New York Income Factor calculation is wrong!

[Gonzis]

It looks like TurboTax online is incorrectly calculating the way income is taxed earned in NY. I've added my income that i earned in NY (as a non NY resident). It says that i will get a refund of a few hundred dollars. However, once I add my wife's income of which none was earned in NY, suddenly we owe a little over one thousand.

Can anyone shed some light into this? Why is her income pushing us to actually owe to NY when all her income was earned in NJ. We are both NJ residents. I did the NY non resident first, i selected the amount i earned in NY and it shows correctly.

[PercyPenguin]

NY taxation is fun! They tax your NY sourced wages based on the percentage of your wages that are earned from NY.

That being said, adding more income should reduce your NY percentage.

Revisit the NY return questions. There are a few and answering them incorrectly will result in your wife's wages being included.

Make sure you answer the "are all your wages NY sourced" as no and thus should give you the screens to allocate your and your spouses wages, and how much of those wages are NY sourced.

[TomD8]

And if your wife as a non-resident of NY never worked a day in NY, then her NY-source income is zero.

[Gonzis]

That is what I'm doing. It's still allocating her NY income to mine as if it was all earned in NY.

[AmyC]

NY has found a way to make the largest tax liability possible. They take all income earned from everywhere for the whole year and they decide what the NY tax would be on that amount. It looks like they are taxing all of your income, because that is how the calculation starts. You should see the NY taxable income on line 37 includes all income. If you continue down the page, you will see a proration of NY income divided by total income on line 45 and that  percentage is applied to the tax liability to create your NY liability. The total for you is on line 50. Check lines 45 and 50. If you have a percentage and reduction, it is correct.