Discussion:How to avoid paying NYS tax as a FLA resident?

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Discussion Forum Index --> Advanced Tax Questions --> How to avoid paying NYS tax as a FLA resident?


Discussion Forum Index --> Tax Questions --> How to avoid paying NYS tax as a FLA resident?

Danjames (talk|edits) said:

7 April 2008
I have a client who lives permanently in FLA.(He has no residence in NYS)He draws a salary from NYS sources (where his C Corp business is located) He also gets paid rent from the business (He owns the building and rents it to the Corp.) Is there a way he can structure this so that he does not have to pay NYS tax as a non-resident?

Blrgcpa (talk|edits) said:

7 April 2008
The rent is NY. Is he working for a NY co in FL to explain the salary?

Danjames (talk|edits) said:

7 April 2008
He is working for the company located in NYS. He gets paid as a consultant and works in Fla.(where he resides) He pays a large amount of NYS tax and was wondering if there was a way he could re-structure his situation so he can avoid paying the large amount of NYS tax.

Blrgcpa (talk|edits) said:

7 April 2008
If he's paid as a consultant for a NY co and gets a 1099 to work out of NY I don't see a problem. Does he see the FL customers etc?

Pegoo (talk|edits) said:

7 April 2008
Technically if he owns the C-CORP in NYS, how can he be a consultant in FLS? What if Corp maintains an office and registers in FLS?

Danjames (talk|edits) said:

7 April 2008
He lives and works in Fla for his company located in NYS. My question is, since the source of his income is from NYS, and he lives and works in Fla, is there a way he can avoid the NYS tax? (He gets paid on a w-2 from the NY company)

KatieJ (talk|edits) said:

7 April 2008
Dan, if your client performs ALL of his services for his company in Florida, I believe he has no NY source income arising from his employment. However, if he spends any time at the company office in NY, he comes under the infamous "convenience of the employer" rule, under which a telecommuter is taxed on 100% of his compensation if he works at his out-of-state home unless he does so out of necessity (i.e., because by its nature the work could not be done at the employer's NY office) and not for the convenience of either the employer or the employee. There is a detailed discussion of this provision and its current status in the recent discussion under the title, "What is nexus?" The important thing is to look at the NY tax department's ruling, cited in that discussion, to see if your client can meet the tests set forth there to have his home office considered a "bona fide location" of the employer. If so, he can exclude his salary to the extent it was earned by working at his home in Florida. He would still be subject to NY tax on his earnings from working in NY.

Of course your client will still be subject to NY tax on the rental income from the NY real property. No way out of that. Also, I presume this corporation is qualified to do business in Florida and files Florida corporate income tax returns. If not, there is some exposure there.

Laticiaw (talk|edits) said:

7 April 2008
How about if they have a residency in PA, went into NY for the summer using an RV to live in, the W-2 Shows NY taxes, but since I work out of Maryland and only see PA with this one client and have never seen NY I'm getting a little stumped as to whether the Form IT-203-B Pertains to this client and whether any sales that were done through her Schedule C Business off the computer that is located in her RV is considered a Nexus for NY as well...I HATE these one time state returns...they take up a lot of time and get you very little mulah in the process.

KatieJ (talk|edits) said:

7 April 2008
Oh, I hear you, Laticia, what a pain to have to learn a lot of stuff about a state and use it once! In this case, though, you may learn some things that will be useful later on. The general principle is that a resident of State A who has income from a source in State B, both states can and probably will tax that income.

Your client is a nonresident of NY but she has NY source income, evidently, in the form of wages earned by performing services for an employer in NY. So she has to file a nonresident return in NY, and MD will give her credit for the tax she pays to NY (limited to the proportion of her MD tax that relates to that income).

As for the Schedule C, I would need to know a lot more about the business to be able to help you. Generally, her physical presence in NY would constitute nexus for the business, at least for that period of time. I believe NY still uses an equally-weighted three-factor apportionment formula for individuals, and it may be that the NY factors would be so small that it wouldn't make any significant difference whether you included it or not.

Laticiaw (talk|edits) said:

7 April 2008
Thanks KatieJ...I do a lot of multiples state returns, but I am usually looking at DE an VA returns. Not NY...This client doesn't even live in MD, but is my boss' client from 20 years ago when she did. FUN FUN FUN!!!!

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