Question

Moved from NY to IL in 2021 -- 2022 Bonus Tax and W-2 State Wage Question

Forum|Forum|3 years ago
March 1, 2023
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I moved from New York to Illinois mid-way through 2021. I received a bonus in March of 2022, and my employer withheld New York and Illinois taxes from the bonus. They withheld about 4.65% of the bonus in IL and 4.58% of the bonus in NY.

They also provided me a W-2 for 2022 that in Box 16 (State Wages, tips, etc.) lists my full year's Wages and Bonus in both IL and NY rows.

My two questions are: 1. Should they have withheld NY taxes at all, since the bonus was determined and paid in 2022? And 2. Is the W-2 correct to list my full year's Wages and Bonus in both rows? I did not work at all in NY in 2022, so it seems odd to have the full amount in there.

Not A Product Question

M

MAK70

If your bonus was based on performance of duties while in New York in 2021, the New York withholding is correct (and New York is quite aggressive about collecting). The W-2 is correct because the state of New York requires:

Full-year New York State resident employees – The amount of wages that must be reported in the State wages, tips, etc. box on federal Form W-2 is the same as the amount of federal wages required to be reported in box 1, Wages, tips, other compensation.
Full-year New York State nonresident employees who perform all of their services in New York State – The amount of wages that must be reported in the State wages, tips, etc. box on federal Form W-2 is the same as the amount of federal wages required to be reported in box 1, Wages, tips, other compensation.
Full-year New York State nonresident employees who do not perform any services in New York State – If a nonresident employee does not perform any services in New York State for the entire tax year, the employer is not required to report any New York State wages in the State wages, tips, etc. box on federal Form W-2.

However, if any of the compensation that is considered wages for federal income tax purposes is attributable to services performed in New York State in a prior tax year(s), then the amount of wages that must be reported in the State wages, tips, etc. box on federal Form W-2 is the same amount of federal wages required to be reported in box 1, Wages, tips, other compensation. (see Publication NYS-50)

You will be able to allocate your New York wages on the nonresident return. You can use a percentage of the bonus if you know the dates that your employer bases the bonus on.