I worked part of the year in NY but my residency is in AL. My W2 reports, for example, $1500 for federal wages (W2, line 1), AL state wages ($1000, line 16 of W2) , and NY stage wages ($1500, line 16 of W2). Remark that NY wages are the same as Federal wages in the W2, which is the way NY does it. In actuality, I only made $500 in NY, which is what I put in the state allocation of TurboTax (TT) step-by-step. TT computes my NY taxes on $1500 and claims their 33.33% (500/1500) of that, which is fine.
However, for AL, TT wants to compute my taxes on $2500 ($1000 + $1500), about $125 (5% AL tax rate), and credits me for only 20% (500/2500) of AL tax calculation, $25 ($125*0.2). I owe AL $100 ($125 -$ 25) this way.
To avoid double taxation, I think TT should compute my AL taxes on $1500, giving $75, and credits me for 33.33% (500/1500), $25, of the AL tax calculation. I would owe AL $ 50 ($75 - $25) this way.
When I try to manually insert in the TT AL Schedule W2, column J section that my additional taxable wages from other states is $500, not $1500, my efile gets rejected by AL.
Note: I neglected deductions to make my point clearer. Numbers provided are examples.
Anyone is familiar with this situation where you are a non-resident of NY and a resident of another state? How do you deal with this case? How do I supply TT the correct info to avoid double taxation?
