Students and State Residency: Why a Dorm Room Is Not a Permanent Place of Abode
Studying in another state usually does not make a student a resident of it. A look at the rules in New York, Michigan and Pennsylvania, and the usual mistakes with withholding.
Students and State Residency: Why a Dorm Room Is Not a Permanent Place of Abode
Your child has gone off to study in another state. The question that comes up for parents in March: where do they file a return now, and have they become a resident of that state?
In most cases, they have not. But there are nuances, and they cost money.
The general rule: school is a temporary absence
Almost every state treats leaving for school as a temporary absence that does not change domicile. The logic runs like this: the student did not leave for good, and their permanent home is still where the family lives.
Illinois spells out the temporary absences that do not affect domicile: military service, living abroad, staying in another state as a student, and spending the winter or the summer away.
Michigan puts it even more plainly: students from other states who live in Michigan while attending school are treated as neither residents nor part-year residents and file as nonresidents.
Pennsylvania describes both sides. A Pennsylvania student who leaves to study in another state stays a Pennsylvania resident until they acquire a new domicile. And a student who comes to Pennsylvania to study counts as a nonresident — unless they themselves regard the state as their new home, support themselves, and have established a permanent place of abode there.
That last caveat is exactly the line past which everything changes.
Where the protection ends
New York. Under 20 NYCRR 105.20(e)(1), a place of abode maintained and occupied by a full-time undergraduate student is not a permanent place of abode for that student.
Here is the detail people get wrong: the exception attaches to the student's status, not to the type of housing. An apartment rented near campus does not turn such a student into a resident either. "Full-time" here means at least 12 credit hours per semester for at least two semesters a year.
Who the exception does not cover:
For them the 184-day rule applies in full force: a permanent place of abode plus 184 days in the state, and the person is a New York resident on their entire worldwide income.
And one more limit: the exception protects only against statutory residency. If the student has established a domicile in New York — moved there to live, not to study — it will not help.
Supporting yourself. Once a student begins to support themselves, work steadily and set up a household in the new state, the "I'm only here temporarily" argument gets weaker.
Actions speak louder than words. A new state's driver's license, a voter registration, the car retitled, tuition paid at the in-state rate — the state will read all of that as a change of domicile. Incidentally, in-state tuition and tax residency are different things with different rules, but in a dispute about the second, the first will be used against you.
The practical part: where to file after all
Even while remaining a nonresident, a student almost always files a return in the state where they study, if they worked there:
A scholarship is a separate story. A scholarship for study is usually not, on its own, income from sources in the state of study. For a nonresident, the only part that lands in that category is the part that is essentially payment for work performed in the state — a teaching or research assistantship stipend, for instance.
Another common situation: the student worked at home over the summer and on campus in another state in the fall. That means two state returns plus the federal one.
Three mistakes we see every season
First: no nonresident return filed to get the money back. State tax was withheld from a student job, and the income is below the filing threshold. The money comes back only on a return — and the return does not file itself.
Second: the employer withholds the wrong state's tax. The campus job is in one state, while the address on file with HR is the parents' address in another. Straightening it out takes two returns.
Third: confusing federal status with state status. A student on an F-1 visa can stay a nonresident alien for the IRS for years — but that says nothing about state residency, which is determined by its own rules. We have a separate article on this.
What parents should do
Sources
Student residency rules — the instructions to the state returns: tax.ny.gov, michigan.gov/taxes, pa.gov/agencies/revenue, tax.illinois.gov. Federal status of foreign students — IRS Publication 519.
If this is your child's first job and first tax return, it is worth getting it right the first time. Book a consultation — we will sort out what goes where.
