I've moved from California (working in California) to New Jersey working in New York. I've remained with the same employer (which has California and New York offices).
I learned that NY calculates its income tax off my federal income, which it then allows me to multiply by an income allocation ratio (denoted as percentage or number of days in the year).
For sake of example, let's assume:
- From January 1, I worked in California.
- On July 1, I relocated to New Jersey and to the New York office.
- I worked in the New York office until the end of the year.
- In the California office my wage was $4,000 monthly.
- In the New York office my wage was reduced to $2,000 monthly.
This would make my federal wage at $4,000 * 6 + $2,000 * 6 = $36,000.
California would tax $4,000 * 6 months = $24,000 of my income.
New York would look at the federal income ($36,000), then based on me working in New York for half the year, applying 50% income allocation would have New York tax $18,000 of my income.
Summing it up, I'll be taxed over $42,000, which is higher than my income, and looks like double taxation to me. Since neither California nor New York treat me as a resident, I'm unable to apply for resident tax credits with either of them. I can apply for resident tax credits with New Jersey, but this can at most zero out my tax liability with New Jersey.
Is there any way to get out of this double-taxation?
Is it permissible to use the NY "income allocation" as means to getting a "fair" amount to pay NY taxes for?
Can I leverage my status in California as a part-time resident for tax credits for NY taxes?
