Incorrectly withheld taxes for the wrong state. How do I indicate this mistake on the non-resident state return?

[midnsingh]

Hey team, my company incorrectly withheld taxes for New York State in 2021 (should have been withheld for Virginia - it was a clerical mix up). Eventually they fixed the error, but not right away. To indicate the mistake, I used a "0%" allocation when filling out my NYS return, and got the following warning from TurboTax:

"Allocation Worksheet for PY/NR: Wages,Salaries,Etc,Col D New York wages were reported on federal form W-2 but no wage income has been allocated to New York. This will cause the efiled return to be rejected by New York State."

TurboTax then prompts me to enter a non zero amount in "Wages,Salaries,Etc,Col D" on the NYS Part-Year Resident/Nonresident Allocation Worksheet.

What am I doing wrong, and more importantly, how do I fix this to indicate that taxes were incorrectly withheld?

[DianeW777]

As long as the company is not located in New York (NY) you are not required to pay tax to NY state. 

When you enter your W-2 in the federal section you can leave the state wages blank and put only the New York (NY) state withholding. This should clear the errors for you and provide a complete refund of any withholding paid to NY. 

If at a future point NY does want clarification you will have the necessary information to provide explanation of the incorrect withholding.

If the company is located in NY, then a return will be required and tax liability may apply.  A summary and link are provided below.

New York State nonresidents and part-year residents

You must file Form IT‑203 if you meet any of the following conditions:

• • You have income from a New York source (see source below)

Nonresidents – New York source income

For nonresidents New York source income is the sum (with adjustments for special accruals as defined on page 48) of income, gain, loss, and deduction from:

• services performed in New York State; (For other items on the list click this link for NY NR Instructions)

[lburrows]

I changed the w2 and removed the nys wage amount and I now have 2 errors: 1) as the worksheet error says it won't allow the nys return to file as it will be rejected and 2) it now says my withholding is 25% more than the income reported and will create another error.  resident of florida, had $39.50 withheld by nys. for this amount, do i even bother to file to get the $40 return? I can't clear the errors. Please help. filed federal, but state is still open.  can i just mail in? or is it required for e-file?

[LindaS5247]

You should not change information reported on your Form W-2.  It should be entered as shown as these are cross-referenced by the IRS.

If your W-2 was incorrect, ask your employer to provide you with a corrected one.

Delete your Form W-2.  And enter it correctly (as shown or as corrected).

In TurboTax Online or CD/Download:

1. Open or continue your return.
2. From the menu, select Search and type-in W-2.
3. Select the Jump to link in the search results.
4. On the Your W-2 info so far screen, select Edit next to the W-2 you want to change.
5. Select the trash can Delete icon to delete the W-2.

If you are a resident of Florida and have NYS wages you should be filing a NYS Non-resident tax return.  I do not know all of the facts of your situation.

Click here for information on why you would have to file a nonresident state return.

Click here for information on how to file a nonresident state return.

If this does not help please feel free to come back to TurboTax Community with additional questions or click here for information on Turbo Tax Support.  You can connect with a Live TurboTax Agent and share your screen.
 

[lburrows]

ok thanks. I fixed my w-2 to show nys is listed as wages with only the $39.50.  I selected to not allocate any nys wages, as I indicated i am a fl resident, and the tax was withheld by employer. i changed deduction, but they didn't update to reflect i am flordia resident.  so now, filing the non resident form to get the $39.50 back, and I selcted not to allocate any of these wages to NY, resulting in the amount showing the refund due.  BUT, the worksheet continues to error out and not allow me to file the state form, saying it will reject.  Turbo tax says - check this entry.  allocation worksheet for py/nr - wages, salaries etc col d ny wages reported on federal form w-2 but no wage income has been allocated to ny.  This will cause the efiled return to be rejected.  it then wants me to change the $0 to a wage amount, which would then calculate tax.  vicious circle.  So can i just send in a paper return to nys to get the $39.50 refund? or must i fix the error and efile?

[LindaS5247]

Did you try entering a $1 as wages for NY?  Sometimes that works.

I have been trying to find a fix for this, but so far I have not.

If you would like us to look into it further you can provide us with a token number.  I will give you the instructions.

 

To take a deeper look at this, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the  directions below:

TurboTax Online:
 

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen. 
3. A drop-down will appear. Select Tools  
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.

Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent”
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.

Please provide the Token Number that was generated in the response.

However, if you like you can mail it in.  Here are the correct addresses:

If you are not including a payment, mail your return to:

STATE PROCESSING CENTER
PO BOX 61000
ALBANY NY 12261-0001

If you are including a payment (check or money order), mail your return (including Form IT-201-V) to:

STATE PROCESSING CENTER
PO BOX 15555
ALBANY NY 12212-5555 
 

You may send your income tax return and tax payment using a private delivery service instead of the U.S. Postal Service. If you use any private delivery service, send the forms to:

NYS TAX DEPARTMENT
RPC - PIT
90 COHOES AVE
GREEN ISLAND NY 12183-1515

If this does not help please feel free to come back to TurboTax Community with additional questions or click here for information on Turbo Tax Support.  You can connect with a Live TurboTax Agent and share your screen.

[lburrows]

thanks, i entered the $1 and it accepted the return.  all set.