Contractors and recruiters regularly face queries on the 183 day rule in various countries and what it means in regards to tax residence. However, possibly one of the most famous people in the world, U.S. president Donald Trump, could now possibly face an investigation into his tax affairs by the state of New York.
Last year, U.S. President Trump announced that he was leaving New York City and relocating to Florida. Trump said of the decision, “I cherish New York, and the people of New York, and always will.”
But he didn’t have much nice to say about the public officials of New York.
“I have been treated very badly by the political leaders of both the city and state. Few have been treated worse,” he said, describing his decision as the “best for all concerned.”
Some New York leaders shared the sentiment. “Good riddance,” Gov. Andrew M. Cuomo tweeted. “It’s not like Mr. Trump paid taxes here anyway. He’s all yours, Florida.”
Many suggest that Trump's motivating factor to prompt the move was the fact that in Florida residents pay zero income tax, but that in New York the income tax can be as high as 12.6% for residents.
However in a significant twist, Trump may not yet be done with New York as auditors may use the 183 day rule as a basis to check if he has indeed changed his place of tax residence and that he has not spent more than 183 days in the Empire state.
In Florida, Trump filed a declaration of domicile, changed his drivers licence and changed his address with his bank, but this may not be enough to satisfy the Empire states auditors that he is actually a resident there.
There is also a secondary test that Trump must pass where five key factors are examined: a taxpayer's true home; active business involvement; time spent at the home; family connections; and where the taxpayer keeps items that are 'near and dear''.
If Trump cannot pass both of these tests, it may transpire that he is not done with New York after all.
It could be that Trump, like many others in the past ,could yet rue the 183 day rule.
Should be not aware of your taxation obligations or the 183 day rule wherever in the world you work. Why not contact 3C Global today for some professional advice?