Trailing RSU tax and property tax in New York and California

[douglasjia]

In January of 2022, I relocated from NY to CA. So, for the first paycheck (for base salary) I get in January, I have state tax withhold from both NY and CA; and all future paychecks only have CA withholding. But due to trailing RSU liabilities, the RSU was granted when I was in NY and vested when I was in CA has state tax withholding from both NY and CA. So I am wondering, in this case, should I report NY non-resident tax first and then claim a tax credit on my CA return on the income from my 2022 first paycheck and RSU with both NY and CA withholding?

The second question is, I purchased a home in CA in 2022. The interested I paid in 2022 was about 40k. When I file NY state non-resident return, Turbotax calculated the deduction for this home mortgage interest is around 20K; when I file CA state return, Turbotax also calculated a deduction for the mortgage interest around 20K. So, I am wondering, can I claim tax deduction for the mortgage interest for both CA and NY state return?

[GeorgeM777]

Yes, prepare your non-resident tax return first (New York), determine what, if any, taxes are owed to NY, and then when you prepare your California return, you can claim whatever credit is available for having paid tax to NY.  

No, as to your second question, as it appears your allocation is not balanced.  The majority of your mortgage interest should be allocated to CA.  In the NY section of TurboTax, after the screen that relates to NY additions and subtractions, you should see the screen, Your mortgage interest and points deduction.  Perhaps you have already seen this screen, but it is here where you can allocate to NY, that portion of your mortgage interest reported on your federal return.  From your post, maybe that $20,000 amount was already entered in the NY field.   However, you need to adjust the amount being allocated to NY to reflect your period of non-residency while you were earning income from a NY source.    

[douglasjia]

Thanks for the reply!

For the RSUs that were granted in NY but vested in CA over 2022, should I consider them as NY income and allocate these income to NY?

[GeorgeM777]

Not entirely.  Calculate the number of months from grant date to vesting date.  Then divide the number of months allocated to NY by the total number of all months (i.e. from grant date to vesting date) and the resulting percentage is what you can allocate to NY.  For example, let's say the number of months from grant date to vesting date was 12 months.  Let's also say that for 9 of those 12 months you were in NY.  For the final 3 months in this example you were in CA and the RSUs vested on the last day in the 12th month.  You would then divide 9 by 12, and the resulting percentage is 75%.  Therefore, in this example, allocate 75% of the RSU income to NY.  The remaining 25% is allocated to CA.  

@douglasjia 

[douglasjia]

Wow, that's sooooo complex....I will allocate all of them to NY first and get tax credits for CA. But thank you for your explanation and examples! 

[whatisthistax]

I have the same issue of NY grant RSU and moved to CA. Did you end up allocating all to NY? What was the result?

@douglasjia

[DavidD66]

You need to determine the percentage of workdays during the period between the grant date and the vesting date and the number of days worked in New York during that period.  Divide New York work days by total work days and multiply that by your RSU income, and that is your New York compensation related to your RSUs.  

According to the New York State Department of Taxation and Finance:

In the case of a nonresident individual who works in New York State, the portion of the individual's compensation related to stock options, restricted stock, and stock appreciation rights that is New York source income is determined by multiplying such compensation by the New York workday fraction.  

The New York workday fraction is a fraction whose numerator is the number of days worked within New York State for the grantor during the allocation period and whose denominator is the number of days worked both within and without New York State for the grantor during the allocation period. 1 The allocation period may span multiple years and may include periods in which the nonresident was formerly a New York State resident. See section 132.18 of the Personal Income Tax Regulations for more information about what constitutes a working day within New York.