Foreign Earned Income - Is that taxable by a State

[CSween1]

I moved to Italy in Sept 2024 and have been employed by a University in Italy. Why is that income being taxed by New York State.

[MaryK4]

If you are a New York state resident, you are required to report and pay tax on all income.  New York allows the foreign earned income to be excluded if it is excluded on the federal return, but you must qualify for the exclusion.  

[CSween1]

Okay, however, I moved out of New State at the end of May. Moved to PA for 3 months then moved to Italy. So I don't think I am a resident of NY

[MaryK4]

Yes, if you abandoned your New York domicile and re-established in Pennsylvania, you would file a Part-Year New York and report the income to Pennsylvania instead.  @CSween1 

[CSween1]

I did file NY as a Part-Time resident. But when Turbo tax brings over my income for the year from my Federal return it includes my income earned in Italy as income in NY. The earned income in Italy is not on a W-2 because the income was earned from a University in Italy. I have a document from the University stating my income and the taxes paid. How do I not include the income from Italy on the NY state return.?

[CSween1]

I did file NY as a Part-Time resident. But when Turbo tax brings over my income for the year from my Federal return it includes my income earned in Italy as income in NY. The earned income in Italy is not on a W-2 because the income was earned from a University in Italy. I have a document from the University stating my income and the taxes paid. How do I not include the income from Italy on the NY state return.?

[MarilynG1]

The state interviews generally bring over a number from your Federal return, and you need to enter an adjustment in the state interview, if that income is not included in that state's return.  Go through the New York interview again, and look for a screen containing a section 'Changes to Federal Income'.

Here's more info on Allocating Income for a Part-Year Resident.

@CSween1 

[CSween1]

Thank you. I did go into the Changes to Federal Income section and then the Adjustments to Federal Income however I do not see a category to exclude Foreign Income Earned after I moved out of NY.  I can see on Form IT-203 that my Federal shows a higher amount than my New York on line 31 for the NY adjusted gross income. However, for line 32 it shows the federal amount( the higher amount). And uses the federal amount in calculating the NY state tax amount. Is that correct? Why doesn't it use the NY state amount column from the form IT-203 to calculate the NY state Tax amount? Or what category can I use to adjust my Federal Income earned under the Changes to Federal Income section on the NY state return that you suggest I use.

[MarilynG1]

Yes, many states calculate state tax by a factor of federal income/NY income and multiplying that factor by state tax due on the federal amount to arrive at state tax due on the NY amount.

Look at Page 2 of your IT-203, Line 36 to see New York Taxable Income, and to see this applied to the % of tax on Line 45, and final NY tax on Line 50. 

@CSween1