Moving out of NYS/NYC none resident wage, RSU, Interest, dividends, CGs taxation

[madmanc20]

For 2025 tax year

• Moved from NYC/NYS to Seattle WA early in the year (2/15/25)
• Work for same multi-national company employer with office in NYC/Seattle (transferred from NYC to Seattle office) Each office location's employee are resident of that state and payroll process local tax to that state (WA now have payroll long term care tax)
• Have RSUs granted early 2023 becoming vested throughout 2025 after leaving NYC/NYS

A few things to confirm

C1 - NYS tax on RSU granted in NYS and vested after leaving NYS use a formula to calculate fraction of NYS work day during the allocation period (grant date to vest date).

C2 - NYC taxation on vested RSU is based on residency so no NYC tax for RSU that vests after leaving NYC even if RSU was granted while NYC/NYS resident.

C3 - A few week business trip to NYC as WA resident. For NYS taxes, wages during this period is taxable (NY sourced). Business trip days will count as NY work days for NYS taxable % of vested RSU. For NYC taxes, NYC tax is residency based and does not tax this fraction of wage and vesting RSU during the business trip.

C4 - Interests, mutual fund/ETF dividends, CGs all taxable when paid out while NYC/NYS resident. Not taxable when not NYC/NYS resident.

[ThomasM125]

C-1 is correct regarding an allocation of income between grant date and date of vesting.

 For C2, the regulations state that the allocation period ends the earliest of when the stock fully vests, the stock is sold, or your employment terminates. It is not clear whether termination would equate to your reassignment to another state. So, I'm not sure you are correct in assuming there would be no New York income when the stock vests if you are no longer a New York resident, because you still work for the company.

C-3 is correct, you are taxed by New York State when working there, but New York City would not tax you unless you were a resident.

C-4 is mostly correct. The investment income your earned while a resident of New York is New York income versus income earned elsewhere, and you use that ratio to determine how much of your New York tax you have to pay.

You can read this from the New York State Department of Taxation and Finance to learn more.

[madmanc20]

@ThomasM125 

Thanks for the helpful answer. We have same understanding on C1 C3 C4 of the original post. However more ambiguities to resolve on C2 (RSU vested after leaving NY City). Can you point to the NY City tax regulations that leads to your answer below? Thanks

"For C2, the regulations state that the allocation period ends the earliest of when the stock fully vests, the stock is sold, or your employment terminates. It is not clear whether termination would equate to your reassignment to another state. So, I'm not sure you are correct in assuming there would be no New York income when the stock vests if you are no longer a New York resident, because you still work for the company."

====

Below is an exhaustive detailed summary on original C2 question/confirmation. After doing much research online, I see many replies and articles  using "NY" which is quite ambiguous because NY State and NY City are 2 different taxation authorities with their own rules despite sharing the same tax websites and use the same tax filing process. Perhaps it is best to ask questions for NY State and NY City separately to avoid confusion.

RSU granted in as NYS/NYC resident but vests after leaving NYS/NYC

NY State (NYS) taxes

Per original post C1 and your reply. NYS clearly say to  calculate the fraction of  NY work day ( days worked in NYS regardless of residency) and allocation period (grant to vest in my case). BTW, this is of course not applying Convenience of Employer Rule (company in NYS, employee working out of state for own convenience) which would make the fraction 100%.

Form to calculate the work day / allocation fraction is in IT-203-F Schedule B. It also includes details such as counting only work days only (excluding weekends, holidays, vacations, sick days)

NY City (NYC) Taxes

Your reply to original post C2 seems to be from New York State’s IT-203-F-I (Multi-Year Allocation Form Instructions) page 3 Schedule B Table.

https://www.tax.ny.gov/pdf/current_forms/it/it203fi.pdf

Box for Restricted stock row and Allocation period column states allocation period is as follows

Date stock received to earliest of:

1) date stock substantially vested

2) employee termination date

3) date stock sold

In my case, it is #1. However, this is NY State tax law (not NY City)

The actual tax law is 20 NYCCR 132.24 (New York State tax regulation on Stock options, stock appreciation rights and restricted stock) This is for NY State

https://www.law.cornell.edu/regulations/new-york/20-NYCRR-132.24

For NY City, I find no specific info on RSU on NY City Tax law. IT-306.1 (Change of City Residence) instructions states the following on page 2 upper left column

If you moved out of New York City, you must include on

Form IT‑360.1 any item of income, gain, loss, or deduction

which, under an accrual method of accounting, would be

reportable at the time you changed your residence. This

includes income or gain you elected to report on the installment

basis. You must also accrue to New York City the total taxable

amount of lump‑sum distributions subject to the separate tax on

lump‑sum distributions (Form IT‑230).

