Residency & state taxes

[flyerii]

I am working on taxes for my son.  We live in California.  He went to school in NY for his undergraduate work, worked for the summer, and returned back to the same school in NY for his graduate work.  So, he was effectively a student for the year, and a summer internship.

During his summer internship, the company put him up in NYC, but the office was in NJ.

He received a W-2 which included:
- The address on the W-2 is the NYC address where the company put him up.

- State taxes in CA, NJ, and NY. 

- The sum of the CA and NJ state wages (Box 16)  is the total in Box 1, with state taxes in Box 17 

- The NY state wages is the same as the total in Box 1, with a small amount deducted in Box 17

So, I have a few questions:
(1) What state is he considered a resident of?  CA since this is home address?  And if so, is he considered a non-resident of NJ and a part-time resident of NY?  Or is he considered a resident of  NY?
(2) What order should do the calculations based on (1)
(3) How do I handle double-taxing in these 3 states?

Any guidance would be appreciated!

[MarilynG1]

(1) Yes, he is a California resident.  If he lives there when not in school or summer undergrad work, has a Driver's License, Voter's Registration, Bank Account, etc. there.  You normally don't become a resident of another state unless you intend to establish residency there.  New York is an exception; if you live there over 184 days, they consider you a resident.

(2) He should file a Non-Resident return to both New York and New Jersey, since both states deducted taxes on his income.  Prepare the Non-Resident Returns first.  The address on the W-2 is irrelevant to the IRS; only the Mailing Address you enter on your return counts.

(3) Basically, ALL his income is taxable in California; his resident state.  In the California interview, he will be asked for 'taxes paid to other states' and receive credit for the taxes he paid in NY and NJ, against the tax CA would assess on his total income.  

Here's detailed info on How to File a Non-Resident State Return and Multiple States to help you.  

@flyerii 

[flyerii]

Marilyn:  thank you for the quick response and the clear guidance.

I was able to complete the NJ non-resident form.  In the NY return, there are 2 options, I also indicated that my son is a non-resident.  However, there is a question about how much of my son's wages should be allocated to NY.  I am entering 0, but this raises a warning message indicating that e-filing will not be possible.

Do you have a recommendation on how to handle this?  

[ErnieS0]

If I’m understanding your original question, your son lived in company housing in New York City but worked in New Jersey. Taxes were withheld for both NJ and NY.

If that’s the case, then yes, file a nonresident NY return, reporting $0 NY wages. 

You will not be able to e-file a NY return with $0 wages. Mail the return, which is good since your return will not match the W-2. Attach a statement explaining that your son’s employer withheld tax by mistake. A letter from his employer would be helpful.

We suggest sending your return by certified mail with delivery confirmation so you have proof of filing.