NM State Income Tax

[rducotey]

I have lived in NM for many years but moved to AZ in August of 2023.  When I do my state taxes with Turbo Tax, it puts my entire 2023 pension, social security and other earnings onto my NM state return and only 5 months onto my AZ return.  There is no NM PIT-B form (which is supposed to allocate income for the NM part of my income).  What am I doing wrong, because my full year income, etc is being taxed in NM?

[MayaD]

You need to file Part-year resident return in NM and AZ. 

you need to make sure you've set up your personal information correctly. We'll ask about where you lived in 2023 when you set up your personal information.

1. Sign in to TurboTax and select My Info.
2. A Your personal info screen appears.
3. Question number 2 asks you the state(s) you lived in during 2023. Select your state of residence from a dropdown menu.
4. You'll also be asked if you lived in another state in 2023. Answer Yes and a new section will appear asking for your previous state of residence. Select the other state you lived in.
5. Fill out the date of when you moved to your current state.
6. If the rest of your information is accurate, select Continue.

[rducotey]

I already did what you suggested but when doing the NM return  Turbo Tax makes me put the entire Federal income amounts into the NM Pit-b schedule.  I can find no way to only pay NM tax prorated for the 7 months I lived in NM.  Since I lived in NM for more than half the year it appears I must file as a resident and NM then wants to tax what my Federal return is showing.  Please help...this is costing me a bunch of $$$$ because NM is taxing me on my FULL Year earnings.  

[AmyC]

Go back to the beginning of the New Mexico and select part year resident. Enter the dates of residency. Go through a lot of screens, liquor license, cannabis and then you reach capital gains, continue and you will see income allocation. Enter NM income.

[rducotey]

I did all you suggest but since I lived in NM for more than 1/2 the year, they consider me a full resident and that all income, etc earned in 2023 is taxable in NM.  The only way I can find around this is to say I moved to AZ before half the year was up.  Once TT sees you lived in NM for more than 183 days,  income for the whole year winds up in NM return.  It does not seem fair.

[rducotey]

ok I finally got my earnings allocated between NM and AZ...BUT, in looking at the NM PIT-B instructions, Turbo-Tax does NOT follow the instructions for the form.  Line 12 of Pit-b says:

12. DIVIDE the amount on line 11, Column 2 by the amount on line 11, Column 1, showing 4 decimal places.
(Cannot be less than zero. If greater than 1, enter 100.0000.)  My result was 58.5263% and that is what TT continues to use.  The result is obviously greater than 1 and therefore NM says 100.0000% should be entered but TT enters 58.5263%  I believe you have a serious NM software bug in TT.

[AmyC]

I am so glad you  won the battle! Regardless of the directions, let's see if your return is accurate.

Please take a look at your total income and your NM income. Is your NM income about 58% of your total income? If yes, then all is well. If no, then there is a concern.

The directions in INSTRUCTIONS FOR PIT-B. Line 12 is to calculate the % of income earned between none 0%  and all 100%. The instructions do clearly state to multiply by 100 to give you a full value between 0 and 100. 

[rducotey]

It still looks to me that if you reside in NM for more than 185 days, they want you to make col 1, line1 and col 2, line1 equal.  Please read the box above section 1 of NM Pit-b form  that says:

Note: Resident taxpayers including persons physically present in NM 185 days or more (me) MUST allocate all income and deductions on lines 1, 2, 3, and 7 in full to New Mexico?????   That sure sounds like 100% of my income MUST be allocated to NM!!!

[RobertB4444]

Unfortunately you were a full year resident of New Mexico.  You're right about that.  New Mexico decides that anyone who lives in New Mexico for 185 days or more is a resident for the full year.  It's not fair but there it is.

You need to do a resident return for New Mexico and a part-year resident return for Arizona.  Do the New Mexico return first.  New Mexico will tax everything and you'll owe them a bunch.

Then, when you do your Arizona return, you will take a credit for taxes paid to other states.  You've already figured out your percentages.  You're going to be paying taxes in New Mexico on all of the income being taxed by Arizona.  41.4737% of the taxes that you pay to New Mexico will also be the tax that Arizona wants to charge.  That credit should wipe out your Arizona tax bill for this year because New Mexico's tax rate is slightly higher.  

@rducotey