Behind on Returns After Moving From New York to Florida

This scenario is an illustrative composite of a situation taxpayers commonly face. It is not a record of any client engagement, and it is not tax, legal, or accounting advice. Rules, thresholds, and IRS procedures change, and every situation depends on its own facts.

Moving to Florida ends state income tax going forward, but it doesn't end what is owed to the state you left. A couple who moved in the middle of a filing backlog needs their federal catch-up, their former state's part-year return, and their business filings to line up, and the move year carries the most scrutiny.

The situation

A couple lives in New York for most of the years they are behind on filing, then moves to South Florida. She co-owns a four-person business set up as a partnership, with partners now living in different states.

The partnership never filed its own return. However, the partners agreed on each person's share of profit and reported it on their personal returns. The couple now needs federal returns for the open years, a New York return for the move year, and the partnership's missing filings.

What's at stake

The move-year return. New York requires a part-year resident return (Form IT-203) for the year of the move. Income earned while a New York resident is fully taxable there. Income after the move is taxable in New York only if it comes from New York sources.

A residency challenge. New York may question whether residency actually ended. It looks at two tests:

• Domicile: where your permanent home is. Changing it requires clear and convincing evidence. New York focuses on five primary factors: your home, your business ties, where you spend your time, where your "near and dear" items are, and where your family is.
• Statutory residency: keeping a permanent place to live in New York and spending more than 183 days there in a year makes you a resident for tax purposes, even if your domicile is elsewhere. Any part of a day in New York generally counts as a day.

Income accrued before the move. Under New York's accrual rule (Tax Law section 639), income earned before the move but received afterward generally must be included on the resident portion of the return.

The partnership penalty. A late partnership return carries a federal penalty under section 6698, charged per partner per month for up to 12 months. New York also has its own partnership filing requirements.

How it's typically resolved

### 1. File the federal returns first Federal income is the starting point for the state returns, so the federal returns for each open year come first. They include the K-1 income from the partnership once its return is prepared.

### 2. Document the move date Build a record of when New York residency ended:

• the Florida lease or deed, and the sale or lease-end of the New York home;
• a Florida driver's license (Florida generally requires new residents to get one within 30 days) and vehicle registration;
• Florida voter registration;
• a Declaration of Domicile filed with the county clerk under Florida Statutes section 222.17;
• moving records, and where personal items, pets, and family members actually went;
• a day count for the move year, supported by phone, card, and travel records.

### 3. File the New York part-year return Split income between the resident and nonresident periods, applying the accrual rule to income earned before the move. For the nonresident period, include only New York-source income, such as business income from work performed in New York.

### 4. File the late partnership returns Prepare the federal partnership returns (Form 1065), with Schedule K-1s matching what each partner already reported on their own returns. Then address the New York partnership return and the filings in the states where the partners live, which can include estimated tax paid on behalf of nonresident partners or composite returns.

### 5. Request small-partnership penalty relief Revenue Procedure 84-35 provides relief from the late-filing penalty for small partnerships: generally 10 or fewer partners, each an individual or a deceased partner's estate, where every partner fully reported their share of the partnership's income and deductions on timely filed returns. Because the partners in this scenario reported their shares consistently, the partnership may qualify. The request is made when the late return is filed or in response to the penalty notice.

Common mistakes

• Keeping a New York apartment "just in case." Combined with enough days in New York, it can keep someone a statutory resident.
• Changing a driver's license but leaving everything else in New York: doctors, memberships, and family items.
• Treating all income in the move year as Florida income.
• Filing the partnership return without matching the figures the partners already reported, which can disqualify penalty relief.
• Not counting days. New York residency audits often turn on day counts.

What to gather before starting

• Lease, deed, and closing documents for both homes
• Florida license, vehicle registration, voter registration, and Declaration of Domicile
• Calendar, travel, and credit card records for the move year
• Each partner's personal returns showing their reported share
• The partnership's operating agreement and bank records

Typical outcome

With the move date documented, New York tax can be limited to the actual period of residency plus any New York-source income afterward. Florida has no personal income tax, so income after a completed move is generally subject to federal tax only. When every partner reported consistently, the partnership's late-filing penalty may qualify for removal under the small-partnership relief.

Frequently asked questions

### Does buying a home in Florida end New York residency? Not by itself. Domicile changes when you actually move your life to Florida, and keeping a New York home with enough New York days can still make you a statutory resident.

### Do I keep filing in New York after I move? Only if you have New York-source income, such as rental income from New York property or business income from work performed in New York. Then a nonresident return is required.

### I work remotely for a New York employer. Is my salary still taxed in New York? It can be. New York's "convenience of the employer" rule generally treats days worked remotely for a New York employer as New York workdays unless the employer requires you to work elsewhere.

### How long can New York audit a residency change? Generally three years from when the return is filed. If no return is filed, there is no time limit.

Next step

If you moved to Florida while behind on returns, or your move year is still unfiled, book a free fit call to map out the federal, state, and partnership filings.