory residence, one or both states may allow the individual a tax credit for taxes paid to another state. States vary in the types of income and taxes that are eligible for such a credit.

General Rule: Many States Allow Credits for Income Sourced to and Taxed by Other States

Many states, including Massachusetts and New Jersey, will allow credits on income taxes paid to another state, but will not allow credits for taxes paid on income sourced to their own state. Massachusetts, for instance, will provide a credit to resident taxpayers for taxes paid to another jurisdiction on (1) any income that is sourced to the taxpayer’s state of domicile, and (2) any income that is unsourced and therefore taxed in the taxpayer’s state of domicile. Accordingly, in Massachusetts, preference is given to the state of domicile to tax unsourced income, such as investment income. (Mass. Gen. Laws Chapter 62, Section 6(a); Letter Ruling 08-11)

New Jersey also permits dual residents to claim a credit based on taxes paid to New Jersey and another state on income that was taxed in both states. As noted above, this calculation excludes income that is allocated to New Jersey. In addition, a New Jersey resident generally will not be entitled to a credit for taxes paid on investment income, unless the income was derived from activities conducted in the other taxing jurisdiction or the taxpayer filed a resident return in the other taxing jurisdiction and reported the income on both states’ returns. The New Jersey credit, as calculated, is intended to equal the lesser of (1) the amount of New Jersey tax the taxpayer would have owed if all of their income had been earned in New Jersey, or (2) the taxes that the taxpayer actually paid to the other jurisdiction. (N.J. Rev. Stat. Sec. 54A:4-1; GIT-3B; Instructions to 2019 form NJ-1040).

The result from this general rule is that if taxpayers are subject to taxation in two states, one state because of domicile and another state because of statutory residency, those taxpayers will only be taxed once on their income, after the application of credits. Each state will tax the income that is sourced to that state. The state of domicile or both states may tax unsourced income but, as in New Jersey, a proportional credit will be provided to dual residents. As a result of these available credits, if a taxpayer is subject to taxation in two states, the only marginal cost to the taxpayer is the difference in tax rates between the two states.

Exceptions: Some States Only Allow Credits for Income Taxed by Other States, If the Other State Provides the Same Relief

Connecticut generally only permits credits for taxes paid to other states on income that was sourced to and taxed by another state. It also allows non-domiciliary residents of Connecticut a credit for taxes paid to their state of domicile on income from intangibles and on income derived from another state that does not impose an income tax. This approach is similar to that of Massachusetts, as described above. However, the Connecticut credits are only permitted if the individual’s state of domicile has adopted an equivalent provision. (Conn. Gen. Stat. Section 12-704(a); Conn. Gen. Stat. Section 12-704(d)) Vermont follows substantively identical rules. (32 Vt. Stat. Section 5825)

Exceptions: Some States Do Not Allow Credits for Taxes Paid on Unsourced Income

Other states, including New York, will not provide a credit for unsourced income taxed in another state. (N.Y. Tax Law Section 620-A) In other words, these states would provide a credit to residents for income that was sourced to another state, such as wages. However, they would not provide a credit for taxes paid to another state on income that is “unsourced,” such as investment income, which would be taxed in both an individual’s state of domicile and their state of statutory residence.

This has the effect of potentially subjecting unsourced income to taxation in two states. Thus, for example, an individual who is domiciled in New York and is a statutory resident of Connecticut would not be entitled to a credit in Connecticut for taxes paid to both states on investment income because New York does not provide a similar credit to Connecticut domiciliaries. (Edelman v. N.Y.S. Dep’t of Taxation & Fin.) Similarly, an individual who is domiciled in Massachusetts and a statutory resident of New York would likely not be provided a credit by either state for taxes paid on unsourced income. Massachusetts gives taxing preference to the state of domicile, and New York does not provide a credit for taxes paid on unsourced income.

Exceptions: Temporary Covid-19 Guidance

As an additional layer of complexity, many states have also enacted temporary rules impacting how income is sourced during the Covid-19 emergency period. A discussion of some of these measures can be found at Key Tax Considerations for Companies with Remote Employees.

