How do I attribute bonuses paid in one year earned in multiple states in the prior year?

[ToddL]

How were they reported to you - W-2 or 1099-MISC? Were they reported by state?

[ASUS06]

They were reported in a W2 (2017). In the prior year, I worked in IL and NY (more or less 50/50 but less than 183 days in NY/C). My employment contract established the amounts to be paid based on performance. The amounts were shown by state but NY amounts always reflect the federal amount.

[ToddL]

NY will always reflect the federal amount since they use your total income to calculate NY tax (then then they prorate it baed on the percentage actually earned in NY). What is your state of residence?

[ASUS06]

In 2017 I was a full year resident of NY. I moved to NY in late July 2016 but the bonus was paid for activities in 2016 that were performed both in IL and NY. Also how do 401k contributions also factor into the calculation,If all the contributions were made while NY resident ?

[ToddL · Accepted solution]

If you were a resident of NY for all of 2017, then all of your 2017 income is taxable by NY. Any 401K distributions in 2017 are attributable to NY, as well.

If your employer did not withhold IL tax for any part of the bonus paid in 2017, you do not need to file an IL return. 

If your employer did withhold IL tax for a portion of the bonus paid in 2017, you should file a non-resident IL return to get a refund of the IL tax paid. 

Individuals are "cash-basis" taxpayers, meaning their income is earned and taxed in the year it is received. If the bonus was paid in 2017, it is earned and taxable in 2017. 

(How your 2016 earnings are taxed is another question).