NC Residency

[erchess]

Where is the list of factors NC Considers in deciding whether a person is at least a PY resident of NC? And would I be right in concluding that where they argue that you are a PY resident they change fo FY Resident if the other state in question does not have a State Income Tax?

Fact pattern - a single self supporting male lived, worked, and went to school in Florida with some parental support in 2011. The parents cannot claim him as a dependant because he is too old to be a QC and both made too much money and provided too much of his own support to be a QR. In December of 2011 he returned to their home in NC and he used their address to file a Federal Return. Since I told my computer he was a resident of Florida he did not file a State Return. It is anticipated that by March of 2011 he will move out of NC into a well paying job. What are the odds that NC will end up making him pay state income tax for 2011?

[snowshine]

NC considers the following in determining residency, although the order is not set in stone:
1.phisical address(es) during the year
2.sources of income
3.spouses/dependent addresses during the year
4.where is the permanent mail address?
5.real property addresses (if you claim mortgage interest in NC they get excited)6.addresses of Drs, schools attended by dependents, etc
and 13! other factors of less importance, such as driver's lisc, auto registration, etc

Sounds like your guy is fairly safe unless he uses the parent's place as a mail drop.

[FEDUKE404]

Part-year resident likely

Where is the list of factors NC Considers in deciding whether a person is at least a PY resident of NC? And would I be right in concluding that where they argue that you are a PY resident they change fo FY Resident if the other state in question does not have a State Income Tax?

Fact pattern - a single self supporting male lived, worked, and went to school in Florida with some parental support in 2011. The parents cannot claim him as a dependant because he is too old to be a QC and both made too much money and provided too much of his own support to be a QR. In December of 2011 he returned to their home in NC and he used their address to file a Federal Return. Since I told my computer he was a resident of Florida he did not file a State Return. It is anticipated that by March of 2011 he will move out of NC into a well paying job. What are the odds that NC will end up making him pay state income tax for 2011?

Couple of issues to clarify:

If you "told your computer" he was a full-time resident of FL for 2011, that was likely an error. Assuming the guy had some NC source income during December of 2011, he would be looking at a part-year resident return for NC. Apparently a similar allocation may be due for 2012?) As you likely know, only the "NC" income would be subject to state tax, and there would be other D-400 adjustments related to ratio of NC income to IRS income. (The FL income is more or less irrelevant as there is no FL income tax and thus no NC tax credit.) The software should easily handle all of this for you.

NC cannot make him "pay" anything (although they may try!) on non-NC source income. It is far better for you to do things correct the first time than for NCDOR to pick up "NC income" from a W2 and then start treating everything as NC income, "why did you NOT file" issues, etc.

The other approach is questioning whether this guy EVER was/is a NC resident. The usual residency considerations are related to where you live, where you make your income, where you vote, where you register your vehicle, or where your driver license originates. If not, you are still stuck anyway with filing a non-resident NC return and the calculations are quite similar.

The only thing I see that might alter things is if the guy had "lived" in FL for some time, got a (temporary) job in NC - and paid NC taxes via non-resident on only that income, and then returned to FL. "It's all in the timing."

And the final scenario would be if the guy has just "dropped in" to live with his NC parents and has zero income from 12/2011 through (assumed) 04/2012. Then he/you could likely thumb your nose entirely at the NCDOR.

Fair warning: NC is very aggressive on finding "lost" income, so any connection to NC income (W2 with NC taxes withheld?) or a current/former NC mailing address may create some, de minimis, "correspondence issues."


Hope this helps....

FE

[erchess]

answers

There was no NC Source income in 2011 or so far in 12. He lived in an apartment in Florida and got his mail in Florida, still carries a Florida DL, banked in Florida, etc.

[FEDUKE404]

Then NC does not matter

There was no NC Source income in 2011 or so far in 12. He lived in an apartment in Florida and got his mail in Florida, still carries a Florida DL, banked in Florida, etc.

Then NC certainly should not be an issue since there appears to be no past/future income taxable to NC.

His tax issues appear to be full-year FL resident for 2011, and part-year FL/part-year ?? resident for 2012. But determining any moving expenses for Form 3903 might get a bit tricky.

This does not preclude, of course, the fact that the NCDOR might somehow see a person with a NC mailing address and 2011 federal income tax records, but no 2011 NC tax returns filed, and then they come calling. The rules of logic frequently are irrelevant to actions by the NCDOR.....they are desperate for $$$.

So how does this "self-supporting" guy pay the bills with no income? Nice work if you can find it!

Dare I even ask if he has been/is receiving any unemployment?

FE

[erchess]

Self Supporting

He had not a great job but a decent one in Florida for all of 2011. He is currently back home living off some combination of his parents and savings. He is currently negotiating with two different employers both of whom have high five figure offers on the table. He has finished school and is a qualified but inexperienced software engineer.

Given that he filed a Federal Return with an NC Address and no NC Return I fully expect a letter from NCDOR. My question concerned the odds that this will end up with him paying the State since the amount in question would be too small to go to court over.

[snowshine]

Honestly, a phone call to the Hart Dr office should suffice to clear up any letter on this. I can't imagine they would persue the matter as they have no case whatsoever. As for Raleigh, well, let's just say I try to avoid talking to them

[FEDUKE404]

Dueling with NCDOR

...Given that he filed a Federal Return with an NC Address and no NC Return I fully expect a letter from NCDOR. My question concerned the odds that this will end up with him paying the State since the amount in question would be too small to go to court over.

While never underestimate the inner workings (or lack thereof) of the NCDOR, I would not yet be at the "fully expect" level re hearing from them. If they send you a letter, provide the facts.

I don't think you would "go to court" but I would not pay NC 1¢ that I did not legitimately owe.

These comments, of course, are based upon your assertions that no income taxable to NC does, in fact, exist for 2011.

As for snowshine's comments about the NCDOR: Quite frankly, I've had more productive conversations with a large pine tree in my back yard than with some of the people at NCDOR. Their "front line" people are frequently....let's be nice here...."clueless" about anything more complicated than knowing if wages from a job are taxable.

FE