Inbound to New York? Understanding the Nonresident Income Tax Status Rules
by R. Scott Jones, Esq. & Richard W. Goldstein, Esq.
A number of contentious issues have arisen in recent years concerning New York state individual income taxation as the New York State Department of Taxation & Finance (the "Department") has honed in on additional revenue-raising opportunities . They include nonresident tax withholding by employers, domicile issue s for taxpayers with homes in multiple states, including "snowbirds", and, the subject of this article, the nonresident tax treatment accorded to foreign nationals working in New York State (and, if applicable, City) for a limited period of time.
A particular fiscal benefit accorded to foreign nationals in the Tri -State region in recent years has been nonresident tax status. New York, Connecticut and New Jersey apply similar rules with varying criteria. State taxing authorities saw fit some years ago to tax such individuals, whose permanent home (a .k.a."domic ile", more about this later) is outside the US but who physically reside within the State (or City), on state source income only rather than worldwide income, provided certain conditions are met. The mechanism arguably carries the advantage of encouraging skilled foreigners and their employers to conduct operations within New York, New Jersey and Connecticut.