We moved to NY from NC on 9/2024. However, all my income was earned in NC as I traveled back and forth. How do I allocate my income?

[gthdmh]

9/23/2024 bought house in NY. My wife earned income in NY.

[MaryK4 · Accepted solution]

For your Part Year North Carolina return, you will allocate the income you earned as a resident and then the income you earned as a nonresident when you established New York residency.  For your New York tax return, you will allocate the income you earned in NC while you were a resident, then claim the credit for taxes paid to another jurisdiction for the taxes you paid to North Carolina on the nonresident income. 

[gthdmh]

Good Morning,

Thanks for the response.  Just so I am clear, even though I earned the income in North Carolina after I bought my house in New York, I still owe New York State the tax on that revenue earned.  Please confirm.  

In 2025, will all my income be taxed by NY since I will be a "full year resident" even though I will be traveling back and forth to NC?

Thanks again!

[Vanessa A · Accepted solution]

Yes.  Even though the income was earned in NC, after you became a resident of NY, that income became taxable to NY.  Your resident state taxes ALL income from ALL sources worldwide.  

For 2025, if you are a Full year NY resident and traveling to NC, your income will be fully taxed by NC and NY.  You will file your NC non-resident return first and then claim a credit on your NY return for taxes paid to NC.  If the taxes paid to NC are less than what NY would tax, you will then pay taxes to NY to make up the difference.  
 

[gthdmh]

Thanks for the help.  It looks like NY wants to charge me a fee for underpayment of taxes.  Is there a way to avoid that?  For this year, do you recommend completing NC or NY taxes first or does it not make a difference?

[MaryK4 · Accepted solution]

You can try to request an abatement of the underpayment penalty- but you should pay it in the meantime and I would not count on it.  You should complete the nonresident return first, so North Carolina.  @gthdmh