[NYC] Multistate Question about allocation method

[zz26]

Relocated from VA and moved to NYC in 2022. Same employer. 

When presented with this question and shown my W2

Were all of your wages and/or your self-employment income earned in New York State? Which method should I be choosing if I earned VA income from my employer when I lived there and I earned NY/NYC from my employer when I moved? What is the purpose of this screen anyways and what is the recommended default, if there's a default?

[ ]100% New York State Income

[ ]Allocate by Number of Days

[ ]Allocate by Percentage

[ ]Don't allocate this employer

[ ]Allocate over Multiple Years

[ErnieS0]

You can allocate by either the number of days or percentage. Percentage is usually the easier method but you can try both methods and see which one gives you the better result.

New York requires employers to report total wages in Box 16 of the New York line of your W-2. Your NY income will generally be that amount minus the Virginia amount on line 16.

You can check your pay stubs to verify this.

[zz26]

Thank you. So if I decide to just use the difference of NY Box 16 - VA Box 16, do I still select "Allocate by Percentage?" 

[ErnieS0]

Yes. For example, if your NY Box 16 (which should match Box 1) is $100,000 and VA Box 16 is $40,000 then your NY allocation percentage is 60% ($100k-$40k) = $60k. $60k/$100 is 60%.

[zz26]

Thank you. I went ahead and gave that a shot but when I try to finalize the NY state taxes I am getting an error message. If I were to give an example:

Box1: $100,000

NY Box 16: $100,000

NYC Box 18: $80,000

VA Box16: $30,000

Error:

IT-360.1 TP: Line 1b is greater than the amount of Wage income allocated to New York State on IT-203. Edit amounts on the Part-Year Resident/Nonresident Allocation Worksheet or City Wage/Self-Employment Income Allocation Worksheet as needed.

[ErnieS0]

TurboTax is saying your New York and New York City wages must match on the NYC part-year resident form (IT-360.1).

In your example, there is some income overlap. 

NY Income: $100,000 - $30,000 = $70,000

NYC income: $80,000

You can adjust your NY income to $80,000 or adjust your NYC income down. 

If you adjust your income upwards, then it looks like $10,000 is being taxed by both Virginia and NY since $80,000 (NYC) + $30,000 (VA) = $130,000. That should not happen if you are part-year.

If you adjust NYC down, it will not match your W-2. NY may question that. If you have pay stubs or other documents, it’s fine to adjust down. You just may have to respond to a tax notice and tell them everything is correct.

[zz26]

@ErnieS0 So if I am understanding correctly, adjusting upwards $10,000 will be double taxed and I can't get either states to give me a credit for that scenario? Not sure if this helps a bit more but my employer does pay me for RSU over 4 years (awarded in VA 2021) and also I got my annual bonus (10/2022). On my paystubs I noticed that after I moved to NYC, I am getting a portion withheld for both NYC and VA. I am not sure if that is impacting the difference between NYC W2 and VA W2. Would love to have them match, unless this is standard when doing multi state taxes to have these nuances.

[ErnieS0]

You can claim double-taxed income as a part-year resident. It's just unusual. However, your bonus and RSUs may explain why your company withheld Virginia tax after you moved to New York.

I'd check your pay stubs, but adjusting your NY income up to match NYC is probably correct and then claiming a credit for any income that is also taxed by VA after you moved to NYC.

On the screen "Take a look at New York credits and taxes" select Taxes Paid to Another State and fill in the info.

If you are using TurboTax online, you can get your VA income and tax by looking at the VA Tax Summary.

1. Tap Tax Tools in the left column
2. Then Tools
3. Select View Tax Summary in Tools Center
4. Select VA Tax Summary in the left column
5. Tap Back in the left column when you are done

[zz26]

Appreciate all your help so far @ErnieS0. So I took your advice and put all my paystubs in an excel sheet and separated by VA taxed and NY taxed. The number I end up getting very close to for VA was VA W2Box 16, and for NY was NY W2 Box 16 - VA W2 Box 16.

1. Does this mean my NYC Box 18 is incorrect and should I notify my payroll?

2. If I don't need to notify my payroll, should I adjust down now that I have proof that paystubs should add up to NY W2 Box 16 - VA W2 Box 16 for NYC Locality Wages?

3. As I finalize my NY Tax return, do I need to claim any credits taxed by VA to NY/NYC, or does the software take care of allocating it? I was taxed by both VA and NYC on portions of RSU and Bonus  (10/22) after I moved to NYC. Bit confused on this part here. 

4. Do I need to adjust anything on Federal portion?