Part-time resident in NY state. Move to NY for a job and my NY taxes show that my taxable income includes what I made in another state. Can I claim a deduction for that?

[DanielV01 · Accepted solution]

What you are seeing is how New York calculates tax for a part-year resident.  All of your income is not taxed in New York, but all of the income you earned is used to determine how much New York tax you pay.  New York will pretend that all of your income is taxed in New York, figure out what the hypothetical tax is on that amount, and then prorate the tax to the percentage of income you received while living (and working) in New York.  All of your income is not taxed in New York, but all of your income is reported on the New York return to determine the New York tax.

Is there a deduction for that?  The only deduction on a state return is if you are working in New York while living in another state other than New York.  In this case, you would receive a credit for the tax you pay to New York while living in another state.  However, in this case, it seems like you are only paying tax to New York on this income.  And, unless you are able to itemize deductions on your Federal Return (where you would claim these taxes as a deduction), there isn't another area I can think of where you might receive a credit or a deduction for these taxes.

[SweetieJean]

multiple post

[RBfromTX]

I thought it was unconstitutional to have your state tax burden increase (NY) in any way due to income received in another state (TX) (i.e., this is not a commuter/work income situation like NJ/NY). If this person had zero income in Texas, I am sure their state tax burden would be lower in NYS. I have this same situation with my daughter that moved to NYS. She earns very little and should not have to pay any taxes in NYS due to the $8,000 NYS standard deduction. But because she made income in her prior state (MD), the NYS calculation is making her pay NYS taxes on total income earned in MD plus NYS. How does one fight this issue?

[GeorgeM777]

As a way of background, New York state income tax rates are 4%, 4.5%, 5.25%, 5.9%, 5.97%, 6.33%, 6.85%, 9.65%, 10.3% and 10.9%. New York state income tax brackets and income tax rates depend on taxable income and filing status.  Also, residency status determines what’s taxable.

As a resident, your daughter will pay state tax (and city tax if a New York City or Yonkers resident) on all income no matter where it is earned.  As a nonresident, your daughter will only pay tax on New York source income, which includes earnings from work performed in New York State, and income from real property located in the state.  Based on what you have stated, it does not appear that your daughter received NY source income while a non-resident of NY, and therefore, income of this type does not appear to be an issue.  

While we do not know where in NY your daughter lived, as a non-resident, your daughter was not liable for New York City personal income tax, and would not be subject to the city of Yonkers tax if your daughter had no income derived from the city of Yonkers.

Essentially, what your daughter's NY part-year resident tax return should reflect is that all income received while a NY part-year resident, plus income from New York sources while a nonresident, has been taxed.  If it shows something different than that, you can provide additional details regarding the income amounts and how such amounts were entered into TurboTax.  Additionally, it is important to enter residency dates into TurboTax that reflect the actual part-year residency period for NY.  

@RBfromTX

[RBfromTX]

Thank you for the detailed response. It was very helpful.