Of all the abused verbs in English, to lie (as in recline) is near or at the top of the list. It is improper to say “I am going to lay down” or “Yesterday he laid on the hammock.”; and yet it seems that more often than not in ordinary conversation, news programs, and even political pronouncements these errors are made routinely. In the first illustration “I am going to lie down” and in the second “Yesterday he lay on the hammock.” are correct.
The intransitive verb “to recline” is lie (present tense), lay (past tense), and lain (present perfect). A verb is intransitive when it has no object: “I smile” or “I sleep” are both intransitive because they need no object to complete the thought. Contrast that with some transitive verbs which are followed by objects: “I threw the ball.”, “I ate lunch.”, “I built the house.” (“ball”, “lunch”, and “house” are the direct objects in those sentences).
The curve ball here is that the transitive verb “to lay” not only looks like its intransitive cousin, but it somewhat relates in that it involves putting an object to rest (the object in each case is in parenthesis): “I will lay the book on the table” (“book”); “He laid the brick walkway yesterday” (brick walkway); or “The left tackle had laid out his opponent” (“opponent”).
And, as you can see lay is the past tense of the intransitive verb and the present tense of the transitive verb which has the following tenses: lay (present), laid (past), and laid (present perfect).
There is no simple solution beyond getting to know both verbs well and applying them in a proper manner. My suggestion is that you avoid the past tense of to lie (“Yesterday I lay on the couch”) until you develop a comfort level. (Substitute: “Yesterday I was lying on the couch”). Concentrate on using the transitive verb to lay properly, which is to say only when it has a direct object; once you have mastered it, venture into the use of to lay as an intransitive verb in the past tense – – and, of course, with no direct object.
— Ken Butera