Part time resident- NY state is taxing all my full federal income even though I was only a part time resident and also paid NJ taxes.

[LH95]

My tax situation is a little complicated, but basically I lived in Masachussets and New York this year- I lived and worked in Masachussets for 3 months, and then moved to NY, where I commuted to a job in NJ for 6 months and then switched to a job in NY for the last 3 months. I've gotten through my state taxes for MA as a part time resident and NJ as a non-resident, and both went fine with me being able to allocate the appropriate income as earned in the appropriate states. Now that I'm doing my NY state filing, I've gone through the activity of allocating the income I earned in NY, but at the end of the state filing, it's showing that I owe taxes based on my full income, including what I earned out of NY. I've restarted my filing a couple of times to make sure there were no typos. Any idea how I can fix this/what could be the issue? 

[BillM223]

New York is one of those states that taxes you everywhere but gives you a tax credit for taxes paid to other states. This is very common for NY/NJ situations where you live in one and work in the other.

In New York State, this is called the "New York State Resident Credit". Look for this on your NYS return, to see if you got credit for MA and NJ taxes.  Ditto with the other states. 

It will look like NYS is taxing everything, but you should be getting credit for taxes paid to other states.

[LH95]

Hi BillM223- 

Thanks for you response! Where can I see those credits? Right now, I am getting a refund in both NJ/MA, but at the end of my NY filing, it's showing that I owe a large amount (and am at risk of an underpayment penalty)...

[LH95]

Actually, I'm looking at the NY summary, and I don't see any credits.

[BillM223]

You did your New York return last (after MA and NJ), right?

If I live in New York but work in another state, am I taxed twice?

A person who lives in one state but works in another may have tax liability in both states, but typically will receive a tax credit in their state of residence to eliminate double taxation of that income.

If you were a full-year or part-year resident of New York State and you had income sourced to and taxed by another state you may claim a nonrefundable resident credit against your New York State tax. This credit is allowable only for the portion of the tax that applies to income sourced to and taxed by the other taxing authority while you were a New York State resident.

For more information see, IT-112-R-I, Instructions for Form IT-112-R New York State Resident Credit.

Look at your IT-112-R and its instructions (the link for the instructions is just above). Can you see your NYS return?

Line 23 should have the state code for the other state. Line 24a should have the tax paid to the other states. Take a look at the instructions and follow them on your return.

If that doesn't work for you, let us know.

[LH95]

I haven't filed my taxes yet, everything is pending in turbotax right now. Is there a way to see the forms before I complete the filing? 

[BillM223]

If you are using the Online product, then you cannot see your output forms until you pay for the product. Then you will be able to see them in the Print Center.

This is one reason why people buy the CD/download product - you can see the output forms at all times.

[LH95]

So is there no way to go about fixing this with the online version? 

[KeshaH · Accepted solution]

There are two things that will happen on your NY return.

1. Your tax liability will be calculated based on your income for the whole year. Then, an income percentage will be applied to that tax liability to prorate your tax based on how much income you earned while a NY resident. 

To calculate the income percentage, you will need to allocate the income you earned during the year between your non-NY period and your NY period. Allocate all income earned while you lived in NY to NY, even though you worked in NJ. This income is taxable to both NY and NJ.

2. Your prorated, NY tax liability will include tax on the same income that's taxable in NJ. You'll get a credit in NY for the tax that you paid in NJ.

To make sure this credit is calculated properly, you'll need to click Start or Edit next to Tax Paid to Another State on the Take a look at New York credits and taxes screen. You'll see a screen asking if you'd like to calculate the credit. Click Continue. On the next few screens you'll enter information about your NJ income (if it's not already populated) so that TurboTax can calculate your credit.

[LH95]

Thank you KeshaH- that solved it!