State Taxation of Non-Resident

State Taxation of
Non-Resident:

So you live in State A, but have some contacts in State B. If
your contacts and involvement in State B are sufficient, State B might be able
to tax some of your earnings. In a recent New York case, the court found the
tax authorities went a tad too far. Occasionally spending the night at your paramour’s
apartment, or a business apartment, should not suffice as a tax hook. The court
stated that the tax authorities have the burden of proving that the taxpayer
had established a New York place of residence displacing his prior permanent
home in another state. What apparently triggered the audit was the listing of a
NY address on several tax forms (the little stuff always matters!). Matter
of Craig F. Knight, DTA No.
819485.  The court distinguished a
prior case which looked at several similar facts. Aetna National Bank v.
Kramer (142 App Div 444). In
Aetna the change in domicile was acknowledged to have occurred, and the only
issue was when it occurred.

Mileage:

Instead of
calculating maintenance, repair, depreciation and other costs for using your
car in business, you can simply multiply the business miles drive by an IRS
allowed rate to simply calculate your deduction. The expense which you can
deduct for each mile drive for business purposes has increased to 48.5
cents/mile for 2007. Rev. Proc. 2006-49, 2006-47, IRB 2006-168. If you
reimburse your employees at this rate and the reimbursement is tax free if the
employee corroborates the time, place, business purpose and mileage of each
trip.

Pension Sub-Trust:

Time to kiss them goodbye? Pension sub-trusts were a plan to give taxpayers the
opportunity to have their cake and eat it too. Use pre-tax pension dollars to
buy life insurance and then have the policy owned by a sub-trust of the pension
plan to keep it out of your estate. A recent TAM stated that a sub-trust may
disqualify the entire pension plan.