Foreign Students and New York State Taxes

While foreign individuals attending universities in New York on a F-1 student visa may be exempt from federal income tax, they may be subject to New York State (“NYS”) taxation.

In general, under N.Y. Tax Law § 605(b)(1)(A), an individual is a resident of NYS if he is domiciled in NYS, unless he meets all of the following conditions:

•           He did not maintain a permanent place of abode in NYS;

•           He did maintain a permanent place of abode outside of NYS; and

•           He spent less than 31 days in NYS during the tax year.

Domicile is generally used to describe the place an individual intends to be his permanent home, i.e. the place to which he plans to return after being absent.  Once established, domicile continues until the individual moves to a new home with the genuine intention for it to become his new fixed and permanent home.

An individual may also be treated as a resident of NYS for income tax purposes if he is not domiciled in NYS but maintained a permanent place of abode in NYS for substantially all of the tax year and spends more than 183 days in NYS during the tax year.  A permanent place of abode is defined in section 105.20(e) of the Personal Income Tax Regulations of New York as “a dwelling place of a permanent nature maintained by the taxpayer, whether or not owned by such taxpayer…”

In 2009, an amendment was made to the definition of permanent place of abode to provide an exception for students.  The new language reads as follows “A dwelling place maintained by a full-time student enrolled at an institution of higher education, as defined in section 606(t)(3) of the Tax Law, in an undergraduate degree program leading to a baccalaureate degree, and occupied by the student while attending the institution is not a permanent place of abode with respect to that student.  A full-time student is an individual who is carrying a minimum course load in such program of 12 credit hours per semester for at least 2 semesters, or the equivalent, during the individual’s taxable year.”

Following this amendment, bachelor’s degree students who satisfy the requirements set forth in the amendment may not be subjected to NYS income taxation while studying in New York on F-1 visas.