The Importance of Tax Residency Tracking

The 183-Day Rule, Explained

Most U.S. states and countries around the world use the 183-day rule to determine tax residency. The concept is simple: if you spend more than half a year, or 183 days, in a state or country, you're typically considered a resident and liable to pay taxes there on your worldwide income. Monaeo

For high-tax states like New York and California, the financial stakes are significant. If you spend 183 days or more in New York State during a tax year, you're generally considered a resident for tax purposes, regardless of where your primary home is located, and must pay taxes on your worldwide income. George Dimov, CPA

States Are Watching Closely

State tax enforcement has ramped up significantly. State tax enforcement surged in 2023 and 2024 as states face budget gaps. Taxpayers who moved during the pandemic are now receiving audit letters questioning whether they truly changed domicile. Strategictaxplanning

The numbers are staggering. New York alone conducts on average 3,000 non-resident audits per year and has won more than $1 billion since 2010 from "non-residents" who were unable to sufficiently prove they actually left. Monaeo

And auditors aren't just checking calendars. New York officials are reported to look at cellphone records, social media feeds, veterinary and dentist records, and even conduct in-home inspections. Monaeo

It's Not Just a U.S. Problem

For digital nomads and expats, the 183-day rule applies globally. Remote professionals and digital nomads need to monitor their time carefully, spending more than 183 days working remotely from Portugal, for example, would establish Portuguese tax residency and require compliance with local income tax filing requirements. Global Citizen Solutions

The U.S. has its own twist: the IRS uses a Substantial Presence Test that counts all days present in the current year, plus 1/3 of days present in the prior year, plus 1/6 of days present two years before. So even if you're under 183 days this year, your cumulative presence could still trigger residency. Internal Revenue Service 

The Burden of Proof Is on You

Here's what catches most people off guard: the majority of New York non-residency audits result in the taxpayer owing more to the state because they couldn't prove they were a non-resident. Monaeo

Keeping track of where you sleep every night of the year isn't something most people think about until they're facing an audit and scrambling to reconstruct their movements from memory, credit card statements, and old flight confirmations.

The Bottom Line

Whether you're a snowbird splitting time between New York and Florida, a remote worker bouncing between states, or a digital nomad hopping between countries, tracking your residency days isn't optional; it's essential. A few extra days in the wrong state could mean an unexpected tax bill in the tens of thousands of dollars.

The good news? You don't have to track it manually. That's exactly why we built iReside to automatically monitor your location, alert you before you hit tax thresholds, and generate audit-ready reports if you ever need them.