There are no specific mention of how to treat RSU vests in IT-360.1 Instructions

https://www.tax.ny.gov/pdf/current_forms/it/it360_1i.pdf

From what I’ve read, NY City tax is treated as an additional layer on top of NY State tax, NY City taxation is based on residence at the time income is earned. Here are 2 examples

There are 3 layers of taxation authority in US for NY City resident.

• Federal
• State
• City

Using an example of change residence from CA (California) to NYC with RSU granted in CA and vests in NYC

• For Federal, no difference on federal tax liabilities
• For State, CA and NY State would each get their work day / allocation period fraction.
• For NY City, vested RSU is 100% taxable. Some might say this is absurd if most of the vesting period was in CA. Such is the ambiguity of corner cases in various tax authority tax laws which only gets clarified when challenged in courts.

In the reverse case, changing residence from NY City to CA with RSU granted in NY State and vested in CA

• For Federal and state, its same as above.
• For NY City, vested RSU in CA is 100% non taxable.

As a side note, will be doing a foreign assignment for my company in South Korea in 2026... So will need to split and credit taxes at the Federal level (pay South Korea tax, get credit on US Federal tax) So I will have to deal with 3+! tax authorities in 2026. South Korea, US Federal, NY State (still have vesting RSUs granted while in NYS) But hopefully no long have to pay NY City taxes haha.

Tax court cases (or lack there of) for reference

For NY State

There are court cases over the years that created the clarification on work day / allocation fraction on IT-203-F Schedule B. NY State lost 2 cases prior to 2006 (Michaelson & Stuckless) which prompted clarification of tax laws on none resident RSU vest tax liability.

https://www.hodgsonruss.com/assets/htmldocuments/The%20Nuts%20and%20Bolts%20of%20Taxing%20Stock-Base...

For NY City

There are no online reference to NY City having similar court cases to resolve tax law ambiguity on changing residence during RSU allocation period.

[ThomasM125]

Unfortunately, no. The only information I could find is in the article from the New York State Department of Taxation and Finance that I referenced in my prior post, and it just addresses state tax issues. I imagine the situation you are in is rare so there is likely not much on it when you do internet research. You may find it helpful to enlist the assistance of a New York tax accountant who is informed about such matters.

[madmanc20]

@ThomasM125

Thanks. I don't think all that rare (RSU grant when NYC resident, RSU vest after moving out of NYC/NYS) but will consult NYC tax expertise given the tax code ambiguity.

Unfortunately  just realized even NY State's work day allocation is quite aggressive at collect RSU taxes even after moving out of NYC/NYS...

Direction for Line 15 of IT-203-F Sched B (the form used to calculate % of RSU vest taxable to NY State after changing residency out of NYC/NYS)

"Line 15: Normal work days spent at home are considered days

worked in New York State. Days spent working at home that are

not normal work days are considered nonworking days."

pg 2 (right column) https://www.tax.ny.gov/pdf/current_forms/it/it203fi.pdf

This means if you move out of NYC/NYS to work in office in another state AND the payroll is processed in the new state. Days you decide to work from home (3/4 of the time for me due to commuting convenience) NY State wants to count as taxable on RSU as if you worked in NYS! So the grant date that occurred while NY State resident unfortunately anchor work from home days to NY State for the rest of the RSU vesting :(

Looks like highly desirable to avoid RSU grant in NYS if possible...

[ThomasM125]

In general, if you work from home out of state, you are only taxed by New York on your wages if you have an office in New York but you choose to work from home, meaning your could work in-state but choose not to. Also, if your employer requires you to work out of state from your home, you will not be taxed by New York. I would imagine this would also apply to the income from your stocks.

[madmanc20]

@ThomasM125 

"In general, if you work from home out of state, you are only taxed by New York on your wages if you have an office in New York but you choose to work from home, meaning your could work in-state but choose not to."

