New York Alimony

[mdamato]

Hello,

My client has lived in North Carolina the full year after her separation from her New York City husband. For state tax purposes, alimony is deductible to the husband in New York and alimony is not considered income in North Carolina. Will my female friend in North Carolina need to claim this income in New York State and pay taxes on it even though she lives in North Carolina?

Also, my NC client has a remote job for a California company. As I mentioned, she has lived in North Carolina since the beginning of this year however, she never changed her W-4 so they have been withholding taxes for New York versus North Carolina. She will be changing it tomorrow, however, should the employer fix this with both jurisdictions for what was withheld year to date? I had a similar situation a few years ago and New York was very difficult to work with when the individual's tax return was filed for a full refund. It took so many months to resolve.

Thanks so much

[sjrcpa]

"should the employer fix this with both jurisdictions for what was withheld year to date? "

No. The Employer did not make any errors. The employee, your client, did by not having correct paperwork on file for payroll.

Yes I imagine she will have trouble with NY. Once you're a NY resident they don't like to let you go.

[BobKamman]

I think it depends on whether the employer wants to be a nice guy.  There is a procedure for refunding the employee and correcting the amount withheld (to zero) before the end of the year.  It doesn't hurt to ask:

(iii) Overcollection discovered in subsequent calendar quarter. Where more than the correct amount of New York State personal income tax has been deducted from an employee's wages and the employer discovers the overcollection after the filing of the quarterly combined withholding and wage reporting return for the calendar quarter in which the overcollection occurred, but prior to filing such employer's last quarterly combined withholding and wage reporting return for the same calendar year, such employer must correct the overpayment to the Department of Taxation and Finance by entering the correct amount of the withholding tax liability on an amended quarterly combined withholding and wage reporting return. The employer must attach to such amended quarterly combined return an explanation of the computation of the overpayment and must also indicate whether or not such employer has repaid the overcollection to the employee. Where an employer shows an overpayment described in this subparagraph on the amended quarterly combined withholding and wage reporting return and has repaid the overcollection to the employee, such overpayment may only be refunded; the employer may not elect to credit the overpayment to a subsequent calendar quarter.

https://govt.westlaw.com/nycrr/Document/I50e94685cd1711dda432a117e6e0f345 

[Terry53029]

In answer to your question on taxability of alimony, I don't think your client has to pay tax to NY. Here is a link to an old court case on the subject.

 chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.tax.ny.gov/pdf/memos/income/m85_7i.pdf

as far as NY withholding I would think it would be easer to just file a nonresident NY return to get back the NY withholdings

[mdamato]

Thank-you very much

[mdamato]

Thank-you very much