Transit Days and Tax Residency

The Short Answer

In most jurisdictions, being present at any time during a calendar day counts as a full day. A handful of jurisdictions carve out an exception for days spent merely passing through — driving across a state, connecting at an airport, or traveling to a terminal to leave. These "transit day" exceptions are narrow, they differ from one jurisdiction to the next, and the taxpayer generally bears the burden of proving that a day qualifies. Where no written exception exists, a transit day is simply a day.

This article collects the main transit rules, explains what usually breaks them, and describes the records that support a transit-day claim. For the general day-counting rules (midnight tests, 24-hour tests, partial days), see What Counts as a Day for Tax Residency.

Three Questions Every Transit Rule Asks

Although the wording varies, the transit exceptions tend to turn on the same facts:

• Where did the trip start and end? Most exceptions require travel between two points outside the jurisdiction. Starting or ending the trip inside the jurisdiction usually defeats the exception (New York and Connecticut are notable exceptions for travel to or from a departure terminal).
• How long were you there? Some rules impose a hard time limit (the U.S. Substantial Presence Test requires less than 24 hours). Others look at whether the time was reasonably necessary for the journey.
• What did you do while you were there? Activity that is incidental to travel — buying a meal, refueling, waiting at the gate — is generally fine. A business meeting, a dinner with friends, or a night in a hotel for a reason unrelated to the connection usually is not.

New York State and New York City

New York's regulations count any part of a day as a day, but expressly allow presence to be disregarded if it is "solely for the purpose of boarding a plane, ship, train or bus for travel to a destination outside New York State, or while traveling through New York State to a destination outside New York State." 20 NYCRR § 105.20(c).

The NY Nonresident Audit Guidelines explain that auditors ask (1) whether the activity was incidental to the travel and (2) how much control the taxpayer had over the travel arrangements. Buying a meal at the terminal, using an ATM, stopping for gas while driving through, picking up a traveling companion on the way to the airport, or parking to meet a car service generally does not convert the day into a New York day. Arriving a day early for a cruise in order to attend a business meeting does. Visiting a friend during an unavoidable delay generally does not.

Common examples: A Connecticut resident who drives to JFK for a flight to Europe; a Florida resident who connects through LaGuardia on the way to Boston; a New Jersey resident who drives across the George Washington Bridge and Westchester on the way to Connecticut. Each can be a non-New York day if nothing else happened in New York that day.

What breaks it: Returning home into a New York airport and staying the night, combining the airport trip with a meeting or a meal with friends in the city, or a voluntary overnight before a flight. Note also that New York's exception applies to the personal income tax day count; it is separate from the employer withholding rules discussed in NY 14-Day Rule: Withholding vs. Liability.

Connecticut

Connecticut similarly counts any part of a day as a day for its statutory residency test, except a part of a day during which the individual is in Connecticut while in transit to another destination — for example, driving through the state or traveling into Connecticut to or from an airport. Conn. Agencies Regs. § 12-701(a)(1)-1. See Connecticut Tax Residency Basics.

U.S. Substantial Presence Test

For non-U.S. citizens, the Substantial Presence Test does not count a day on which an individual is present in the United States for less than 24 hours while in transit between two places outside the United States. IRC § 7701(b)(3)(D)(ii); Treas. Reg. § 301.7701(b)-3(d). Changing planes at a U.S. airport on a trip from Toronto to London is the classic case.

What breaks it: The regulations treat the individual as not in transit if they attend a business meeting or otherwise engage in activities unrelated to the transit while in the U.S. Staying 24 hours or longer also defeats the exception, even if the delay was the airline's fault.

Puerto Rico Presence Test

For the Puerto Rico presence test, days spent in the United States for less than 24 hours while in transit between two places outside the United States are not counted as days of U.S. presence. Treas. Reg. § 1.937-1(c). A day on which you are present in both Puerto Rico and the United States counts as a Puerto Rico day. See Puerto Rico Residency.

FEIE 330-Day Physical Presence Test

For the Foreign Earned Income Exclusion, travel of less than 24 hours between two foreign locations generally does not interrupt foreign presence. Treas. Reg. § 1.911-2(d)(2); Struck v. Commissioner, T.C. Memo. 2007-42. By contrast, time over international waters or airspace on a direct flight to or from the United States is not time in a foreign country. See FEIE 330-Day Physical Presence Test.

United Kingdom Statutory Residence Test

Under the UK Statutory Residence Test, a day generally counts if you are in the UK at midnight. A "transit passenger" exception applies where you arrive in the UK as a passenger, leave the next day, and between arrival and departure do not engage in activities that are to a substantial extent unrelated to your passage through the UK. Finance Act 2013, Schedule 45, paragraph 22; HMRC guidance RDR3.

What breaks it: Having dinner with friends, attending a business meeting, or doing work in the UK during the layover. Having a meal or staying in an airport hotel because the connection requires it is generally consistent with transit.

Schengen Area

The Schengen 90/180-day rule is an immigration rule, not a tax rule, but transit questions come up constantly. Entry and exit days both count as days of stay. A passenger who connects in the international transit area of a Schengen airport without passing through border control generally has not entered the Schengen Area. Once you clear passport control — even for a few hours — the day counts. See Schengen 90/180-Day Rule.

Jurisdictions Without a Transit Exception

Many states and countries have no written transit exception. In those jurisdictions, a few minutes on an interstate highway or a connection at an airport is a day of presence under an "any part of a day" rule. Before relying on a transit argument, confirm that the specific jurisdiction actually recognizes one, and how its rule is worded. Some states use different tests altogether — for example, Maryland and New Mexico have their own 24-hour approaches, and Ohio uses overnight "contact periods." See What Counts as a Day.

Documenting a Transit Day

Because the taxpayer bears the burden of proof, a transit claim is only as strong as its records. Useful evidence includes:

• Boarding passes, airline itineraries and baggage receipts showing the origin, connection and final destination;
• Toll records (E-ZPass and similar) and fuel receipts showing a continuous drive through the jurisdiction;
• Credit card activity limited to the terminal or the travel route;
• A contemporaneous location log showing when you entered and left the jurisdiction, that you never stopped for long outside the airport or route, and where the trip started and ended.

A location log is especially valuable because it answers all three questions above at once: where the trip began and ended, how long you were present, and whether you went anywhere other than the terminal or the highway.

How Domicile365 Handles Transit Days

The Domicile365 App counts presence in a jurisdiction at any time during a day as a day in that jurisdiction. That is the conservative approach and is consistent with the rules in most places. Transit-day exceptions are not subtracted automatically, because whether a day qualifies depends on facts the location data alone cannot establish, such as the purpose of a stop or what you did during a layover.

Subscribers can use the Travel Day Check report in the Domicile365 web portal to identify candidate travel days and review them with their tax advisor. The report flags days with a detected flight or multi-state travel, and marks a state or country as a Possible Transit when your location log shows you passed through it without a stay of 45 minutes or more (time at an airport excluded) and the day neither started nor ended there. For each such jurisdiction it shows when you entered and left and your longest stop, which are the facts most transit rules turn on. The report is a starting point for review, not a determination: you and your advisor decide whether a given day meets the applicable jurisdiction's transit rule. Your detailed location log for that day provides the supporting record.

Conclusion

Transit-day exceptions can matter a great deal to someone near a 183-day threshold, but they are narrow, jurisdiction-specific and fact-intensive. Know which rule applies, keep the trip clean of unrelated activity, and keep records that show where the journey started, where it ended and how long you were present along the way. This article is general information, not tax advice; consult your tax advisor about your specific facts.

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