Tax Residency Compliance and Planning

When it comes to state personal income taxes, where you live – and, more importantly, where you’re considered to live – can have significant implications. Residency rules vary by state and can be very complex, so navigating them effectively and accurately requires both foresight and meticulous preparation. This is particularly true in the wake of a move or when multiple homes are involved.

CohnReznick’s State and Local Tax practice helps clients assess their residency status, file state taxes correctly – and ultimately avoid paying additional tax, interest, and penalties.

Want to see if the residency rules apply to you? Answer a few quick questions.

Take the Questionnaire

Navigating residency for state tax purposes

Generally, state residents are subject to tax on all income, regardless of where it was earned – both earned income (e.g., wages and business income) and unearned income (e.g., interest, dividends, and capital gains). Nonresidents are generally taxed only on the income earned in that state, which is determined based on specific “allocation” methods applicable to compensation (whether deferred, equity, or cash) and business income realized through a pass-through entity. And depending on the state, sometimes sales of ownership interests in pass-through entities are also subject to allocation.

Our residency tax services bring together credentialed accountants, experienced attorneys, and former senior state and local government executives to help clients understand and address the complex challenges involved in state taxation. We interpret evolving residency laws into clear, actionable guidance, and explain how factors such as day counts and patterns of personal and professional activities can impact your tax profile.

Even if you already have a tax advisor, our team can complement your existing planning based on decades of experience in assisting clients with these types of issues.

Key services include:

Analysis and evaluation of residency status

Strategic planning and guidance for a successful change of residency

Recommendations for state residency recordkeeping and documentation

Audit notice response

Preparation for state income tax audit

Representation for state income tax audits up to administrative appeals (if needed)

Analysis and planning for allocation of business income and compensation

Residency and income allocation analysis and modeling for future business sales