W-2 by JP Morgn federal wage $34K incorrectly split between VA (20K) and NY (34K)

[Greta]

NY wage should be $14K, right? Young student client may not know how to get a corrected W-2. Is there a subtraction line on the NY return where I can deduct the Virginia wage? Otherwise, even with OSC credit in Virginia (where client resides), wouldn't he be paying twice on 20K?

[sjrcpa]

NY says all wages go in the state box.

NY has provisions on the state tax return for allocating wages to NY 

[Skylane · Accepted solution]

NY has an allocation worksheet for days worked out of NY. Generally speaking, it serves to transfer some of the NY state wages to the home state. 

i used to use it for NY non resident employees who would have business trips outside NY (the intended use)

The worksheet is based on total working days, weekends, etc. You may be able to make it work…. Note that days worked from home are not permitted 

edit: this would be strictly a workaround. Make sure your on firm ground and document the w2 is incorrect 

[qbteachmt]

It's not a split. You cannot add States together to get Fed. Every State has its own reporting and allocation method. The W2 people are nearly always doing it right.

[rbynaker]

Welcome to "why I stopped doing NY tax returns."

NY has a ridiculous form IT-203-B that you have to fill out to allocate the wages based on the number of days spent in-state.  'Cause everybody keeps track of that.

It gets even more fun if there's a bonus or employer stock grant that was partially earned while working in NY.  That gets you an IT-203-F (which wasn't supported by ProSeries when I left).  Because everybody knows exactly how many days in the last four years they worked in and out of NY.

[sjrcpa]

You're right Rick.

In Greta's case i have a feeling it is a part year situation so might be relatively easy.

[rbynaker]

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@sjrcpa wrote:

You're right Rick.

In Greta's case i have a feeling it is a part year situation so might be relatively easy.

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I've been known to take the difference between Fed & VA and call it NY.  If NY wants the IT-203-B they'll ask for it, right? 🙂

Sometimes you can get the data from a friendly HR department.  But at this point I think most of them have been replaced by robot portals.

[Greta]

How to enter part-year dates when student spent 3 summer months of internship in NY, the rest in Virginia. The question "on which date did you move into NY" can't be answered; unless I artificially give him 3 different months Oct-Nov-Dec. Same question in part-year VA.

So perhaps I'd best say he's a full-yr VA resident and use OSC as an attachment to VA. Should he pay NY fully on 34K because JP Morgan is in fact "sourced" in NY. But why does the W-2 give him $20K VA wage. I'm confused.

[Skylane]

Rick, 

NY tax rate is higher than most others… had a few execs spent 4+ weeks traveling… the difference in taxes could be 2k+

[qbteachmt]

"when student spent 3 summer months of internship in NY, the rest in Virginia."

Is this what you have?

You don't seem to have a person who moved residency. This doesn't seem to be a part-year resident, even. You seem to have a person who worked for a NY firm, who did so with earnings while in VA (telework or remote) and then onsite in NY as a temporary assignment.

NY is taxing all of it.

"If a person is not a New York resident, however, he or she is subject to New York income tax only on income that is sourced in New York. The source of compensation income generally is where a person works; thus, a nonresident employee’s compensation from working for a New York employer in an office in New York generally is taxed by New York.

If a nonresident employee of a New York employer telecommutes from his or her home outside of New York, days spent telecommuting are generally considered days worked in New York if the nonresident’s principal office is in New York."

VA is taxing the amount earned while in VA.

For the $20k: "Every resident of Virginia, including domiciliary residents, is liable to state income taxation as a resident. This means that they are subject to Virginia income tax on their entire income, whether it came from sources in or outside of Virginia."

For the $20k that is part of the $34k: "To help prevent payment of taxes to multiple states on the same income, Virginia law provides a credit for taxes paid to another state. If any part of your Virginia taxable income is also taxed by another state, this credit may be available to you. To claim it, you will need to include the Schedule OSC and a copy of the return you filed with the other state with your Virginia income tax filing."