NY Non Resident Tax Filing is showing all my income in Turbo Tax and not just the income earned in NY

[graigtjj]

How do you enter into Turbo Tax NY Tax info specific to NY only and not all income earned in all states?

[ToddL · Accepted solution]

NY uses your entire AGI to calculate your tax on NY income. It isn't, however, as bad as it appears. They calculate what your New York tax would have been if you earned everything in NY, but then prorate that tax based on how much of your income was earned in NY. The NY state tax interview will have a screen where you can allocate your non-NY income.

For example, if the NY tax on your entire 2015 income was $1200, but only 30% was earned from NY, your NY tax would be 30% of $1200 = $360.

Why do they do this? So they can tax your NY income at the highest possible tax rate, based on your entire AGI.

From the instructions for Form IT-203 Nonresident and Part-Year Resident Income Tax Return:

You will compute a base tax as if you were a full-year resident, then determine the percentage of your income that is subject to New York State tax and the amount of tax apportioned to New York State. 

[graigtjj]

Understood - Thank You

[ToddL]

You are welcome - I get this question every day

[challenbrand]

Hi Todd! Question on this: how would I determine the % of time worked in NY? I recieved my NY W2 from my former employer without any accompanying information breaking out time actually worked in NY. Is that something my employer is required to provide? Otherwise I would just be guessing.

[Anonymous]

To help see the intent why NY state tax calculation is done that way,

  Hypothetically, Consider a person earns $5,000 in each of the 50 states. His annual wages would be $250,000.  If each state just considers the income the person made in the state ($5,000), he might end up not paying any state tax.  

   If you over simplify, states are trying to calculate the tax bracket considering your overall annual wages ($250,000) and apply that bracket to the income made in the state.

[kjhart01]

As a NYS non resident freelancer, I have multiple W2s, but only one of those W2s has NYS income. When filling out the Non Resident NYS Income Tax Return, do I need to include income from all sources on the Federal amount side? This would push me into a higher tax bracket than NYS even originally claimed on the W2, and get quite confusing. I understand the connection to AGI, but is that number relative to the job? Thanks @ToddL!