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lzo
Level 2

"Year end" bonus earned in one state, taxed in another?

Hi -

Have lived my entire life in Texas - with no state income tax

Recently moved to the Northeast, and now have state income taxes

I got my year-end bonus paid out after the move, and the state taxed the bonus.

 

The bonus was for work performed in the previous year, where I lived in Texas, but paid out after I moved.

Is there anything I can do to get a refund from the state for that amount?  Or is it all income, regardless when earned or where, is taxed?  I'm thinking it's probably the latter, but just want to get clarification

 

I wish I'd done some more research, as I would have postponed my move for another few weeks if it would mean not having to pay state income tax on the bonus amount!

 

Thanks in advance for answers

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4 Replies

"Year end" bonus earned in one state, taxed in another?

lzo
Level 2

"Year end" bonus earned in one state, taxed in another?

Thank you.  that post implies (if i'm understanding it correctly) that it's dependent on the state.

 

moving from TX to NJ - do i have any chance of getting the withholding removed?  It's completely legit - bonus paid out in July for work done July 1st to June 30th - the entirety of that time I was living in a different state. 

 

'Bonus' for me is a big, big part of my income, so it hurts having NJ taxes taken from it!

Hal_Al
Level 15

"Year end" bonus earned in one state, taxed in another?

This documenthttps://www.nj.gov/treasury/taxation/pdf/pubs/tgi-ee/git6.pdf seems to say, in several places, that you are taxed on income received while you were a NJ resident, e.g. 

"part-year resident and may need to file a resident tax return to report the income received for the period you
resided here" (page 2).  

 

This is the way it usually works, in most states, as HelenC12 said at the other TT (referenced) thread ("Generally, individuals are cash basis taxpayers.  A cash basis taxpayer is a taxpayer who reports income and deductions in the year that they are actually paid or received.").

 

But, you may want to call the NJ tax people and get specific answer.  Let us know what you find out. 

 

Being double taxed is also not unusual.  The first state may tax you because the bonus was earned there, the year before, and the 2nd state taxes you because it was received while you were a resident there.  The 2nd state gives you a credit for tax laid to the 1st state.  Since your 1st state (TX) doesn't have an income tax, you  get no credit, in your case. 

 

 

TomD8
Level 15

"Year end" bonus earned in one state, taxed in another?

Since you received your bonus after becoming an NJ resident, it is fully taxable by NJ.

 

From page 6 of the reference cited by @tagteam :

 

"As a part-year resident, your resident return must include all income you received during the time you
were a resident."

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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