NYS filing - a possible program error?

[jobo_bobo]

I am trying to do my DC and NY state taxes. My filing situation is as follows:

1. I am the primary filer and my residence is full year in DC. My wife has full year residence in NY.

2. Under NY state return section, General Residency is selected as non-resident form IT-203. This is the software's recommendation.

3. Under New York City and Yonkers allocation, I am listed as a non-resident of NYC and Yonkers, and my wife is listed as Full Year resident of NYC and nonresident of Yonkers.

4. In DC my residence is listed as Full Year Resident (form d-40). There is no place for residence for my wife. Also, in DC the filing status is set as Married Filing Separately on Same Return.

Problem is that when I print the forms, and go to form IT-203 for NY section, my wife's name is listed as the main filer and the spouse's area is all blank except for my SSN number. That's all. My name and info should be where her name and info is, and her info should be on the the spouse line. This is definitely not correct!  Married status on that IT-203 form is "Married filing joint return". When i go to the section E, it shows correctly that I didn't live in NYS but my spouse lived there for 12 months.  However, when I go down to points 51-55 where there should be NY city tax listed, all values are 0. Why is that? Please help. Thanks!

[SusanY1]

To properly file the New York tax return, you will need to either elect to treat the non-resident spouse as a resident or file a separate tax return for the resident spouse, including only the income that belongs to that spouse.  

Filing a separate return in New York is generally the preferred method. You can see more about what the state of New York says about this by clicking on this link: New York filing status.

The District of Columbia makes it easy for you to handle your nonresident spouse income with their "Married Filing Separately on the Same Return" option. New York does not have a similar status.  Therefore, you have to take some extra steps to file a Married Filing Separate tax return for the state of New York only.  

Here are the steps for filing a separate NY return for your spouse:

The TurboTax CD/Download product (found HERE) is the preferred product to file your federal return jointly, and your state return separately.     

Here is how to do this in TurboTax CD/Download:

1. Prepare your joint federal return in TurboTax as you normally would. 
2. Prepare a mock Married Filing Separately (MFS) federal return for each spouse who will file separately in any state.  You will not file these federal returns, but they will be used to create the state returns.
3. For the separate return, include only the income and deductions that apply to that state. 
4. File your joint federal return as prepared in the joint file.
5. If filing jointly in one state, transmit this return with your federal file.  Otherwise, transmit only your federal file from the original MFJ return.
6. Using the mock MFS file that you have now created, file each state return separately.  You may have to print and mail state returns when filing separately from your federal return. 

You can transfer the data that you have already entered into TurboTax online to the desktop product by following the steps found here:  Transferring from TurboTax online to desktop.

If you prefer to continue to use online TurboTax, you follow the same instructions. However, instead of creating three files on your computer, you will create three TurboTax accounts, each with a unique user name and password.

[jobo_bobo]

@SusanY1 . Your answer doesn't address my problem. Here is what I am asking about:

"Problem is that when I print the forms, and go to form IT-203 for NY section, my wife's name is listed as the main filer and the spouse's area is all blank except for my SSN number. That's all. My name and info should be where her name and info is, and her info should be on the the spouse line. This is definitely not correct!  Married status on that IT-203 form is "Married filing joint return". When i go to the section E, it shows correctly that I didn't live in NYS but my spouse lived there for 12 months.  However, when I go down to points 51-55 where there should be NY city tax listed, all values are 0. Why is that? Please help. Thanks!"

[SusanY1]

The calculations aren't showing because the form can't be filed in this format. You cannot file the return as prepared, using MFJ but listing you as a nonresident of NY.

New York requires either that you include the spouse as a resident or file the return Married Filing Separately in New York.

From the New York Department of Taxation and Finance (in the link previously mentioned):

[When] one spouse is a New York State resident and the other is a nonresident or part-year resident... (Y)ou must either:

• file separate New York State returns using filing status (3); or
• file jointly, as if you both were New York State residents, using filing status (2).

Filing status 3= MFS and filing status 2= MFJ (but treating you as if you were a resident, meaning your income would be taxed).  

TurboTax state programs don't work with each other, so these sorts of things require manual adjustment.  I am sorry that I didn't explain this part more clearly in my initial answer. 

The return as you have prepared it cannot be filed, and that's why it's not calculating any numbers.  

[jobo_bobo]

Thank you, @SusanY1  I changed my portion to be NY resident for the full year.  So, now we are both marked as full year NY residents. The refund numbers haven't changed, that's good. But the only thing that did change is that now in part E it says in both boxes that I and my wife have been in NYC for 12 months. The very top of the form still lists the spouse as the main filer (name, date of birth, ssn), and the second line for the line is all blank except for my SSN.  Also, the NYC calculations are still all 0s. 

