Pro football coach with New York NR wages

[Ross]

Taxpayer is a pro football coach. He has W2s from eight states from the same employer. He lives in VA. Most of the states show state wages between $1,300 and $3,300 with state withholding from $31-$102. However, his NY W2 shows state wages equal to his Federal wages; $2XX,XXX with NY state withholding of $83. I had him contact his payroll office, and here is the response he received:

"We have had several questions in regards to the New York Wages listed on W2’s. The wages that are to be for the state of New York (only applies to state of New York), are the same wages as reported in box 1 of your W2’s. The box 1 amount are gross wages less any pretax deductions (medical insurance, 401k, flex money).

I have attached the link for the New York State Tax Controller which breaks down the information that is required to be listed. The following information is listed within that link:

Box 16 State Wages
The State wages reported for the State of New York are required by law to be the same as the amount of Federal wages reported in Box 1 – Wages, Tips and Other Compensation.

http://www.osc.state.ny.us/payroll/w2.htm

Has anyone ran into this with a New York non resident W2? TIA.

[Uncle Sam]

NYS Wages

You need to allocate the wages by the number of days in the year actually worked in New York.
There's a separate schedule of IT-203- it's either Schedule A or B (I forget which) in which that calculation
is made.
This is a common situation with nonresident W-2 employees. You're not alone.

[Snaggletooth]

The TEAM is a resident.

The TEAM has resident NY employees - thus the universal designation of all wages as NY wages. Your coach's employer, from what you say, has got to be a coach for Buffalo Bills, New York Giants, or New York Jets. And they are classifying ALL employees as New York residents.

Even though his domicile is in Virginia, it will be hard to defeat the residency. Many states begin residency with 90 days, so if a taxpayer stays more than 90 days in 2-3 states, he could be classified as a "resident" of ALL those states. Chances are overwhelming that he IS a resident of New York for NY purposes. He is also a resident of Virginia for Virginia purposes. Funny about these various states -- they don't have to be concerned whatsoever about a taxpayers' obligation to other states, and they usually DON'T.

And you can't make a case against NEXUS for the Jets, Giants, or Bills either. New York wins this one hands down. Sorry!!

As hopeless as this situation may sound, the allocation process suggested by Uncle Sam will STILL bring tax relief. Although he is taxed by New York on 100% of his salary, he is allowed a credit for taxes paid to other states. And he should be filing in every state where his team played, except states with no tax such as Texas, Florida, Washington, etc. After they are filed, measure the tax paid in the other states versus the NY tax for the same amount of income, and take the lower of these two numbers as the credit. This measurement must be done piecemeal, state by state, and not in the aggregate. So in a sense, NY is allowing these other states to take their slice of the pie and not double-taxing the coach.

Guess what?? after this exercise is complete, Virginia is structured the same way. The ironic thing about this is he is likely to have ZERO W-2 wages in Virginia because there are no professional football teams there. Yet since he is a Virginia resident, he owes Virginia tax on all money made ANYWHERE. But after it is calculated on the gross amount, measure the taxes paid to other states in the same fashion as above. Virginia will thus allow the credit as well.

[Gary2]

The TEAM has resident NY employees - thus the universal designation of all wages as NY wages. Your coach's employer, from what you say, has got to be a coach for Buffalo Bills, New York Giants, or New York Jets. And they are classifying ALL employees as New York residents.

Even though his domicile is in Virginia, it will be hard to defeat the residency. Many states begin residency with 90 days, so if a taxpayer stays more than 90 days in 2-3 states, he could be classified as a "resident" of ALL those states. Chances are overwhelming that he IS a resident of New York for NY purposes. He is also a resident of Virginia for Virginia purposes. Funny about these various states -- they don't have to be concerned whatsoever about a taxpayers' obligation to other states, and they usually DON'T.

I'm not sure where you're getting this from. There's nothing to suggest that he's a coach for any of those teams. If it's NFL at all, the Redskins seem more likely (though I haven't checked the 2012 schedule to see how many states they played in).

