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Withholding for multiple states (NY and CT)

Forum|Forum|5 years ago
July 23, 2020
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I read a bit and understand I won't be double taxed (resident of NY, working in CT). However, what isn't clear after reading is if I actually need to have withholding for both states throughout the year? e.g. Do I actually pay the taxes for both states, only to get a full refund from NY for my CT wages? I don't understand why I should be required to have NY collect regular taxes from me (and hold on to my cash for a year) only to give it back to me on April 15 the following year. What am I missing? Let's assume the dividend / interest question is moot (I will pay estimated taxes on that in NY) and we are only talking state taxes on my wages.

Thanks!

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Best answer by TomD8

I am just starting my CT job and they are asking me for my withholding. First half of year was NY job, from now until end of year, CT.

If you are going to be working in CT, you should have your employer withhold CT taxes. That's because once you're working in CT, you'll definitely have a tax bill for CT. You may or may not have a tax bill for NY. That'll depend on the size of the out-of-state credit you'll be able to take on your NY tax return. Once you're working in CT the great majority of your total state tax bill will be to CT.

A

Anonymous

don't know where you got your info about being not being taxed by both states. There is no reciprocity between NY and CT. you will be taxed by both states. CT because you physically work in that state and NY because that's your state of domicile. what will happen is the NU being your state of domicile will give you a credit for some or all of the taxes paid to CT. you will need withholding for CT because that's where you work. you may need withholding for NY too because its tax rates can be higher than the credit you'll receive for being taxed in CT. you didn't say where you live in NY state. Some of its cities also impose an income tax so you'll need to have withholding for those cities if that's where your home is.

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jims7Author

Perhaps poor wording on my part, if I pay taxes and get all of it back in credits, I consider that not being taxed. I did not get an answer to my question however. Assuming wages only and assuming tax rates between my area and CT are the same, do I need to actually pay taxes to NYS throughout the year just to get it all back in credits. I am not in NYC or Yonkers.