Hello,

I'm looking for some advice about my state tax return. Thank you in advance for whoever can provide some guidance.

I'm a french citizen and arrived in New York under a J-1 visa in July 2004. I filed as non resident for my 2004 tax return.

In October 2005, I obtained the H1-B status. If I understand correctly the post I read on this forum, I will still file my Federal Tax return as a non resident for 2005. Since my H1 was granted in October 2005, I do not pass the substantial presence test for this year, hence I can be considered a non resident for Tax Purposes.

I'm a little confused about New York state and New York city taxes. I have been residing in New York city ever since I arrived in July 2004, however, my current status is only valid for 3 years - so I'm wondering whether I can claim that my permanent residence is still my home country (France). I have a permanent address in France (which is my parent's address). I'm not sure whether I will be sponsored for a green card, nor if I will take this step.

Do you think I can file a New York State return as Non Resident ?

Thank you for your help.

Lothaire

Lothaire:

Your non-resident alien status applies only for your federal tax return.

For both the NY state and NY city tax return, you are considered a NYC resident just like everyone else, and must pay taxes (and get the credits and deductions) just like everyone else. You must file Form IT-201.

The Form IT-203 (non-resident tax return) is for those people who work in NY state, but live somewhere else (like Pennsylvania or New Jersey).

Lothaire:

Your non-resident alien status applies only for your federal tax return.

For both the NY state and NY city tax return, you are considered a NYC resident just like everyone else, and must pay taxes (and get the credits and deductions) just like everyone else. You must file Form IT-201.

The Form IT-203 (non-resident tax return) is for those people who work in NY state, but live somewhere else (like Pennsylvania or New Jersey).

Thank you for the information.

I have two further inquiries:

- under the France - USA treaty, I can claim an exemption for $5,000 of the income I received while I was under a J-1 Visa. In the 1040NR form, I will deduct this amount from my gross income and write this down on line 22: "Total income exempt by a treaty". Am I able to do the same for my New York Tax return ? If so, where can I specify that I'm deducting 5,000 from my income based on a tax treaty ?

- I didn't have a permanent residence in New York city for most of 2005. I started renting my own place in September 2005, but previously, I was renting a room in somebody's apartment. Furthermore, I was supposed to stay in New York only for the purpose of my internship according to the terms of my J-1 visa. Based on this circumstances, can I claim that even though I was stayig in NY state for 2005, I had no permament residence for that year and therefore should file as a Non Resident ? It is my understanding that non immigrant alien who are staying in NY for the purpose of completing a specific mission and intend can file as non resident ?
Any advice on this issue ?

Lothaire

Lothaire:

Regarding application of the French treaty exemption to NY state, I do not think it transfers, but I am not sure.

Further, I do not know about the provisions of state residency as you describe them.

You need to call the NY state tax department and ask!

Quote:

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Originally Posted by lruellan

Hello,

I'm looking for some advice about my state tax return. Thank you in advance for whoever can provide some guidance.

I'm a french citizen and arrived in New York under a J-1 visa in July 2004. I filed as non resident for my 2004 tax return.

In October 2005, I obtained the H1-B status. If I understand correctly the post I read on this forum, I will still file my Federal Tax return as a non resident for 2005. Since my H1 was granted in October 2005, I do not pass the substantial presence test for this year, hence I can be considered a non resident for Tax Purposes.

I'm a little confused about New York state and New York city taxes. I have been residing in New York city ever since I arrived in July 2004, however, my current status is only valid for 3 years - so I'm wondering wether I can claim that my permanent residence is still my home country (France). I have a permanent address in France (which is my parent's address). I'm not sure wether I will be sponsored for a green card, nor if I will take this step.

Do you think I can file a New York State return as Non Resident ?

Thank you for your help.

Lothaire

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I disagree with Atlanta tax expert. The issue is far from clear.

Unlike Federal regulations, NY State Tax code is based on INTENT not simply constructive presence and as such it involves questions of both domicile and residence. For further information on this please see the instructions on page 58 of the NY state non residency form available at http://www.tax.state.ny.us/pdf/2006/inc/it203i_2006.pdf

If you intend to return to France within the next few years (as your visa requires you to and as you were obliged to satisy USCIS at the time of issuance of your visa and DHS at the time of entry) then you clearly have strong grounds for showing that you do not have intent to establish permanent residence in New York and thus are not domiciled in New York State AND do not have 'permanent' residence.

The problem is that NY State is currently aggressively policing this.

5 years ago there would have been no question that in your case you are non-resident.
It was common practise for foreign investment bankers working in NY for as long as 5 years to file as non-residents even if they owned houses in New York and spent most of the year there.

Now on audit NY State may well challenge you and there is not much that you can do.

I would suggest you call NY state tax helpline and ask for advanced support on this to establish what is needed in order to prove that your intent is actually not to establish permanent residence.

Good luck!

TaxBlog:

You rebutted your own argument. While the state law seems to be rather ambiguous, the state tax authorities position is clear: you live and work in NY state, you pay NY state taxes. End of conversation!

Further, the NY state tax authorities rival the IRS in terms of their tenacity in getting the taxes they believe they are owed.

