Warning: A finding of New York State or New York City residency against any individual living outside of New York but owning or leasing residential property in New York may result in severe tax consequences.

The New York State (NYS) and New York City (NYC) tax regimes are fraught with traps for unwary nonresidents and part-year residents. In order to avoid significant tax consequences, it is essential for any non-resident with a dwelling in New York to be aware of the applicable residency tests and to prepare properly tax returns and to maintain appropriate records and other legal documents in order to avoid the New York residency tax trap. Please keep in mind that while nonresidents are taxed by NYS only on their NYS income, NYS residents are taxed on their income from all sources. While NYC nonresidents are not taxed by NYC, NYC residents are taxed by NYC on all their income from all sources. The maximum individual tax rates are 8.97% for NYS and 3.876% for NYC; thus, leaving no doubt that a high-income earner will be loathe to fall into the residency tax trap.