My employer paid income tax to a state I did not live in, and won't issue a correction.

[jjn1056]

I worked for a company which is based in California, but I was based in NY (I worked remotely).  In Sept of 2013 I moved from NY to TX, but my employer kept withholding NY income tax after the move.  Between Jan to Sept 2014 this employer (which was based in CA) withheld NY state income tax even though I lived in Texas.  I left the company in Sept of 2014.  I am not sure the correct way to file this.  My prior company won't correct the W2 and now claim I never told them I moved...  Am I going to have to sue them to fix this, or is there some way I can just file my NYS tax forms and get back the taxes paid?

[JenniferD · Accepted solution]

Nonresident income is income from another state you didn't live in during the year, and includes any of the following:

• Wages or income from a state you're not a resident of,
• Rental income, gambling winnings, or sold a home for a profit in a state you're not a resident of,
• S Corporation business shareholder income from a business in another state,
• You are a partner in an out-of-state partnership,
• You are a beneficiary of a trust or estate that has an interest in another state, or
• Your employer withheld state tax for the wrong state. Under most circumstances, you’ll have to file a nonresident return to recover the incorrectly-withheld taxes.
  Notify your employer right away so it doesn't happen again!

Filing a Nonresident State Tax Return

Make sure you prepare all nonresident returns before your resident state return, to ensure proper calculations. Also, make sure you select the state long form(s) even if TurboTax selects the short form(s) for you.

Tip: If you are preparing a nonresident state return solely to recover tax that was withheld in error, enter 0 on the screen that asks for the income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.

If you live and work in a Reciprocal State, you may only need to complete Step 3.

1. Prepare your federal tax return first, then as you begin each state return;
   • Your federal return data transfers into your state return, and
   • TurboTax learns that you need to file each state return.

1. Prepare a return for the nonresident state(s). Only report the income and withholdings from that state.
2. Prepare a return for your resident state. You will report all of your income, including income from any nonresident (or part-year) states.
3. Take a credit for taxes paid to the nonresident state on your resident state return so that you won't get double-taxed on the same income.

TurboTax calculates the credit for you, but you must select the state's long form to get the option, even if TurboTax chooses the short form for you.

Example: if you live in Kansas but work in neighboring Missouri, you would file a nonresident Missouri return in addition to your usual (resident) Kansas return. You'd then take a credit for any taxes you paid to Missouri on your Kansas return

http://turbotax.intuit.com/support/go/GEN12109'>http://turbotax.intuit.com/support/go/GEN12109

[floripabud]

What if I accidentally prepared my resident state first?

[SweetieJean]

You may have to do an amended resident return if you already filed it, after you do the nonresident one.

[floripabud]

Also, I don't see where I can go to enter 0 for income earned in the state? Where is the income earned in the state section?

[tazzdevil90]

You cannot file this way in the state of Arkansas, they have to have a corrected W-2 or a statement on a company letterhead stating the income did not belong to Arkansas and withheld taxes in error.

[Marty270]

I'm trying to file a non resident state income tax return from New York. My company, based in New York, took out NY state tax in error. I live year round in Tennessee. I followed the instructions of placing a zero in the NY state income section on a non resident form, which then gives me the full refund. However, when I go to transmit the return it brings up a message that the return will be rejected because my W-2 is showing NY income. Any suggestions????

[ajs1287]

get W2 corrected from employer, thats the cleanest way. i'm in exact same situation you are in to, works and lives in TN paid NY state tax, let me also know how you resolved this situation

[alex5]

delete

[kpw]

Curious to see how this played out. I'm in the same boat, my company thought I still lived out of state and took over $2k worth of state taxes. I live in a state that does NOT have state taxes so  I have no way to get my $ back

[opsahlk]

I live in FL but work remotely for a company in MO.  When I transferred to another department, I noticed on my first paycheck after that that they were taking out state of Missouri income tax.  Thankfully I caught it right away but now on my W-2 it is showing the state income tax that was taken out for MO.  We don't have state income tax in the state of FL.  What do I need to do to resolve this?   

I had a coworker who had the same problem and told me she was penalized $100 for the mistake.  Why should I be penalized for a mistake I did not make? 

[AmyC]

Each state has different rules.

@Marty270 @ajs1287  NY taxes all income that comes from from NY based business.

@kpw you should file the state return and claim a refund for the excess taken out.

@opsahlk, MO does not care that your income is MO based, you can file a MO return, state nothing earned there and get a refund.

[Mbrandley18]

I had a similar issue this year.

I moved from NYC to NC in April of 2018. For 2019 I got two W2's. One was all NC and the other had me reported as NYC Resident only partially reporting to NYC that year. I didn't live in NY all of 2019. How do I get this corrected to all go to NC? How do I get the additional taxes that my company had me paying to NYC back?

I had a similar issue the year before, but that was for a partial year of NYC residency although we still never got our full refund back due to NYC.

[DaveF1006]

File your NYS return first as a non-resident. Make sure you indicate in MY INFO there was no residency dates. As you navigate through your NYS return, there will be a section where you will need to allocate NYS income. Since there is no income to allocate, either leave this blank or if it is asking for an entry, indicate zero. 

One note I need to mention, as you answer questions in your NYS return, it will ask you if you lived in NY. Here you would say no. Then it will ask you in the beginning of the income allocation page if your wages were earned in NY, you would also say no.

When you get to the W2 summary in your NY state return, select edit next to the W2. Next screen will say Allocate Wages to New York, here you will allocate by percentage. Indicate 0%.

[Slclsu22]

My legal address was in Florida but I never worked there last year.  I worked in Several states including Texas and became a legal resident of Texas in August.  My employer reported all of my wages to Florida but I never worked there.  Is this legal?