I live in PA and work in NY. When entering information for my NYS non-resident return in Turbo Tax, in the 'New York Income Allocation' section under 'Nonresident other allocations' there is a screen which asks "Enter the amount of federal income that was derived from New York sources..."
I have three entries - for two (dividend income and capital gains / losses), I believe this should be entered as zero since I live in PA not in NY. For the third (taxable refunds of state income tax), should this income item be added to the 'New York Source Portion' or does this remain zero as well?
You are correct. As a resident of PA, your dividend income and capital gains/losses are considered as PA-source income (unless this income cam from a NY-based S-Corp or Partnership where you had an interest) ). Enter "0" as the amount of federal dividend and interest that was derived from New York sources..."
If the state refund came from NY, it is NY-source income. State tax refunds are not, however, taxable income to the state that issued them. They could, however, be taxable income to your home state and/or the IRS; in both cases that would depend on whether you had claimed a deduction for the NY refund on your PA or federal returns.
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