RSU double taxation by NY after moving to CA

Forum|Forum|2 years ago
March 28, 2024
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Hi, I am doing my daughter's taxes. She works for a company not based in either CA or NY. In Feb of 2023, she moved from NY back to CA. She had some RSUs that were (acquired and disposed of) both AFTER she left NY. However, in doing her taxes and reviewing her W-2s, She seems to be taxed by the State of NY almost as if she was the a resident for the whole year. Eventhough, during the TurboTax initial steps, we did specify the dual state status with dates, but the NY taxes calculated by the software are staggering (2.5 times what is on W2). Can anyone shed some light on this please? Thanks.

Best answer by Rob58Por

Thank you. I will do as you suggested and report back. Your assumption about what I meant is also correct.

ThomasM125

I think you mean that the New York tax is 2.5 times the tax withheld for New York as reported on your W-2 form. When you prepare the New York return, you will need to indicate that all of your income was not earned in New York. You will do that as you work through the income portion of the New York return by allocating only a portion of each item of income to New York:

You have to edit your W-2 form to allocate wages to New York:

Allocate your wages based on percentage of days in New York:

When you do that, New York will still tax you on all of your income earned in and out of state, but they will reduce the tax thus calculated by a percentage based on how much income was earned in their state. So, the taxable income may seem high, but the tax will factor out earnings from other states.

If you look at the tax summary in TurboTax, you will see the Tax and then the Total New York State Tax, which will be smaller based on your New York income allocation. The summary may help you gauge the accuracy of your income allocations, as it will reflect a reduction in New York tax based on the small percentage of income earned there.