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How do I determine residency for state tax purposes with remote work?

by | Nov 1, 2025 | Individual Taxes

Here’s what HIVE AI had to say about “How do I determine residency for state tax purposes with remote work?”:

Determining state residency for taxes when you work remotely

The core residency categories

Domicile (your “true, fixed, permanent home”)

  • You are a resident of the state where you are domiciled until you abandon it and establish domicile elsewhere.
  • Domicile is based on intent and facts: where you live most of the time, maintain your primary home, where your family lives, driver’s license, voter registration, vehicle registration, professional licenses, where you bank, doctors/club/church ties, and where you keep valuable personal property.

Statutory residency (day-count plus a home)

  • Some states also treat you as a resident if you spend a threshold number of days in the state (frequently 183) and maintain a “permanent place of abode” there, even if your domicile is elsewhere.
  • This can create dual-residency exposure if you maintain a home and spend significant time in two states.

Part‑year residency

  • If you move during the year and change your domicile, most states treat you as a part‑year resident: resident for the period you lived there, nonresident otherwise.

Remote work does not, by itself, change residency—facts and ties do

If you moved and established new ties

  • You likely changed domicile to the new state when you:
    • Established a primary home there and relinquished or demoted your former home
    • Moved family/household there
    • Switched driver’s license, voter registration, vehicle registration, and mailing address
    • Shifted your personal/professional life and property
  • Expect part‑year returns in both states for the move year.

If you stayed put but work from another state temporarily

  • You generally remain a resident of your home state (domicile unchanged).
  • You may also owe nonresident tax in the state where you are physically working if you cross that state’s filing/withholding thresholds (many states use day or dollar thresholds for nonresidents). States use various day- or dollar-based nonresident thresholds and safe harbors; some policy analyses recommend standard day-based thresholds to simplify compliance for mobile workers 1.

Living in one state and working for an employer in another

Credits, reciprocity, and double tax risk

  • Most states give residents a credit for income taxes paid to another state on the same income, reducing double taxation—typically only for income earned while physically working outside the resident’s state 1.
  • Some state pairs have wage reciprocity agreements so you pay tax only to your state of residence on wages—file an exemption form with the work‑state employer when applicable 1.

“Convenience of the employer” rules

  • A handful of states apply “convenience” rules: if your employer is based in that state, wages you earn while teleworking from another state can still be sourced to the employer’s state unless remote work is a necessity of the job (narrow exceptions). Your home state may deny a resident credit because you were physically working in your home state, creating true double taxation of the same wages. This is a key trap for remote workers tied to employers in “convenience” states 1.

Nonresident thresholds and “mutuality” complications

  • Many states use filing/withholding thresholds for nonresidents (by days or by dollars). Four “mutuality requirement” states—Louisiana, North Dakota, Utah, West Virginia—only extend their nonresident safe harbors if your home state offers a “substantially similar” exclusion, which is not clearly defined in public guidance. That ambiguity increases compliance risk for short‑term work across states 1.

A practical framework to determine your residency

Step 1: Identify domicile facts

  • Where is your primary home?
  • Where do spouse/dependents live?
  • Where are your license, voter registration, vehicle registration?
  • Where are your doctors, clubs, safe‑deposit box, and main bank?
  • Where do you spend the most time over the year?

Step 2: Check statutory residency exposure

  • Did you spend at least 183 days in another state while maintaining a permanent place of abode there?
  • If yes, that state may also treat you as a resident; you’ll need to sort credits and sourcing to avoid double taxation.

Step 3: Map wage sourcing and employer location

  • If your employer is in a “convenience” state, assess whether your remote work qualifies as necessity versus convenience; if convenience, expect the employer state to tax all wages tied to that job and plan for possible resident credit denial by your home state 1.
  • If there’s a reciprocity agreement between your residence and work states, file the exemption certificate with your employer and ensure withholding aligns with residence-state only 1.

Step 4: Evaluate nonresident thresholds

  • If you spend time physically working in a nonresident state, check its filing/withholding thresholds (days or dollars). Some states layer in “mutuality” limitations that may negate safe harbor relief depending on your home state’s rules 1.

Step 5: Plan credits and filings

  • If two states claim your wages, compute resident credits carefully; remember many states grant credits only for tax on income earned while you were physically out of the resident state (a problem under convenience rules) 1.

Examples to illustrate

You moved from State A to State B mid‑year and now work fully remote

  • You’re part‑year resident of A and B.
  • Wages while domiciled in A are taxed by A; wages after establishing domicile in B are taxed by B.
  • If your employer is in a convenience state, confirm sourcing—B may not grant a credit for A tax on wages you earned while physically in B 1.

You live in State A, visit State B for a 4‑week project

  • You remain a resident of A.
  • You likely owe nonresident tax in B on wages earned there if you exceed B’s day/dollar threshold; A should give a resident credit for the B tax on that B‑source income 1.

You live in State A, employer in State B with reciprocity

  • File B’s reciprocity exemption; employer withholds only for A. File only in A for wages, absent other B‑source income 1.

Documentation and planning tips

Keep evidence of intent and ties

  • Lease/closing statements, moving receipts, updated IDs/registrations, school enrollment, healthcare providers, voter records.

Track days in each state

  • Maintain a contemporaneous day log and travel evidence to defend against statutory residency assertions.

Review employer policies and location

  • Ask HR if the employer applies convenience rules or alternative work‑location registrations; adjust withholding and estimated taxes accordingly 1.

Verify thresholds annually

  • States change nonresident day/dollar thresholds and safe harbors; “mutuality requirement” states can deny relief depending on your residence state’s rules 1.

Sources

1 – Tax Foundation 📄 Summarize

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