Dependents working out of state but living home

[rgcosta]

I have two sons away in college.  One in South Carolina and the other in California.  We live in NY and that is their permanent address.

They both had jobs in 2022 in stores physically located in those states.

On the W2 for the California job, the company is located in Florida.   Not sure yet about the SC job, but it is a national chain so I assume it will be similar.

Will they need to pay CA and SC state tax?

Thank you,

RC

[MichaelG81]

It depends, according to the New York Dept. of Taxation and Finance; they may receive a credit for taxes paid in another state. For California and SC they may have to pay taxes for income received while working there as a resident, non resident, or part year resident.

If I live in New York but work in another state, am I taxed twice?

A person who lives in one state but works in another may have tax liability in both states, but typically will receive a tax credit in their state of residence to eliminate double taxation of that income.

If you were a full-year or part-year resident of New York State and you had income sourced to and taxed by another state you may claim a nonrefundable resident credit against your New York State tax. This credit is allowable only for the portion of the tax that applies to income sourced to and taxed by the other taxing authority while you were a New York State resident.

For more information see, IT-112-R-I, Instructions for Form IT-112-R New York State Resident Credit.

Here is an excellent source of information to see what qualifies as resident, nonresident, and part year resident; considering domicile rules from New York.

@rgcosta 

[Hal_Al]

Q. Will they need to pay CA and SC state tax?

A.  Yes, but they will get a credit, or partial credit for what they pay those states, on their NY return. 

This is the general rule: The income is work state (WS) source income since it was earned there. Resident States (RS) tax all their resident's income, regardless of where earned. You will file a non-resident tax return for the WS and report the WS income. You will file a full year resident return for the RS, reporting all your income. The RS will give you a credit, or partial credit for any tax paid to the WS. This applies to out of state students, who are considered still residents of their home state, where their parents live. 

The rules will be different for reciprocal states. But, that doesn't apply in your situation.

For state filing requirements, the WS does not, usually, go by what you earned in their state but by your total income . For example, if WS has a $10,000 filing requirement and your total income for the year was $15,000; you would be required to file even though you may have had only had $300 of income in that state. But if your total income was $9,000 you would not need to file.

Filing Requirements: https://ttlc.intuit.com/questions/2903200-do-i-need-to-file-a-state-return