Thanks again.

FYI... I am using desktop Deluxe version and NOT the online one.

[SusanY1]

I will look into this further.  While I am doing that, I would like for you to try one more thing, please. 

Save a copy of your TurboTax file to your computer and then use Save As to create a second file (so that you can return to the original file later if necessary.)  

Using the File menu, choose the option Remove State Return.   This will not uninstall your state program but will clear your state data. 

Save the file and close TurboTax.   Re-open TurboTax and allow it to check for updates.  Next, start the state tax return again and see if this will resolve the error of the 0s in your calculation. 

Please keep us posted!

[jobo_bobo]

Hi @SusanY1 . So I found it that  in NY I don't pay city tax if I am not a state resident. I only pay state taxes. So, now I am trying to figure out if I can be a city resident and not a state resident. The thing is my wife stayed with me in DC for a little while and was back in NYC for when she worked. Kinda going back and forth. The software allows me to select:

1. DC full year resident for both - married filing separately on the same return

2. NY State non resident for full year. I assume it is joint return, so the selection applies for both. 

3. NY City part allows me to select non-resident for myself and a full year resident for my wife.

4. In NY State I indicate that both my wife and I maintained our Brooklyn residence for the entire year. We own the condo and pay mortgage on it.

So with the settings above I am getting the biggest refund. But since I noted that I am not NY state resident, the city taxes are blank. But can I be a resident of NYC but not the state at the same time? Or is it ok to remove the NYC residence as well? Actually it is my wife that is the problem here. Filing the states separately pretty much removes all refunds, so it's not very good for us.

Thanks again for your help.

[SusanY1]

When you are testing the scenario of filing MFS for New York, make sure that you have started a new tax file and that your income isn't entered anywhere in that file at all.  If your income is entered but just listed as "not earned in NY," it won't calculate correctly.  

If you've already done that and the result is still better filing jointly, I am surprised, but that happens a lot with taxes!   

1. Your DC return sounds like it's perfect the way it is.  No matter what you decide to do with NY, sticking with the Married Filing Separately on the same return is the best choice for DC.
2. If your wife spent more than 184 days in New York in 2019, she should file as a resident.  If she is a resident and you file a joint state return, you must also elect to be treated as a resident, even though you are not.  You will be able to allocate your income to income not earned in NY, but it will be combined with hers to determine the tax rate that applies to the NY-source income. 
3. Since you are not a New York state resident but are electing to be treated as one for tax purposes, it is possible to be a nonresident in NYC for tax purposes while filing as a state resident for tax purposes. (Defies all logic, doesn't it?) 
4. You should file the returns using the status(es) that get you the best result, but the residency determination should be made based on the facts and circumstances.
   • Since your wife was back and forth, you'll need to determine if she was in NY more than the 184 days or otherwise meets the NY definition of a resident.  If you would like to see more about how NY determines residency, click on this link: New York State Income tax definitions. 

[jobo_bobo]

@SusanY1 , you are incredible. Thank you so much for your patience and help. Last final question: is it possible to be a non-resident in NY state but be a resident in NY City? The software allows for that.

Thanks again!

[SusanY1]

You're welcome!    No, you cannot be a resident of New York City while a nonresident of New York State. 

The software allows you to make this entry on the input screen, but it will flag it during the review of the return.  (You can see this by going to the Review tab, to the right of the State tab).   

[jobo_bobo]

Thanks @SusanY1 . The software does NOT see it as an error. So, I believe it's a bug that needs to be addressed by the developers at Intuit. This is why I have such a hard time now: my taxes are wrong as you pointed out and the software doesn't flag it as such. All checks are passed with success and no issues to fix.

You've helped me a lot. Many thanks!

[SusanY1]

That is interesting that you didn't get an error during the review. 

 I got a "Check this entry" alert when I ran my review with myself marked as a nonresident of the state but a resident of the city.  I will make sure the proper department takes a look at this to see why you would not see the same thing!  

[jobo_bobo]

Thank you, @SusanY1 .  Please make sure they know it is the Deluxe for Mac version of the software. Thanks again.

[SusanY1]

 Thank you, I will update my report to include that additional information.  That also explains why my experience was different when I worked to duplicate the issue in my software!  

[NonNYer]

I have another possible program error....    The IT-203 front page of tax form (for Nonresident and Part Year Residents) does not appear to load the spouse's name portions (2 fields) and the spouse DOB.  It does load spouse SSN okay.  It's just the front page for this problem.