Where Your Dog Lives Can Impact Your Taxes

Be careful where you park your pets if you're splitting your time between states.

We don't just pay taxes at the federal level; state income taxes can come into play, too. And if you live in more than one state, you may be liable for more than one state tax bill.

Many people who split their time between different states will argue that they're really only a resident of a single state -- and it's that state they'll assume they should pay taxes to. But if you're not careful, you may end up owing money to another state due to surprising factors -- like where your dog lives.

When your dog makes the difference

A recent Yahoo Finance story shared the tax plight of Gregory Blatt, the former CEO of Match.com. New York went after Blatt for state income taxes even after he moved to Dallas, Texas, where he not only signed a lease for an apartment, but also purchased a car and established a dating life (a point that was brought up repeatedly in legal proceedings related to the matter).

But New York argued that Blatt was still a resident for one big reason: He not only still had an apartment there, but a dog living in Manhattan as well. Blatt countered that moving his senior dog to Dallas would have been difficult due to the area's extreme heat. But he eventually relocated his dog to Texas to establish that as his home state.

A situation that could get complicated

Splitting one's time between states was less common prior to the pandemic. But these days, remote work is a lot more popular. As such, more people are splitting their time between different states for a host of reasons, from escaping harsh weather to enjoying savings related to cost of living.

But if you're someone who lives in two (or more) states, whether temporarily or on a long-term basis, it's important that you understand what that means from a state income tax perspective. And what's especially tricky is that each state establishes its own rules when it comes to what constitutes residency.

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In New York, for example, living there for more than six months makes you a resident of the state for tax purposes. But if you surrender your former license or live in Texas for 30 days, you become a resident there. Do both within the same year, and you could be looking at two state income tax bills.

That's why it's so important to consult a tax professional if you're going to be living in more than one state. A professional can help you figure out which state(s) you owe money to, and just as importantly, develop strategies to reduce your tax liability.

For example, if you don't want to be considered a resident of New York for tax purposes, you may decide to only live there for five months rather than six. Or, in some cases, getting a license, registering a vehicle, and buying auto insurance in one state might make that the state that gets to charge you income taxes.

Ultimately, when it comes to rules this complex, professionals know best. So if you'll be splitting your time between states, make sure to consult one. And also, if you're set on making one state your home over another for tax purposes, make sure to take your dog with you.