Yes. Each state handles their nonresident tax in their own way. Sometimes it calculates the tax on just the income from that state and other times the state will take the specific state income divided by the total federal income (usually the AGI). The tax is calculated first on the entire amount of income then the ratio that was determined will be multiplied by the tax to arrive at the tax for the nonresident income tax return.
In New York (NY) they are calculating the federal AGI, adjusted for NY differences, then calculating the tax as if it were a full year. After this they take the NY income and divide it by the total income to arrive at the percentage to multiply times the tax. This amount will be the tax liability on the NY return.
The income attributable to NY and the tax charged by NY (not withholding), will be used on the PA return to receive a credit for taxes paid to another state on the same income.
The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income. As the resident state all worldwide income must be included.
The credit for tax paid to another state on the same income will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
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