Out of state income

[fusilli45]

Hello, I am a NY resident, and last year made a short trip to Massachusetts to do a free-lance task, for which Mass. tax was withheld. I am filing both NY and Mass. state returns. In TurboTax, it seems (on NY Form IT-201) that I'm still paying NY tax for the total amount. In the “Wages, Salaries, Tips, etc.” row of the screen titled “Income Taxed by Massachusetts”, the “New York Total” shows the total of W2 amounts from my Federal form, and the “Portion Taxed by Massachusetts” shows the Mass. income. But it still seems clear that the NY tax computation is using the entire Federal amount, so that I’m still paying NY for income taxed by Mass. Is it correct that I should not be “double-dipped” in this way, and if so, is there something I’m doing wrong that can address this? Thank you.

[LindaS5247 · Accepted solution]

When you are filing a Resident and Non-Resident state tax return, you have to complete the Nonresident tax return first. Your resident state (New York) will give you a credit for taxes paid to your Nonresident state (Massachusetts). This credit should be shown on line 31 of your New York State tax return, Form IT-201.

After you finish your federal return, you'll automatically move to the State tab, where you'll see your nonresident state(s) listed in addition to your resident state.

Once you have entered all of your information for both state tax returns and your federal tax return, you will be guided through the e-file process with the TurboTax prompts.

Remember: To ensure accurate calculations, always complete the non-resident return first if filing in multiple states because your resident state might give you a credit for any taxes paid in that situation.  

Once you've determined that you need to file a nonresident state return, the first thing you want to do is make sure you've filled out the Personal Info section correctly:

1. With your return open, select My Info in the left-hand menu.
2. Then, on the "Personal info summary screen", scroll down to "Other State Income", and select "Edit".
3. On the screen  "Did you make money in any other states?" question, answer "Yes" and make sure your nonresident state(s) are selected from the drop-down.
4. Select "Continue" to return to your "Personal info summary".

Click here for information regarding filing multiple state returns.

Click here for additional information on filing when multiple states are involved.

Please return to Community if you have any additional information or questions and we would be happy to help.

[fusilli45]

Thank you! Think I've got it. So it's not the case that the income earned in the non-resident state is not taxable in NY (or NYC) - it is fully subject to tax in NY but the tax is reduced by any tax that was paid to the non-resident state - correct?

[DawnC]

Yes, New York will give you a credit for the tax paid to MA.   And if you prepare the non-resident state first, TurboTax will apply the credit automatically.