Capital gains in one state when residing in another.

Forum|Forum|2 years ago
February 15, 2024
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I live in New York and had some farm land in Indiana. In 2023, I sold the land in Indiana, and thus paid a capital gains tax on my federal return and the Indiana return (nonresident).

I completed the Indiana tax forms first and included the capital gains on the Indiana tax.

When I started the New York taxes, TT asked how much of each income source was taxed in Indiana. In the page that showed the capital gains, the New York Total was $123,456 (which TT is taking from the federal form) and the Portion Taxed by Indiana was $123,456. The question asked whether the Indiana amount was correct, which it was. Therefore, I left the Amount if Different box empty. Is this correct?

Yet, the New York line for gains (Line 7 on form IT-201) still shows $123,456.

Is this a bug, or am I doing something wrong?

Thanks.

Best answer by MayaD

No, it is correct.

Your capital gain is taxable in Indiana because it it considered Indiana source income and in NY your state or residence. As a resident, you pay state tax (and city tax if a New York City or Yonkers resident) on all your income no matter where it is earned.

However, on NY state, you can claim credit for taxes paid to another state. This credit is allowable only for the portion of the tax that applies to income sourced to and taxed by the other taxing authority (state, a local government within another state, the District of Columbia, or a Canadian province) while you were a New York State resident.

Income Received from Indiana Sources

ny.gov