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State’s residency laws throw ‘snowbirds’ for a loop

Determining residency for tax purposes often proves challenging for Minnesota’s population of “snowbirds,” retired individuals who head south each winter.

Last year, Governor Mark Dayton made an attempt to enact a snowbird tax, expanding the number of people required to pay Minnesota income taxes.

While that particular law did not pass, a measure imposing a 9.85 percent tax on upper-income earners did become law, giving certain individuals good reason to question their residency as it relates to Minnesota’s tax laws.

“Not surprisingly, states with no income tax or a rate much lower than ours are increasingly popular locations to maintain a second residence,” said Michael Niznik, a CPA at Carlson Advisors, LLP in Minneapolis. “It’s important for taxpayers who live in more than one state to consult a tax professional who can help them determine their residency status. If you don’t understand the rules, it’s relatively easy to unintentionally break the law.”

Minnesota uses various criteria to determine taxpayer residency, including statutes, regulatory factors and individual behavior.

To offer some clarity, the Minnesota Society of Certified Public Accountants (MNCPA) explains the standard rules of determining residency:

● Any individual who is physically present in Minnesota for 183 or more days in a year is automatically considered a resident of the state. Regardless of other factors, persons exceeding this day count are required to pay Minnesota resident taxes.

● If a person is present in the state for fewer than 183 days, Minnesota uses a set of 26 regulatory factors to determine whether he or she qualifies as a resident.

These factors include voter registration, issuing state of valid driver’s license, where your vehicles are registered, professional licenses and involvement in local organizations.

If filers maintain any of these aspects of their identity in Minnesota, they are eligible to be considered residents of the state.

● If an individual owns property in Minnesota but rents and lives in a dwelling in another state, Minnesota may assume that person’s residency has not been severed.

● If residency is still unclear after all of the previous factors have been considered, Minnesota may look to see if the taxpayer’s overall behavior (i.e., participation in a place of worship, involvement in community organizations, etc.) has changed since moving to his or her new home.

● Taxpayers should be wary of how their hobbies and lifestyle reflect their residency status. For example, persons participating in competitive sailing may be affected, for tax purposes, by the place they choose to dock their boat or the state in which they do some or all of their racing.

A CPA can help navigate the challenging issues of determining residency and other complex and emerging tax-related questions. To connect with a CPA, visit