Any New Mexico Preparers?

[Unregistered]

I have a client that was in New Mexico part year. Then moved here to Texas. He did change his home and domicile.

As I understand the book on New Mexico, if he was in NM for more than 185 days, he is still considered a resident. Does he not get to prorate the income to the days in NM verses the days in TX?

Not sure that NM can tax funds while the person had moved to another state?

[Bird Legs]

New Mexico Tax Preparers

Go to the NATP Website and select Find a Tax Professional. The website address is
natptax.com

[Brad Imsdahl]

TTB All States Edition (to be released February 2nd), page NM-2 says: "Part-year resident. An individual who was a New Mexico resident for part of the year, was not physically present in New Mexico for 185 days or more, and was domiciled in another state on December 31, 2005."

Most states say that the physical presence test only applies if the taxpayer had a permanent home located in the state for the entire year. New Mexico appears to only care if you were physically present for 185 days or more. So the only way to be a part-year resident is to be physically present for less than 185 days.

[WhiteOleander]

Well, I found an EA in NM. She said that yes, he is considered a resident, but can still prorate the income to only the income received while in NM.

So, I'm going to work on this.

[Brad Imsdahl]

Oops, I missed that….

TTB All States, page NM-5 says: “First-year residents, part-year residents, and nonresidents first calculate tax on total taxable income from all sources the same as full-year residents. Tax is then prorated based on a ratio of total adjusted New Mexico source income to total adjusted federal income.”

Page NM-2 says: “First-year resident. An individual who moved to New Mexico during the tax year with the intent of making New Mexico their permanent residence. The 185-day rule does not have to be met in this situation.”

Use Schedule PIT-B to allocate.

Sounds to me like you can prorate only if the person is moving into the state. If they are moving out, NM wants to treat you as a full year resident if the 185 day rule is met.

[Brad Imsdahl]

From http://www.state.nm.us/tax/forms/yea...BInstfinal.pdf

New Mexico residents must allocate
in full to New Mexico all amounts on
lines 1, 2, 3 and 7, column 1, on
Schedule PIT-B. New Mexico residents
whose income on lines 1, 2, 3
and 7 was from a source outside New
Mexico may claim a non-refundable
CREDIT for the tax paid to the other
state on that income. See the instructions
for line 21 of 2005 Schedule PITADJ
to calculate the credit.

A first-year resident or part-year
resident with income on lines 1, 2, 3
and 7 received during the period in
which the domicile was established in
New Mexico allocate that income to
New Mexico. A first-year resident or a
part-year resident receiving income on
lines 2, 3 and 7 while domiciled in another
state allocates that income to the
other state. Wages, salaries and tips,
etc. (line 1, PIT-B) of a first-year resident
and a part-year resident that were
received during the portion of the year
that the taxpayer was a nonresident of
New Mexico are allocated to New
Mexico only if the income was from
employment within New Mexico.

[WhiteOleander]

Thanks. I will really study this and look into it further.

Texas doesn't have a state income tax for individuals. So, trying to do other states returns is really challenging sometimes.