If Iruellan decided to claim non-residnet status and failed to pay the appropriate taxes, NY WILL pursue him/her back to France to get their money, and the French authorities WILL assist NY is that pursuit.

Best Iruellen pay as a resident to avoid any problems, especially if he/she has any intent of returning to the U.S.

This is incorrect. See Patrick Gallagher for a determintation clearly analogous. As you will see from this determination the issue hinges on the question of "permanent abode". If filer can provide proof of intent to return to France within 3 years then he should file NY tax as a non-resident thus declaring NY source income only. Note from the above ruling that even though the H1 visa requires holder to return to France on expiry this is not considered adequate proof. Gallagher failed as he had an open ended contract and failed to provide other proofs. Note that during J status filer is Federal Tax Exempt on Global Income (ie non US Source income) and thus files on US Source (and for NY on NY source income only.)

I see that I am in error and concede the point to TaxBlog.

Iruellen should file as a non-resident and only claim NY-sourced income.

AtlantaTaxExpert; taxblog;

I have an additional question I thought you would be able to answer.

I'm a military member serving in Virginia. I've been a "resident" of NY since I joined in 2003. I have been taxed by the state of NY since that time.

I've heard of people in similar circumstances (military member stationed in a different state) filing their NY state tax return as a Nonresident and getting a full refund on all state income tax under the SCRA (Servicemembers Civil Relief Act).

My interpretation of SCRA is that it protects you from being taxed by the state you are stationed in, not necessarily the state in which you claim to be a "resident" or "nonresident".

Basically, these people can theoretically pay $0 in state income tax by receiving a full refund from the state of NY and not paying any taxes in the state in which they are stationed. This sounds fundamentally incorrect to me.

I was hoping one (or both) of you can elaborate.

Cheers.

Thought this info might help:

NYS Tax Exemption:
NEW YORK
Taxpayer Assistance Center
W.A. Harriman Campus
Albany, NY 12227
(800) 225-5829
Forms: (800) 462-8100
Refund: (800) 443-3200
Website: Department of Taxation and Finance
Military income exemptions: If permanent home was New York state before entering the military, active-duty income is not subject to state taxes, if taxpayer meets all three of the following conditions: 1) did not maintain any permanent place of abode in New York state during tax year; 2) maintained a permanent place of abode outside New York during the entire year; 3) spent less than 30 days in New York state during tax year. (Barracks, bachelor officers´ quarters, quarters assigned on vessel do not constitute permanent abode.) It also is not subject to tax if taxpayer was in a foreign country for at least 450 days during any period of 548 consecutive days.
Exit bonuses/separation pays: Follows federal tax rules.
Retired pay/survivor benefits: Exempt
Accepts computer forms? Yes
Allows electronic filing? Yes
Nonresident filing: If the military nonresident has nonmilitary income from a New York source, he may be required to file Form IT-203; military income is included in figuring tax rate on nonmilitary income.
Permits separate returns even if a joint federal return is filed? Generally, no
Maximum tax rate: 6.85 percent (New York City residents subject to additional local tax rate of 3.84 percent; Yonkers applies 10 percent tax surcharge.)

I live in NJ, but I only worked for NY for a few weeks and rest of income came from NJ. Why I need to fill in all my federal income in NY state Non-resident form I-230? That will be unfair to me to pay the income tax which has nothing to do with NY source. Can someone to help me to explain this?

Taxblog, In the Patrick Gallagher case, it says that there is no question that the person is not domiciled in NY. Does that mean that if you are on non-immigrant visas (H1B) you are not domiciled in the NY? My situation is one where I have been under an H1B for 7 years. The past 2 years, I have been spending about 90 days in NY per year. I was born and raised in Europe and that is where I spend the majority of my year now. When I am in NY I stay with my brother as a visitor. Can I file as a non resident?

Yes, you can file as a non-resident alien IF you spent a full calendar year outside of the U.S.

I am not spending a full tax year outside the US. I spend approximately 90 days per year in NY.

Quote:

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Originally Posted by AtlantaTaxExpert

Yes, you can file as a non-resident alien IF you spent a full calendar year outside of the U.S.

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I guess my question is the following:

Do I have an 'automatic' non-domicile regardless of my presence in NY if I have the below characteristics?

I am not a US citizen or a Green Card holder
I have been on an H1B from 2006 to 2013
My days are approximately:
2006: 300 days
2007: 300 days
2008: 300 days
2009: 200 days
2010: 200 days
2011: 150 days
2012: 80 days
2013: 80 days
My family is in Europe (parents, sister, uncles, cousins, - brother is in college in NY)
I have always had a house in Europe where I live.
The reason I spent these years in NY is because I started a business which I will continue to own going forward.

I am planning to file as an NR for 2013. I've been filing as a resident all the other years.

Can the IRS argue that I have a domicile in NY when my work permit is for a limited time and not indefinite?

For 2006 through 2011, you met the Substantial Presence Test, so the IRS would probably argue you needed to file as a resident for those years.

You missed the Substantial Presence Test for 2012, and will miss it for 2013. If you file an expatriate dual-status return for 2012, then a non-resident alien return for 2013 and beyond would be acceptable to the IRS. I did something very similar for a Danish engineer, and he pays U.S. income taxes as a non-resident alien ONLY for income earned while he is physically present in the United States.