Double taxation part year worker in New York

Forum|Forum|11 months ago
May 1, 2025
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I worked part of the year in NY but my residency is in AL. My W2 reports, for example, $1500 for federal wages (W2, line 1), AL state wages ($1000, line 16 of W2) , and NY stage wages ($1500, line 16 of W2). Remark that NY wages are the same as Federal wages in the W2, which is the way NY does it. In actuality, I only made $500 in NY, which is what I put in the state allocation of TurboTax (TT) step-by-step. TT computes my NY taxes on $1500 and claims their 33.33% (500/1500) of that, which is fine.

However, for AL, TT wants to compute my taxes on $2500 ($1000 + $1500), about $125 (5% AL tax rate), and credits me for only 20% (500/2500) of AL tax calculation, $25 ($125*0.2). I owe AL $100 ($125 -$ 25) this way.

To avoid double taxation, I think TT should compute my AL taxes on $1500, giving $75, and credits me for 33.33% (500/1500), $25, of the AL tax calculation. I would owe AL $ 50 ($75 - $25) this way.

When I try to manually insert in the TT AL Schedule W2, column J section that my additional taxable wages from other states is $500, not $1500, my efile gets rejected by AL.

Note: I neglected deductions to make my point clearer. Numbers provided are examples.

Anyone is familiar with this situation where you are a non-resident of NY and a resident of another state? How do you deal with this case? How do I supply TT the correct info to avoid double taxation?

TurboTax Home & Biz Windows

RobertB4444

Because you are a resident of Alabama you are taxed on 100% of the income that you earn in any state while you're a resident. However, Alabama also will give you a credit for taxes paid to another state and you can deduct that amount from the taxes owed to Alabama. The TurboTax system should have entered the taxes paid to New York into your Alabama return as a credit amount after you did the non-resident New York return. This credit avoids the double taxation but you have to have the income there in Alabama to qualify for it.

So you need to fix your income back to where it belongs and make sure that you are getting the credit for taxes paid to other states.

@DoctorJJ

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DoctorJJAuthor

This was my question.

Anyone is familiar with this situation where you are a non-resident of NY and a resident of another state? How do you deal with this case? How and where do I supply TT the correct info to avoid double taxation?