Pursuant to temporary policies implemented in Massachusetts, through December 31, 2020, the income of nonresidents will be sourced to Massachusetts if the individual performed services in Massachusetts immediately prior to the Covid-19 pandemic and began performing services from outside of Massachusetts due to circumstances related to Covid-19. (TIR 20-10) The effect of the temporary guidance is to increase an individual’s tax liability only if the nonresident performs services in a lower tax jurisdiction during the Covid-19 emergency, since the individual will be subject to Massachusetts tax rates rather than the lower rates in their state of residence. Because the income is Massachusetts-source, no credit would be provided against Massachusetts tax, even if the income is also taxed in the taxpayer’s state of residence. Whether the state of residence respects Massachusetts determination of source, however, may not be so clear—thus, taxpayers affected by this statute may find themselves faced with double taxation.

If the reverse is true—a Massachusetts resident who previously worked outside of Massachusetts now works in Massachusetts due to Covid-19—Massachusetts will allow that person a credit for taxes paid to the state where the resident previously performed services if that state has adopted temporary guidance that sources the resident’s income to that state.

In New Jersey, due to telecommuting activities that arose during Covid-19, individual taxpayers may use a different allocation method when reconciling their 2020 nonresident income, in the event their employer does change the “work state data” in its payroll systems. New Jersey typically sources income of nonresidents to New Jersey if services were performed there, but for the duration of the Covid-19 emergency, income will be sourced based on the applicable rules of the employer’s jurisdiction. (N.J. Rev. Stat. Sec. 54A:5-8; Telecommuter Covid-19 Employer and Employee FAQ)

Additional Considerations: Part-Year Residency

Taxpayers who are considered statutory residents of a state may in fact only be considered part-year residents, and would thus only be taxable on the portion of the income earned during the time they were considered residents.

Most states limit part-year returns to taxpayers that have changed their domicile during the tax year. In Connecticut, part-year residents are defined as taxpayers having “changed [their] permanent legal residence by moving into or out of Connecticut during the … taxable year.” (Instructions to 2019 Form CT-1040 NR/PY) Therefore, it is likely that Connecticut would only consider a taxpayer a part-year resident if they changed their domicile. Similarly, New Jersey specifies that individuals who were domiciled for part of the year should only report income that was earned while they were residents of New Jersey.

However, some states consider statutory residents part-year residents based upon the time-period for which a taxpayer maintained a permanent place of abode. In Massachusetts, a person who “established a permanent place of abode and became a resident” during a taxable year would be taxable as a part-year resident. (2019 MA Nonresident or Part-Year Resident Income Tax; TIR 95-7) Therefore, a Massachusetts statutory resident who established a permanent place of abode during a particular tax year may only be taxed as a part-year resident for the timeframe after which they established a permanent place of abode.

In non-binding guidance, the Vermont Department of Taxes drew a distinction based on the time-period a permanent place of abode is maintained. If the abode is maintained for an entire year and the individual is present for more than 183 days during the year, that person will be considered a Vermont statutory resident for the entire year. If, in contrast, the residence is maintained for more than 183 days during the year but less than the full year, and the individual is present for more than 183 days during that period, the individual will be a resident of Vermont during the period that they maintained the place of abode. (32 Vt. Stat. Section 5811(10); Vermont Formal Ruling No. 89-3)

In some states, statutory residents are not eligible to be part-year taxpayers. In New York, for instance, individuals who satisfy the requirements for statutory residency are required to complete a resident tax return, rather than a nonresident or part-year resident return. (Instructions for Form IT-203-B) New York’s and Connecticut’s stance that statutory residents are not eligible for part-year residency is likely of less concern, given that statutory residence is only triggered if a taxpayer maintained a permanent place of abode for a long time, more than 11 months in New York or the full year in Connecticut.


Individuals who relocated for the Covid-19 emergency may be subject to taxation by two states, one based on principles of domicile and another based on principles of statutory residency. Generally, states consider taxpayers statutory residents if they maintain a permanent place of abode in the state and have spent more than 183 days in the state. However, each state has important nuances in the application of those general rules. The determination of domicile and residency is highly fact-specific, and will depend on each individual’s unique circumstances. Taxpayers should consult their tax professional concerning their particular situation and any specific legal questions relating to residency.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Lee Allison and Kat Saunders Gregor are partners and Andrew Yarrows is an associate at Ropes & Gary LLP.

(Updated to reflect Vermont guidance.)

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