home office in two states

[baumgartner-chuc]

I changed residency in 2022 from New York State to Florida and, included in this move, was a change in my consulting LLC registration from NY to FL.    I now own homes in both states and maintain a home office in each home.   The company I presently do consulting work for is located in CA and this is the sole source of my business income. 

My question is “Do I need to file income tax with NYS?”    I maintain a home office in the state for 5 months of the year, but the income is earned in CA and I pay nonresident tax to CA.  

My reading of the tax code is that I should file a nonresident NYS tax and apportion 5/12 of my 2022 business income and 5/12 of my paid CA income tax with this filing.   Is this correct?     The home office size and office expenses are different for the two locations.   Do I apportion 5/12 of the total for NY or is this handled differently?    So how do I handle all of this in TurboTax?

[VegasTaxMan]

Hi @baumgartner-chuc . Yes, you will need to file form  Form IT-203 Nonresident and Part-Year Resident Income Tax Return, however, you would not file as a "non-resident", but as a Part-Year Resident as you did actually domicile in NY during the tax year.

You are required to pay taxes to NY on income that you earned as a resident of NY, regardless of the source of that income. Your CA source income would therefore be potentially subject to being taxed in both CA and NY.

In order to prevent both states from collecting taxes on the same income, the state in which you are a resident - NY in this case - allows you as a resident to claim a tax credit on your NY State tax for the lesser of what you actually pay CA (net of any refund) or what you would have had to pay NY on that portion of your income. So if you had, say, $20,000 withheld in CA taxes, of which $1000 was refunded after you filed a CA return, you paid CA $19,000 in tax on your CA earnings, and you will be able to claim a credit of up to $19,000 on your NY return, depending on what you would actually have had to pay NY.

Regarding the income apportionment, yes, that is an acceptable way of doing it, using the formula you proposed, 5/12. If you know the actual amount earned during the time in NY, then that would be the preferred  way of handling it should you ever be questioned by a NY taxing authority. 

Finally, when using the Turbo Tax program, you would be filing a multistate return. First complete the CA Non-Resident return, followed by the NY Part-Year resident return. During the entries, the NY return will ask you both for the amounts earned in NY and also for the taxes paid in CA to calculate the correct amounts due.

I hope this helps 🙂