I don't recall any states that start at 90 days. If they have statutory residency at all, it's usually at 183 days, coupled with maintaining an abode.

If you're latching onto the fact that box 16 wages is the same as box 1, forget it. By NYS rules, box 16 is required to be the same number as box 1 for non-residents and residents alike. I wish the IRS would prohibit that for non-residents, but they don't.

[joanmcq]

Yes, NY is a total pain in this matter, and as far as I've seen, it's the only state that allocates 100% of wages to NY and then makes you figure it out for NR as well as residents.

I got a new client this year that works for our local NBA team. Watch for Louisiana if he got a W-2 from there; LA has a special form just for pro athletes.

[JoshinNC]

Actually, if you want to take that approach

The TEAM has resident NY employees - thus the universal designation of all wages as NY wages. Your coach's employer, from what you say, has got to be a coach for Buffalo Bills, New York Giants, or New York Jets. And they are classifying ALL employees as New York residents.

Even though his domicile is in Virginia, it will be hard to defeat the residency. Many states begin residency with 90 days, so if a taxpayer stays more than 90 days in 2-3 states, he could be classified as a "resident" of ALL those states. Chances are overwhelming that he IS a resident of New York for NY purposes. He is also a resident of Virginia for Virginia purposes. Funny about these various states -- they don't have to be concerned whatsoever about a taxpayers' obligation to other states, and they usually DON'T.

And you can't make a case against NEXUS for the Jets, Giants, or Bills either. New York wins this one hands down. Sorry!!

As hopeless as this situation may sound, the allocation process suggested by Uncle Sam will STILL bring tax relief. Although he is taxed by New York on 100% of his salary, he is allowed a credit for taxes paid to other states. And he should be filing in every state where his team played, except states with no tax such as Texas, Florida, Washington, etc. After they are filed, measure the tax paid in the other states versus the NY tax for the same amount of income, and take the lower of these two numbers as the credit. This measurement must be done piecemeal, state by state, and not in the aggregate. So in a sense, NY is allowing these other states to take their slice of the pie and not double-taxing the coach.

Guess what?? after this exercise is complete, Virginia is structured the same way. The ironic thing about this is he is likely to have ZERO W-2 wages in Virginia because there are no professional football teams there. Yet since he is a Virginia resident, he owes Virginia tax on all money made ANYWHERE. But after it is calculated on the gross amount, measure the taxes paid to other states in the same fashion as above. Virginia will thus allow the credit as well.

He has to coach for the Bills because NYG and NYJ play and are based in NJ, not NY. But, as laid out by another, I think the most likely answer is this is a Redskins coach who happened to coach a game or two in NY during 2012, and, as also previoulsy pointed out, NY is notorious for saying "if you earned some here prove you didn't earn it all here".

[JoshinNC]

Why is an NFL coach

using a professional preparer that doesn't understand how to allocate wages between states? Is this your only pro athlete/coach client?

Typically these folks utilize the same two or three firms in their area to handle all of their returns as the firms have a specialty in this area.

[Snaggletooth]

Coach for Another Team

Do you mean that he could be coaching for another NFL team (other than the three mentioned) and NY still requires ALL WAGES to be shown as NY wages? Yikes!!! There should be a law somewhere prohibiting this! Although if Uncle Sam's allocation is followed it still won't make any difference on the bottom line.

In other words a coach works for the Chicago Bears and the team plays ONE GAME in Buffalo, so he gets a NY W-2 with ALL of his salary shown as NY wages? Sheeesh!!

It would have prevented some confusion if we had known which team employed the coach. But we shouldn't ask the OP for this because of privacy reasons.

[DexEA]

In other words a coach works for the Chicago Bears and the team plays ONE GAME in Buffalo, so he gets a NY W-2 with ALL of his salary shown as NY wages? Sheeesh!!

I have a NY nonresident W-2 and that is exactly what NY requires. Actually made less then $2,000 working in NY but the NY W-2 has $50,000 +. I first thought it was a mistake, but it wasn't, so it's not really a case of not knowing how to allocate wages, but how and what forms are needed for NY.