Mistaken withholdings to New York, live in Virginia

[jmud]

Hi,

My family moved from New York to Virginia in July 2021. In 2021 we were successfully able to allocate the percentage of year between the two states and receive our NY refund and pay our VA taxes. This year we are having a more difficult time.

- My Ohio-based company did not change my address until mid-2022, and New York taxes were withheld until they made the change, when it switched to Virginia.  My W-2 has the same amount for wages in the New York and Virginia boxes (my full-year salary for both). My understanding is that all my New York withholdings should be refunded because there is zero relation to New York (my residence or company location).  A TurboTax live help agent told me that I need to request a corrected W-2 from my employer - what corrections should I request?

- My wife received a W-2 from a NY-based company that ended her employment at the end of 2021. No Virginia taxes were withheld from this W-2 despite us having lived in Virginia for all of 2022. Does this count as New York Source Income because the company is New York-based, although we live in Virginia? 

In TurboTax, I'm told that my New York e-file will be rejected when I allocate our New York wages to 0. I've seen elsewhere that we should file this return by paper with a note. Happy to provide any other details if needed.

[MaryK4]

You cannot request a corrected W2 from your employer because except in rare cases, they are not allowed to make changes to state withholding after the end if the year.  You will have to file a nonresident New York return and report zero New York wages.  Can you clarify the second question- if your wife's NY employer ended her employment in 2021, why did she get a 2022 W-2 from them?  You would have to mail the return if TurboTax will not efile with zero New York wages.

[jmud]

Thanks for the help! It seems like we won't go through TurboTax then.

Regarding my wife's W-2, we are pretty sure that it's because her employment ended on Dec 31, 2021 (they wouldn't keep her on remote) and then they processed her final paycheck, PTO payout, and a referral bonus once 2022 began. We can follow up with them but think this is the case. Does this count as NY income despite us not living there?

[MaryK4]

Yes, in this case it would be New York source income because it was directly related to her New York employment.  I guess the good news is you will have NY income so you can efile... @jmud 

[jmud]

Thanks. This is where I’ve been receiving conflicting information from various sources. I’ve been told elsewhere that this her W-2 wouldn’t be NY income for our purposes since we didn’t live in NY at all in 2022 (and my wife had been working remotely in VA for the latter half of 2021 when any of this would have gone through). Does that affect anything @MaryK4 ?

[ErnieS0]

Whether your wife’s income is taxed by New York depends on why she was paid. You originally said New York tax was withheld by mistake because your address was not updated after you moved to Virginia.

You later said she received her final wages, PTO payout, and referral bonus after she moved. Those items are all NY-source income because they were connected to her employment in New York. That is NY nonresident income.

If your wife received a combination — NY source income and mistaken withholding — then you can adjust your NY wage to claim only the NY source portion.

[jmud]

That makes sense. So we should just look at the pay stub and determine which portion of her paycheck was her final out-of-state wages (non-allocated to NY since we were in VA) and which were NY income (e.g., PTO, referral bonus - allocated to NY)?

I was given completely incorrect information from a CPA via TurboTax’s live help option. This is really helpful but definitely disappointed in what I got from TT! Thank you @ErnieS0 & @MaryK4 

[ErnieS0]

Yes. Checking pay stubs would be the best option. Most companies generally have different lines for PTO, bonuses, etc. from regular wages. If not, you can make a guess. It's likely you would have an issue because both states will only get W-2 info and not a breakdown of wages. States realize wages are often allocated because they don't always match.