State tax filing

NY uses all income to create your NY tax then it multiplies that by the percentage that was actually NY income.  It looks confusing on the return because it shows all income and the next line is NY tax.  Keep going and you will see the NY percentage.

For example:

• NY tax on your federal income is $8,000
• But only 10% of your income was earned in NY
• NY tax liability will be 10% of $8,000 or $800.

Here is how NY return works:

1. The Federal AGI is used as a denominator and only the NY income as the numerator to calculate the percentage of income earned in NY. on line 45.
2. NY determines the tax on your entire federal income, line 37, then multiplies the tax times the percentage just determined to create your actual tax on line 50.
3. Tax withheld on line 62

Let me get you to preview your return and check.

• If you are using the online version:
  1. go to Tax Tools,
  2. then select Tools,
  3. select View Tax Summary,
  4. on the left side, select Preview My 1040.
• In the desktop program, switch to forms mode.

Your resident state taxes all income but gives a credit for income taxed by another state.  Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.

1. First, prepare your non-resident NY return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
2. Then prepare your resident state return and it will generate a credit for your income already being taxed in the non-resident state.
3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state, if they have a higher tax rate.

It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.