State unemployment NY and exclusion

[Maria310]

There are two confusing screens in the turbo tax software when filing my NY taxes:

1) New York Income Allocation:

 Enter the amount of federal income that was derived from New York sources. If none, enter zero.

 I'd collected NY unemployment and it auto fills the federal Income (-$XX,XXX) (unemployment      compensation exclusion). Then you enter the amount of New York source income [   ] is it the exact same value (-$XX,XXX)?

 2) Unemployment compensation exclusion:

 If you claimed an unemployment compensation exclusion on your federal return, TurboTax automatically calculates the amount of adjustment below. Enter the New York portion of the unemployment compensation exclusion. The total amount is auto filled ($XX,XXX), then enter NY source Portion [ $XX,XXX ]. I'm confused why this is the exact number as in the above 1) "NY income allocation" except it it positive in 2) instead of negative.

I guess my question is what I should enter for the NY source portion? I don't know how the exclusion is handled in terms of being NY sourced.

[MaryK4]

Yes, if you received the unemployment from the state of New York, you enter as NY Allocation as the federal amount.

For the Unemployment Income Exclusion, New York is not excluding the exclusion of the unemployment income, so it has to be added back.  Because of the way the IRS requires it to be reported, on the federal return, it is added then subtracted.  For the New York part, it has to be added, subtracted then added again.  

[mike247]

Can you clarify this...

"New York is not excluding the exclusion of the unemployment income" But it is, isn't it? NY is not excluding the first 10,200 of UI from taxable income. This is different from "not excluding the exclusion"

I am a non resident of NY but my UI is derived solely from NY income. I allocated 100 percent of the amount.

The next screen is asking how to allocate the $-10,200 exclusion.  Do I allocate the whole $-10,200 ( negative number)?   So is this not excluding the exclusion?

"For the New York part, it has to be added, subtracted then added again."  I think you mean...the income is added and then subtracted via the negative 10,200 ($-10,200) but how is it "added again?"

Do you mean to allocate 0 of the negative 10,200 ( $-10,200)---this seems as though it would add the income to NY but EXCLUDE THE EXCLUSION.  I am not sure why Turbo tax is doing it this way. Since you know the NY tax law concerning the exclusion, this should be calculated automatically since thee are no scenarios where you can exclude the 10,200 form NY income. Can you please spell this out more simply with special attn to your double negatives? (-: thanks

[LenaH]

NYS will not exempt $10,200 of unemployment benefits from taxation. Therefore, unemployment is fully taxable on your NYS return.

For the allocation on your NYS return, please enter $0. This negative amount of $10,200 will have to be added back for your NYS return. Once this is done, your unemployment will not have a corresponding negative number as shown on your federal tax return. This will make the entire amount of unemployment taxable as per law.

Example:

On your 1040, you have $11,000 of unemployment - $10,200 exclusion, which would leave $800 taxable on your 1040.

For New York, you would have $11,000 of unemployment - $0 exclusion, which would leave $11,000 taxable on your IT-203. 

If you need further clarification, please comment below and we can assist you further. 

@mike247

[hrhodes1]

Hi, I have the same sort of question as the last comment. This still isn't making sense to me. All of my unemployment income is from NY sources but was all received in OH. I allocated all of the income to NY but don't understand how to allocate the exclusion.

"New York Resident Period" screen :

For the first screen where I am allocating my unemployment compensation exclusion of -$10,200 (listed as federal income here), it asks how much of this exclusion was received when I was a NY resident. I put 0 because I received all unemployment income in OH. This much I think is right (correct me if I'm wrong) but the issue comes a couple screens later...

"New York Nonresident Period" screen:

This is when I run into the issue. It's asking me to allocate the unemployment compensation exclusion of -$10,200 (now listed as NY non-resident income) to NY sources. I think all of the exclusion is attributable to NY since my unemployment income was all from NY. But, what do I enter in the box? -$10,200 or +$10,200? It seems entering it as a negative number would make better logical/mathematical sense, but it feels unintuitive. Please advise on if I should enter +/- $10,200 and if all other steps I explained here are correct.

Or...do I go rogue and enter 0 because NY is not honoring the exclusion? Surely TurboTax doesn't expect us to keep up with this legislation and do all kinds of mental gymnastics/read their mind. Not sure what I'm missing.

