Part Year Resident for NC and NY- Taxes witheld for NC on W2, NC Refund not calculating correctly as I lived there only about 2 months, TurboTax says I owe money to NC

[hellotax1111]

Hello 

My Token number is: 1298068 using online turbotax Premier. 

I have a nonresident form for IL, part year resident for NC (worked there remotely 2 months) in 2024 and part year resident for NY (worked there remotely 10 months in 2024). I'm trying to make sure I get a credit from NC for the taxes on the W2 that were witheld there since my W2 had my NC address. The employer has employees in NY and NC. 

At first, the NC tax summary said I have a refund but when I went to file it says I owe money to NC, which is not correct since I witheld money to NC on the W2 for the whole year and was only there for 2 months.  I did the nonresident form first, then NC then NY in that order. The taxable income for NC seems to be showing the amount for about 310 out of 365 days of working there instead of the 55 days of working there. Not sure why it's not showing a smaller amount for the taxable income when I had updated the income in the NC state to 55/365 times my W2 income there.

I deleted NC and NY and redid them and it still did the same thing when I went to file after showing me I had a refund initally in the tax summary. 

Can you please help me correct as soon as possible? I put the token number above. 

I was hoping to file on Mach 31 2025 to prevent the price increase but I guess I missed that. 

Thank you 

[KeshaH]

Thank you for sharing your token.

One thing I noticed is that you have all of your wages being allocated to North Carolina even though you mentioned that you only worked in North Carolina for two months. The amount of income you allocate to North Carolina should align with how much you actually earned while you lived you there. This income has also been allocated to your New York return so you're being taxed on that income twice.

Additionally, with your other income you have it all allocated to New York plus some of it allocated to North Carolina, so that income is being double taxed as well. Go back through your allocations and update the amounts that are being allocated to each state. Once you update your NC income, you should see that you'd be due a refund.

[hellotax1111]

Hello 

Thank you, yes I mentioned in my previous note I am not sure why the taxable income is showing for about 10 months in NC instead of the 2 months. I corrected that but as I mentioned when I went to file, the incorrect taxable income shows. 

The NC state tax return is labeled as non resident even though I answered in the questions that I am part year and allocated only 2 months of earned and non-earned (interest etc.) income to NC 

Do you know how to help me correct?

[KeshaH]

Although the main page that lists state returns shows Nonresident for North Carolina, when you print your return, you'll see Schedule PN that shows you were a part-year resident of North Carolina for 2024.

To properly adjust your NC income, go through your NC screens until you get to the screen explaining that you will be allocating your part year and nonresident income.

On the wages allocation screen, all of your W-2 income is showing as part year North Carolina source income. 

You'll need to add a line that says Not NC source income and split the income between the two rows. You can do this based on time spent in NC or by how much income you actually received within and without North Carolina.

For New York, look for the screen that says New York Nonresident Period. This is income that you received when you weren't a resident of New York but would be still be sourced to New York. Based on the information provided and since you've included this income on your North Carolina return, you should enter zeroes in these boxes. That will remove this income from your New York return.

[hellotax1111]

Thank you, 

Especially the part about adding another line under wages allocation for non resident income to add up to total 2024 income in NC was unclear and I think should be clarified in the instructions and the nonresident NY income needing to be 0 if we're doing a part year allocation needing to be 0 also. 

However, I started over the NC return, and the NY return did NC first and NY second and made the updates you suggested and the refund is still not calculating correctly for NC. The taxable income is still showing about 10 month of income instead of 2 months for some reason. The PY NC Income reverted back to Full Year W2 income again after I had already changed it to the NC allocated portion. So there is something in the system that is not allowing that to register especially after I select "File and Review" and the smart check is run. Because I corrected the NC PY income allocation after it reverted to the wrong amount (full year income on W2) but then when I clicked file and review and smart check the refund didn't show again. 

Are you able to help?

[KeshaH]

Can you send an updated token so that I can see the changes that were made?

[hellotax1111]

Yes

updated token is:  1298764

[KeshaH · Accepted solution]

Thank you, I was able to recreate the issue from this file. Here's how we fix it:

1. Go back to the wages allocation screen in the North Carolina return.

2. Keep the first line as the full-year income. This is pulling from your W-2 and is why the amount keeps reverting. Change the status column to Not NC Source Income.

3. Change the second-line Wages column to the NC source income that you calculated. Change the status to PY NC Source Income. This will not increase your overall income.

Now when you go to file, you should see your refund stay as a refund.

[hellotax1111]

Thank you so much after so much trial and error and back and forth it finally worked. 

Don't you agree the directions were not at all clearcut and caused this to be way more time consuming than it should have been? Are you able to share the feedback with Turbotax on that?

Thanks for your patience and helpful guidance to resolve this!

I also am paying more money now that the March 31 deadline has passed because of the confusion. 

Do you know if there is any chance Turbotax would refund me the incremental cost or no?

Either way, thanks again for all your help, really appreciate it. 

[KeshaH]

You're welcome and I'm glad that we were able to get this figured out for you.

Unfortunately, we aren't able to assist with refunds on this forum, but you can try reaching out to TurboTax Customer Support.

[hellotax1111]

Thank you!

-For future reference, does NY also tax income on rental property earned in another state?

For example, if I file a non-resident form for a rental property in IL because the rental property was there, was that also be considered NY income as well for the time I live there?

-Is there a way to go back and see the screens where I typed in responses not just the summary in the Turbotax online?