Why is New York state taxing me for all my earned income including out of state income

It depends.  If you are a NY resident (live in New York), then you must file a return on all of your income.  However, you will receive a credit on taxes you pay on your out-of-state income to that other state. If this is the case, prepare that state first as a non-resident return first in TurboTax, and then prepare the New York resident return.  It will allow TurboTax to calculate your credits quickly.  

If you live in another state, New York does not tax all of your income, but they factor it in  Let's say you earn 50,000, 25,000 in New York and 25,000 in the other state.  New York will figure out what your tax would be if you earned all of the income in New York, and then will charge you for half of it.  If New York is not where you live, you prepare the New York return first as a nonresident state, and then the resident return to your home state.  

To prepare a nonresident return, see this FAQ:  https://ttlc.intuit.com/replies/3302052