Non-Resident Taxed in NY

[taxtoddnyc]

Hey Folks,

Could use an opinion or two on this. Client went on the road performing in late 2008, completely giving up his NYC apartment, and changing his residency to Ohio. He's still on the road, but the employer apparently didn't get the message on the address change and continued reporting nearly 1/2 his 2009 income to NY State (but not NY City) and of course continuing to withhold NY tax. Obviously the simple way to rectify this is to file the NY IT-203 with the reported income, let them have the tax due, and just take the credit on his OH return... but I'm concerned about what he'll lose on the difference in tax rates.

Here what I'm wondering... would it be possible to file the NY return showing NO NY income, and get a full refund of the taxes withheld. Would this require a mail-in return with a written explanation? Any thoughts or experience concerning state income being mistakenly attributed is appreciated.

[Don in Upstate NY]

... Client went on the road performing in late 2008, completely giving up his NYC apartment, and changing his residency to Ohio. He's still on the road, but the employer apparently didn't get the message on the address change and continued reporting nearly 1/2 his 2009 income to NY State (but not NY City) and of course continuing to withhold NY tax. ... would it be possible to file the NY return showing NO NY income, and get a full refund of the taxes withheld. Would this require a mail-in return with a written explanation? ...

Without addressing the issues of residency and domicile, a person who works part time in NY should get a W2 showing Federal wages, NY wages, and Federal and NY withholding. Per the instructions for the NY W2, the NY wages should equal the federal wages. The employer does not do an allocation of wages to NY state. That is done by the taxpayer on the IT-203.

Just fill out the IT-203 showing no NY wages (if he didn't perform in NY during 2009) and he should get a refund of the withholding. No need for a paper return or explanation -- if the folks in Albany have a question they'll contact the taxpayer (or you).

[jainen]

>>Client went on the road performing in late 2008, completely giving up his NYC apartment, and changing his residency to Ohio. He's still on the road,<<

If you fully understand the client to be an Ohio resident, file the way you want to. I would guess New York won't give it a thought--but don't assume anything about this. Document your position in case you have to defend it later. In my opinion it sounds like he may not have established a domicile in Ohio, which under New York law probably still leaves him as a resident of New York. Remember, Ohio and New York have separate laws, so it is entirely possible to be a resident of BOTH states at the same time!

[schirallicpa]

Without addressing the issues of residency and domicile, a person who works part time in NY should get a W2 showing Federal wages, NY wages, and Federal and NY withholding. Per the instructions for the NY W2, the NY wages should equal the federal wages. The employer does not do an allocation of wages to NY state. That is done by the taxpayer on the IT-203.

Just fill out the IT-203 showing no NY wages (if he didn't perform in NY during 2009) and he should get a refund of the withholding. No need for a paper return or explanation -- if the folks in Albany have a question they'll contact the taxpayer (or you).

Agreed!

[HV Ken]

Are you saying that the W2 TP received shows both states and the income allocated equally between the two states, such that when added together they equal the federal amount ? I know what Don says about how the W2 is supposed to look, but some of the ones I have seen are done as I stated above.

Perhaps it would help if we knew exactly how the state portion of the W2 was filled in....

[taxtoddnyc]

Just to address some of the above questions/issues... as I mentioned, the NY wages on the W2 were about 1/2 of the Federal total. The OH wages are significantly less, likely reflecting only the weeks actually worked in Ohio during the tour. I wish I could say this situation is uncommon, but as I prepare a lot of performer's returns, what frequently occurs is the employee neglects to mention the residency change to the employer until well into the gig, (and heaven forbid they should actually look at their pay stubs to see where the taxes are going), so the blame for the error is usually on the employee due to simple ignorance. What apparently happened in this case is the employee informed management of the address change about 6 months into the year, thereby causing the NY withholding to cease. As for the residency issue, since he was working away from home the entire year, it's perhaps a little iffy to definitively state that he's an OH res., (though that's his permanent address). But there's little doubt that he's no longer a NY res., having given up his long-time abode in '08, (and as anyone who's ever had an apartment there for any length of time will know, is a very big step.. i.e. once you choose to leave, getting back in can be very difficult).

In any case, I believe I'll file the NY return with $0 NY income, and deal with any consequences that come up. I'm sure the client will be able to provide ample proof of his OH residency if it's questioned, and I'l advise him to make sure his ducks are in a row on that issue. Many thanks for your advice and opinions... this forum seems always to fill in the gaps, and for that I'm very grateful.