RSUs vesting income after moving from CA to NY

[CoffeeBreak]

For 2021 I'm filing my state taxes as a part year CA resident and a part year NY resident.

I moved from CA to NY in September of 2021 while continuing to work for the same employer (I was moved from CA to NY office). I was granted multiple RSU awards back when I was working for my CA company and I'm going to continue to vest them in the next few years.

1. For 2021, I use form IT-203-F form (New York State Multi-Year Allocation Form) Schedule B(s) to allocate  RSUs income in my NY state tax return. This way I effectively end up paying NY state taxes only on the portion of my 2021 RSUs vesting income (let's call it `A`). At the same time the other portion of my RSU income is taxes by CA (let's call it `B` = 1 - `A`). Does that sound correct?
2. For 2022 and onwards, I will need to pay CA income tax on my RSUs and I will be able to take a tax credit on my RSU income while filling my NY state tax return. Does that sound right?

Does the usage of IT-203-F Schedule B(s) form sound correct? 

[GeorgeM777]

Question 1 - It depends where the services were performed that resulted in you obtaining the RSUs.  If those services were all performed in CA, then you would include the value of the RSUs on your CA non-resident return, pay the tax, and then obtain a credit from NY for having paid tax to CA.  If the RSUs that have vested are for services that you performed in NY, then that income would be subject to NY tax but not CA tax.  

Question 2 - We need some additional information.  The RSUs that you will receive in 2022 and beyond, are those RSUs all based on the services you provided to your company while you were working in CA?  If yes, then the RSUs are likely taxable by CA, but you will file a non-resident CA tax return, pay whatever tax is due, and then obtain a credit from NY for having paid tax to CA.  

Here is a link to a recent TurboTax article that discusses, in a step by step method, How to enter New York State income as a part-year resident in TurboTax.  

@CoffeeBreak

[CoffeeBreak]

Thank you for your response @GeorgeM777.

Re question 1: The services were all performed in CA. For 2021, I cannot file as non-resident CA return as I was a CA resident for the first 9 months of 2021. For this reason, I'm filling a part-year CA return. For a part-year CA resident I do not think that a tax credit approach is a viable one. That's why I think I need to use IT-203-F form (New York State Multi-Year Allocation Form) Schedule B(s). Does is sound OK? Can I use tax credit approach if I'm a part-year resident in both CA and NY? 

Re question 2: All of the RSUs that I'm going to vest were obtained while working in CA so I guess what you said makes sense: for 2022, file a non-resident CA return and claim a tax credit on my NY resident tax return.

[GeorgeM777]

Thank you for that additional information.  Yes, TurboTax will likely prepare IT-203-F for you because you do need to allocate income to NY and need to allocate income to CA.  

Because  you were a resident of New York State for only part of the tax year, you are subject to New York State tax on all income you received while you were a resident of the state and on income you received from New York State sources while you were a nonresident.  It does not appear that you received income from a NY source while you were a non-resident of NY because all such income came from a CA source.   

To compute the amount of tax due, TurboTax will prepare NY Form IT-203, Nonresident and Part-Year Resident Income Tax Return. You will compute a base tax as if you were a full-year resident, then determine the percentage of your income that is subject to New York State tax and the amount of tax apportioned to New York State.

Yes, for 2022, it looks like you will seek to obtain a tax credit from NY for having paid tax to CA on income that NY will also seek to tax. 

@CoffeeBreak

[notaCPAjustgenetics]

At the risk of reopening an old thread, since I landed on this searching for info on RSU taxation when moving interstate I want to add that NY state rules around this are more complex (& painful) than mentioned in the other answers and could include more tax due for the OP in future years due to their NY dates and move.

There is a grant-to-vest rule for RSUs which bases the amount of New York source income for the RSUs on the number of days worked in New York during the entire grant-to-vest period. e.g. for a 3 year vest the fraction is based on days worked in NY divided by the total of days worked (likely hundreds) in those 3 years.  

In the case of OP this calculation would be from the point the RSUs were granted so would include their days in California pre-move along with days they perhaps visited NY office as non-resident during those California years, and then of course racking up NY 'work days' after moving to NY with those still-unvested RSUs in hand.

Interesting article on it linked below, with detailed examples and also has discussion around the workday count [beyond the NY state worksheets on the topic]: “The Nuts and Bolts of Taxing Stock-Based Compensation in New York” (July 2022)

Link: https://www.hodgsonruss.com/assets/htmldocuments/The%20Nuts%20and%20Bolts%20of%20Taxing%20Stock-Base...

Hope this helps someone in the future, or at least @CoffeeBreak