Yes, this is the "Convenience of Employer" rule.

"if your employer requires you to work out of state from your home, you will not be taxed by New York"

This can help some cases I guess and probably a good audit trigger so  I'd guess have to back it up of course. My case is work is highly networked and distributed world wide (both team members and customers) and be located closer to family. Work from home in WA often to avoid daily commute to office.

Anyway, NYS tax for multi-year allocation for vested RSU use IT-203-F Sched B. Calculations for # days worked in NY are line 6-17. The calculation sequence basically treat all work from home including after moving away (non resident) as work in NY. Line 15-17 is where it does this and the directions doesn't say "count the number of work from home days while resident of NYS". Rather, its basically says "# of work from home days in the entire RSU allocation period is working in NYS"

https://www.tax.ny.gov/pdf/current_forms/it/it203fi.pdf

https://www.tax.ny.gov/pdf/current_forms/it/it203f_fill_in.pdf

This treats moving out of NYS with still vesting RSUs like a big business trip. Anytime you work from home after moving away is like either 1) returning to NY State 2) working for the NY based company despite moving to a different company location in a different state and processing payroll there. Will consult with CPA on this but the calculations is quite clear and unambiguous.

Furthermore, there are recent tax court rulings in 2024 that says "if any NY work day is performed during allocation period, then the entire vested RSU is taxable to NYS" This goes even beyond the NY workday allocation fraction described by NYS's own tax law. Below is the case summary. Perhaps reading actual court documents might yield more detailed reasoning. Also linked the 20 132.24 ruling (stock based compensation taxation) and 20 132.18 ruling (defining what is NY income)

https://www.stateandlocaltax.com/new-york/new-york-division-of-tax-appeals-finds-new-york-source-inc...

https://www.law.cornell.edu/regulations/new-york/20-NYCRR-132.24

https://www.law.cornell.edu/regulations/new-york/20-NYCRR-132.18

132.18 is basically rephrasing "Convenience of the Employer" rule. It says moving away from NYS has to be based on the necessity of the employer and not at the convenience of employee. What is necessity can be grey area given modern tech worker's fully distributed teams and customers.

Covid19 work from home employer policies also generated ample court cases around the "Convenience of Employer" rule for wages. So far, it seems all courts have ruled in favor of this rule. NH and MA went to Supreme Court on this issue but the court didn't take the case. This rule seems to be increasingly the determining factor  for non resident taxation. Increasing the scope to tax non residents on their post exit RSU vests.

https://www.grantthornton.com/insights/alerts/tax/2024/salt/k-o/ny-nonresidents-pandemic-remote-work...

Can't find any clarification on if changing the state of payroll processing matters to exclude NY workday.

Anyway, tax law in this area has ample ambiguity and wide range of scenarios. Tax courts have been quite active so I guess a high audit risk if want to pay less taxes than 100% NY resident.

[madmanc20]

Also following up with the buggy mechanics of TurboTax in handling non resident NYS RSU allocation and NYS NYC resident wage entries.

Entering IT-203F-B(s)

I've read online problems in the past with TurboTax Deluxe and Web version not handling this and Premier is required. As of 2025, Deluxe on Mac seems to work fine as is Premier. Don't know about the Web version.

First the Easy Step process is quite confusing and can't handle making workaround to solve TurboTax bug. So I just used forms manually for this area.

Then there are 2 bugs entering and adding up all the IT-203-F Sched Bs. 1 Sched B is required for each  RSU vest event to calculate the NY workday and allocation percentages.

Bug 1

The only way to get > 1 Sched B is click on the empty fields in the Sched B. For example,  in "Description of Stock" field. Then Sched B turns into a scrollable window. Scrolling down access additional Sched Bs for more RSU vest event entries. All the directions I found online were wrong and accidentally stumbled on this. Perhaps this UI kept on changing and this is how its done in 2025.

After viewing another form and return to IT-203-F, Sched B boxes are all empty and require clicking in the empty field again to see the entered Sched B(s).

Bug 2

After all the Sched Bs are entered. They are summed up automatically and put into Alloc Wks worksheet form in the Capital Gains or Loss Smart Work Sheet line A. This is incorrect because the RSU NYS tax allocation is not a CG and require 2 manual corrections.

1. Manually copy to Income line 1 column D. If you have other NYS income not part of line 2-15 while a non NYS resident, probably have to add it manually before entering into line 1.

