Consultant - multiple W2s received

[sg11sg]

My daughter works for PwC. She received 3 W2s. NY where she resides, MA which is her official mailing address (our home), and IL (where she billed a sizable chunk of her hours with PwC). Is the IL W2 because of this billed hours. How about MA? Can her official MA mailing address result in MA state taxes?

[TomK2023]

She will need to file a NY state return as a resident.  She will also need to file an IL non-resident return and a MA non-resident return.  Please read the TurboTax FAQ below.

IL Department of Revenue - Filing Requirements

A nonresident, you must file Form IL-1040 and Schedule NR if:

• you earned enough taxable income from Illinois sources to have a tax liability ( i.e., your Illinois base income from Schedule NR, Step 5, Line 46, is greater than your Illinois exemption allowance on Schedule NR, Step 5, Line 50), or
• you want a refund of any Illinois Income Tax withheld in error. You must attach a letter of explanation from your employer.

Commonwealth of Massachusetts - Who Must File a Massachusetts Personal Income Tax Return

If you're a nonresident with an annual Massachusetts gross income of more than either $8,000 or the prorated personal exemption, whichever is less, you must file a Massachusetts tax return.

You are an individual nonresident if you are neither a full-year or part-year resident.

Nonresidents use Form 1-NR/PY: Massachusetts Nonresident/Part-Year Tax Return.

Please see TurboTax FAQ: How do I file a nonresident state return?

[sg11sg]

The confusing thing is of her 3 W2s, the MA one has Box 1 filled with her wages, and her NY and IL Box 1s are set to 0. This can't be right, her office is NYC where she lives. She didn't bother updating her Paycheck portal with her NY address instead of our MA address. How do we reconcile the Box 1 for NY that should be the primary box for her federal wages?

Thanks

[DianeW777]

File both nonresident states first.  She would report all of her income to New York (NY) where she lives.  You can enter that as her wages for NY in the W-2 Entry, although her residency in the NY return should pull all of her income over.

There is no reciprocal agreements with NY so as stated by @TomK2023, a return must be filed with the nonresident states. Prepare these first.

Once those are completed, then the credit for taxes paid to another state will populate for her resident NY return.  

• Enter the appropriate wages in the W-2 for each state along with any withholding for each state according to the W-2
• Review each state return for the amount of taxable income and tax liability (not refund or balance due) 
• Next review the NY return you will have the appropriate figures for your 'Other state tax credit' section.

This should resolve your issue for all states.

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:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state

@sg11sg 

[sg11sg]

Thanks. So when you say prepare MA and IL first, are you suggesting I remove NY from the Turbotax version on my Mac. I bought all the state downloads, and have 3 tabs showing for the 3 states. And then I prepare the MA and IL ones, indicate that I was a Non Resident in both, right?

[DianeW777]

Yes, be sure to select nonresident for both IL and MA.

NY should work fine as long as you are prepared to enter the necessary information in the NY return.  I believe that NY does bring you to the Other Tax Credit section and allows you to edit the entry.  You may not need to but you should have the income (from the W-2s) for each state and the tax liability (from each state's return) and you will be prepared.

@sg11sg 

[sg11sg]

What should I answer to this question, Yes or No. "Yes, I made money in States other than NY."

I am presuming it's yes, because she spent a few days each week working at the client office in IL? 

For the IL state wages, e.g. if my W2 reports 10k, then shouldn't my NY state wages show that much less. i.e. if my Box 1 wages are 50k, and IL wages are 10k, shouldn't my NY state wages show as 40k?

Also in the MA section which I am doing first, it asks. should I remove all three, or just the MA one?

Let's Confirm Your State Wages from PwC.

Below we've listed the states with wage income reported on your W-2 from PwC.

Since you are a resident of another state and you worked in Massachusetts, you only need to report the Massachusetts income.

Check "Remove These Wages" for each line that is a duplicate and not from Massachusetts.

State ID

State Wage Amount (box 16)

Remove These Wages

MA.  xxx  Checkbox

IL.  xxx  Checkbox

NY.  xxx  Checkbox

[DianeW777]

The answers to your questions are shown below for your nonresident state returns.

• Yes:  Yes, I made money in States other than NY.
• Yes:  shouldn't my NY state wages show as 40k?  However there is a column for federal and a column for NY amounts.  In the end the NY income will be divided by the federal income to arrive at the percentage of the total tax for the NY portion.
• MA:  Remove any amount of wages that were not earned in MA.  Only wages earned in MA are taxable to that state.

@sg11sg 

[sg11sg]

Please ignore this message, I deleted the content after I found out that I was getting a credit for my IL taxes on my NY state taxes owed.