Student moved out of state for part of the year for an internship.

[AreCool]

My son is a college student that lives in NY, but moved to WY for an internship for the summer. WY is one of the states that do not have a state income tax so I know that he doesn't have to file in WY, but can someone confirm that NY will want to tax all of that income even though he was not living in NY at the time?

I am assuming that NY still considers him to be a full-time resident and therefore all income earned is subject to NY income tax, but most of the information that I am finding online is addressing those that are commuting or telecommuting to another state while continuing to live in the state that they reside in.

If my assumption that this income is taxable in NY, do you think that he is likely to be hit with a penalty for under withholding? His employer said that they were unable to withhold any amount as WY does not have a state income tax. I am hoping that NY recognizes that this income was earned out of state and will not penalize him for it, but it is NY we are talking about so...

Thank you for your assistance!

[MaryK4]

Yes, New York will tax the income because your son is still a resident.  

He will have to pay the penalty for underpayment if it was his only job, since the exceptions for the penalty does require withholding and/or estimated tax. 

The exception for penalty applies if he had 100% of his prior year tax penalty withheld or 90% of current year. (Penalty for underpaying your estimated tax), and you are correct that New York is very strict on the guidelines and in general.