2. Manally add negative of this line 1 to line 2 to erase the CG since its incorrect.

When printing PDFs, this CG hack from the Alloc Wks doesn't seem to show up anywhere. All the IT-203-F Sched B(s) are printed in the PDF. Since NYS require electronic filing. I don't know if it properly transmits. A few user in the prior threads never confirms (but maybe implied) and some just went with CPA for prep and file. Here are those threads

@nivin developed this hack workaround

https://ttlc.intuit.com/community/state-taxes/discussion/what-does-the-form-203-f-mean/00/1404869/pa...

@demens13 seems to imply he efiled with this hack workaround. You be the judge 🙂

https://ttlc.intuit.com/community/state-taxes/discussion/incorrect-classification-of-income-on-it-20...

Entering NY State Resident Wage Income 

For awhile, I kept on getting pointed by form directions to use IT-203-B to enter the NYS resident wage income. This is wrong as it will calculate the fraction of the year as NYS resident and multiple against your W2's State Waves (box 16) In my case, box 16 also include the entire RSU income and the employer didn't calculate the NYS fractions. So IT-203-B + IT-203-F Sched B(s) sum forward through Alloc Wks will ~2x your RSU income.

The proper way is just to enter it into Alloc Wks line 1 column B. I just used the gross wage income on the last NYS resident paystub for the NYS amount + business trip to NY calculations as a non resident (NY State considers work performed while there as NY sourced income for non residents (I used # days / 365 * annual salary) )

This Alloc Wks line 1 column B will be automatically added with column D and automatically entered into IT-203 line 1 New York State amount

Entering NY City Resident  Wage Income

This is entered through Cty Wg/SE Alloc form Part 1. I put NYC as city code, alloc method blank, percentage 100%, company name in the empty description box, and W2 box 18 (local wages) into City Wages. This number is automatically inserted into IT-360.1 form to calculate the remainder of NY City Taxes.

Regarding if vested RSU earning are taxable as Non Resident of NY City, depends on your scenario of course. Further, the # in W2 box 18 is based on your employer's payroll's interpretation.

=====

Anyway, took me awhile to figure out how all the figures flowed and work around TurboTax deficiencies and bugs.

I may (you might also) choose to go with a CPA for the following reasons. But doing Turbotax with these bugs and UI nuances is still quite valuable to understand all the figures, decision points, and mechanics.

• Avoid any problems with TurboTax bug workaround making its way into the electronic filing.
• Determine best NYS workday allocation interpretation (probably based on the latest legal case results) to avoid NYS audit.

[madmanc20]

googled "IT-203F B line 15" found this taxslayer support direction for filling this this schedule

https://support.taxslayer.com/hc/en-us/articles/17007711405965-How-do-I-complete-the-New-York-Income... 

Section "Allocating the income" bullet 3 explain work from home for non NY residents.

====

Enter the total number of days worked at home

• Days worked at home are considered New York workdays only if the employee’s assigned
  or primary work location is at an established office or other bona fide place of business of the employer in New York State.
• If the employee’s assigned or primary work location is at an established office or other bona fide place of business of the employer outside New York State, then any normal workday worked at home would be treated as a day worked outside New York State

====

Found no clarification like this in the following

• NYS's IT-203-F Sched B instructions
• NYS's RSU and NY workday tax code explanations
• Any legal cases stating this

Maybe this is just taxslayer clarification for questions they have received from customers. Of course they will not be liable for correctness for using it to file in TurboTax 🙂 So I guess it will be individual's decision on trusting this interpretation as defense against an audit.

taxslayer's explanation does lower NYS taxes in my case.

[madmanc20 · Accepted solution]

Here is a fairly complete forensics of NYS non-resident wage an RSU tax code and forms. The reason lacking a simple answer is because how convoluted the explanations and forms are.. The actually logic buried in tax code 20 years ago is reasonably clear.

https://www.bogleheads.org/forum/viewtopic.php?p=8690416#p8690416

To do the actual NY workday accounting, I had to use an AI. Without it, it'd be manually making a day by day log like a time sheet. Using AI isn't trivial but maybe good to generate the initial daily log to hand adjust.

https://www.bogleheads.org/forum/viewtopic.php?p=8690454#p8690454