Thank you!!

[Maria2020]

I am following this thread as well. This is so confusing and it seems as if Turbo Tax does not have an answer. When I enter $0 in the New York column ( next to the -$10,200.00) it brings me to another section of underpayment penalty. This should not be this difficult. And then I read that you must do NYS first ( live in NJ) so how do you do that if you started with NJ? This is frustrating.......Can someone please direct us? We all get that NYS is not giving the tax recovery credit...So please help! Thanks, Maria

[LenaH]

In order to assist you further with your question, I have prepared a mock tax return with $10,200 of unemployment as a nonresident of New York receiving NYS sourced unemployment. Please follow the steps and the screenshots that are shown below. 

1. Edit your nonresident New York return.
2. On the page titled New York Income Allocation, enter $10,200 for the NYS portion of your unemployment (since it is from a NYS source). 
3. On the page titled New York Income Allocation, enter $0 for the unemployment compensation exclusion as it is fully taxable in NYS. 
4. Follow the remainder of your NYS nonresident return.
5. On the page Let's Review Your New York Numbers, you will see that NY starts with your federal adjusted gross income and the amount taxed looks greater than the amount of your unemployment. As you may know, NYS uses the New York Income Factor when determining your tax amount. They start with all of your taxable income and tax it at the NYS rate. Then, the state uses the allocated income (unemployment) to determine your NYS Income Factor (what percentage of your income was sourced in NYS). Lastly, NYS multiples your total tax by the NY Income Factor to determine your state tax.

In addition, depending on the amount of your unemployment in 2020 and the state taxes paid on your unemployment during the year, there may be an underpayment penalty calculation on the screens that follow Step #4. 

For more information on the underpayment penalty, please see Interest and Penalties.

Please comment below if you have any further questions. 

@Maria2020

@hrhodes1

[Maria2020]

Hi Lena,

Thank you so very much for this. You are awesome and obviously an expert 😉 Adding the screen shots enabled me to complete (correctly) the NYS tax return and with ease. Lots of misinformation out there, so again, much appreciation for your quick response!

Best,

Maria

@LenaH 

@Maria2020 

[hrhodes1]

Thanks so much!!!! That answered my question too.

[ashrpicc]

Thank you. Your advice and screen grab did help a lot for the first two pages. However, after I enter 0 for the New York Allocation Page (where it has the -10,200), a few screens later brings me to the "Unemployment Compensation Exclusion" page. Here the compensation is a positive number (10,200). What am I meant to input into the New York Source portion? 0 again? Or 10,200. Greatly confused.

[ashrpicc]

@LenaH 

Trying this again. And hoping you can help. Reposting.

Your advice and screen grab did help a lot for the first two pages. However, after I enter 0 for the New York Allocation Page (where it has the -10,200), a few screens later brings me to the "Unemployment Compensation Exclusion" page. Here the compensation is a positive number (10,200). What am I meant to input into the New York Source portion? 0 again? Or 10,200. Greatly confused.

[LenaH]

I can't seem to recreate your screen. What is your exact tax situation? 

Generally, the 10,200 is NYS sourced if you are receiving unemployment from a position you held in NY. Therefore, I would enter the full $10,200. 

@ashrpicc

[heidicat77]

I have the same question as ashrpicc.  She/he is referring to the section "Changes to Federal Income" under the section "Adjustments under Covid-19" that is called Unemployment Compensation Exclusion.  It occurs after the New York Income Allocation pages.

[Anonymous]

@LenaH 

I have the same question as @ashrpicc . The page says "If you claimed an unemployment compensation exclusion on your federal return, TurboTax automatically calculates the amount of adjustment below", so does that mean to leave that field blank and TurboTax will take care of it? It makes sense to enter the full $10,200 New York sourced portion, but I'm really not sure. Any help would be greatly appreciated. Thank you!

[ekghsk]

@LenaH  I also have the same question. Live outside of NY, received UI from NY based on previous employment in NY. 

Here is what's confusing; If i didn't enter the -10,200 but entered 0 as NY-sourced income on the NY income allocation screen, shouldn't it also be 0 on the "Unemployment Compensation Exclusion" page, to be consistent? Why should I not allocate it to NY in the income allocation but at the same time should allocate it to NY on the other page?