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NJ & NY wage allocations

Forum|Forum|5 years ago
April 26, 2021
3 replies
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I am looking to see if anyone has had a similar client and can offer guidance. Here are the facts:

Taxpayer worked 20 years for Company - 16 in NJ, last 4 in NY.

Taxpayer accepted early retirement/severance in December 2019.

Final payment (severance/unused vacation and sick days, etc) of $120k was made in February 2020.

Taxpayer never worked in NY during 2020.

Taxpayer collected Unemployment benefits from New Jersey in 2020.

W-2 shows $120k in wages for NY and NJ. State taxes were withheld for both states ($10k - $7k NJ, $3k NY)

I would like to put 100% of the wages into NJ, as the tax rates are lower there. But I am worried that NY will want the income declared there. (For 2019, 100% of W-2 wages were taxed in NY)?

Any guidance on this case would be appreciated.

Michael Gilligan

Lacerte Tax

This topic has been closed for replies.

Best answer by PKCPAMST

The income sourced to New York must be reported there.

Under NYCRR 20 §132.4(d, payments, such as severance pay that a taxpayer receives in consideration for “past services” upon termination of employment, are included in a nonresident individual's New York source income if they are derived from or connected with personal services performed in New York.

qbteachmt

Level 15

"Final payment (severance/unused vacation and sick days, etc) of $120k was made in February 2020."

"(For 2019, 100% of W-2 wages were taxed in NY)"

Severance Pay is the same as wages.

Sick Pay and Vacation Pay are the same as wages.

You just didn't have to show up to earn them.

Don't yell at us; we're volunteers

M

minnow150Author

Level 2

Since taxpayer lives in NJ, can I exclude the $120k from teh NY return, or does it have to be declared in NY, and NY taxes paid.

sjrcpa

Level 15

Sounds like it was earned in NY.

The more I know the more I don’t know.

P

PKCPAMSTAnswer

Level 6

The income sourced to New York must be reported there.

Under NYCRR 20 §132.4(d, payments, such as severance pay that a taxpayer receives in consideration for “past services” upon termination of employment, are included in a nonresident individual's New York source income if they are derived from or connected with personal services performed in New York.

qbteachmt

Level 15

Let's review:

You work somewhere, and you accrue Sick and Vacation pay that you don't take. So, that component is from Working In NY, by definition. Then, they paid Severance, which is from the NY Job. These three types of payments are treated the same as Wages. The 2019 Wages are reported as from the NY job.

You stated:

"Taxpayer accepted early retirement/severance in December 2019.

Final payment (severance/unused vacation and sick days, etc)"

You never described that any part of the Final payment was other than these three components. Not Retirement payment.

I'm just evaluating what you told us. You seem to know what it is and what it isn't.

We don't always get to do what we would Like to do.

Don't yell at us; we're volunteers

T

TylorValdez1

Level 6

NY as a form for this kind of situation. It is called IT-203-B. You would go to screen 55.092. Enter the employer in the field name or number of w-2. Then go to the field days worked outside of NY and enter 262. That will adjust the sate wages down so they will not have to pay tax on the income.

Accountant-Man

Level 13

The employer already made some determination of the wages earned in NY by withholding only $3,000 of NYS tax.

I have several clients who work for consulting firms and might work in various states throughout the year. They live in NJ, so all wages are taxed to NJ.

NY always starts at 100% of federal wages, Box 16, but the tax in Box 17 is too low for 100% of the wages. On the IT-203 you can enter the NY wages, such as if the NJ resident worked at home for part of the year. Only the NY piece goes on the NY column of the IT-203.

Some employers are putting the NY wages in Box 14 of the W2. Some call it "NYWAGE."

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