Residency Audits are becoming more and more prevalent, especially in New York State, which also has a second layer if a New York City residency is involved. Should you have multiple residences there are steps you can take to determine your residency status as either full-time, part-time or non-resident. Below is what the state will look at to determine your residency status should you be audited for filing incorrectly.
✔ Which home/residence did you own first? How much was invested in each of the properties? How much has each of the properties been upgraded? Where does your family go to school? Where do you belong to clubs, gyms etc.? Where do you spend special occasions? Is one home a seasonal home? Where do you entertain? Where do you vote?
✔ Documentation – Closing statements/leases, moving bills, insurance policies, descriptions and photos of each of the rooms for each of the properties, drivers license, where you receive mail, if you have multiple cars/boats/other transportation devices and where they are kept, doctors offices, voter registrations, cable/phone/utility bills, grocery bills, catering bills etc, club/gym memberships, voter registration cards.
2. Active Business Involvement
✔ What is your involvement in the business? Where is the business located? Are you a partner or investor in businesses elsewhere? What is your level of involvement in any of those businesses?
✔ Documentation – W2s, proof of address, business credit card statements, calendar with work schedules, travel information for business trips.
✔ Where do you spend all of your time? What is the percentage of time you spend in the questioning state? Do you travel extensively for work or pleasure?
✔ Documentation – Journals, diaries or appointment books, all credit card statements, expense reports, phone bills, frequent flyer statements, passports, personal travel information, EZ-pass records etc..
4. Near and Dear
✔ What are your most prized possessions? What do you consider to be most sentimental? What is of the greatest value to you? What precautions have you taken to protect your home(s)?
✔ Documentation – Moving bills, security system information, insurance policies on certain items, photos of family heirlooms, recreational vehicles, media systems (surround sound systems, tv’s, computers, etc.)
✔ Where do your spouse, children, parents and siblings live?
✔ Documentation – housing information for those family members i.e., a driver's license showing proof of address
While there are many outcomes to a residency audit, you want to be sure you have enough information to be prepared to fight back if you in fact have filed correctly. We have the tools and experience to help you through this process.