Please, need help on New York return

[WhiteOleander]

I prepare very few NY return, although I do register with them every year.

I have a couple filing MFJ, two dependents. They have lived in TX for all of 2015. They have a rental house in New York state. All other income is wages from TX sources. The loss on the rental is -5187. The federal AGI is 34428. (this of course takes into account the rental loss) It also shows the NY AGI as 34428. So, then it deducts the NY standard deduction of 15850. Leaving 16578 as NY taxable income. On the next page, it show NY tax as 663.00 and an EIC of 654.00. Base tax of 9.00. Income percentage of zero because NY state amount is -5187 divided by 34428.

Why is NY taxing wages not earned in their state?

How can the t/p be entitled to EIC if they didn't live in the state and no earnings are from the state?

Any help will be appreciated.

Thanks

[Uncle Sam]

NY Tax Help

While I don't have an answer for your question - other than if something is miscoded in your software -
here's the NYS Individual Tax Help line - 518-457-5181

[FEDUKE404]

Question #1

Are you working on a NY **non-resident** (Form IT-203) return AND (somewhere) on a tax software worksheet separating the NY income/adjustments from federal income.

FE

[New York Enrolled Agent]

I prepare very few NY return, although I do register with them every year.

I have a couple filing MFJ, two dependents. They have lived in TX for all of 2015. They have a rental house in New York state. All other income is wages from TX sources. The loss on the rental is -5187. The federal AGI is 34428. (this of course takes into account the rental loss) It also shows the NY AGI as 34428. So, then it deducts the NY standard deduction of 15850. Leaving 16578 as NY taxable income. On the next page, it show NY tax as 663.00 and an EIC of 654.00. Base tax of 9.00. Income percentage of zero because NY state amount is -5187 divided by 34428.

Why is NY taxing wages not earned in their state?

How can the t/p be entitled to EIC if they didn't live in the state and no earnings are from the state?

Any help will be appreciated.

Thanks

NY taxes non-residents who have NY source income. The IT-203 form basically calculates the NYS tax as if you were a resident through line 44 of the return. That's why the wages are included and the EIC is calculated. Line 44 is the tax - then on line 45 you calculate the portion of that tax attributable to NY sources. Since you have no net positive NY income the tax for these non-residents equals zero

[WhiteOleander]

Yes FE, thank you. On page two of the IT-203, it shows all federal income verses NY income. The only income attributed to NY is the -5187 of rental property. On the IT-2015 Claim for EIC for NY, it shows that they are getting 30% of the federal EIC. I do have the income allocated. I do know that most states tax on a percentage of the federal income. But, I sure didn't think they would be eligible for EIC if they did not live in the state. They do not owe any NY tax.

[FEDUKE404]

NY State EITC

Yes FE, thank you. On page two of the IT-203, it shows all federal income verses NY income. The only income attributed to NY is the -5187 of rental property. On the IT-2015 Claim for EIC for NY, it shows that they are getting 30% of the federal EIC. I do have the income allocated. I do know that most states tax on a percentage of the federal income. But, I sure didn't think they would be eligible for EIC if they did not live in the state. They do not owe any NY tax.

I quit doing NY returns several years ago, when they got "creative" with their preparer rules and fees. Perhaps this will help??

BTW: Did you go through the full Q&A sequence (especially NY) with your tax software? One would think this issue. . .would then not be an issue.

FE


From NY web site:

Earned income credit (New York State)

You may be entitled to claim this credit if you:

--- did not claim the Noncustodial Parent New York State Earned Income Credit, and
--- qualified for and claimed the federal earned income credit. For more information on qualifying for the federal credit, see the IRS EITC home page.

How much is the credit?

The credit is equal to 30% of your allowable federal earned income credit, reduced by the amount of any household credit.

Is the credit refundable?

Full year residents - fully refundable
Non residents - non refundable
Part-year residents - partially refundable

[WhiteOleander]

Thank you very much for finding that EIC reference. It has helped me a lot. Our software does not have the Q&A you refer to. We select the state needed. Then it is our responsibility to know how to check boxes etc. and use or not use the forms we think we will need. So, it can be difficult to find all the different rules and regs for each state and apply them properly.

Thanks again.

[Lion]

If your returns are getting more complex or having more interconnected parts (like multi-state returns), then it might be time to demo other software or check with your current company about optional modules. You want to be able to click on Help and get to government instructions for that field or that form or explanations/definitions or be able to dig down to see where an amount came from or how it was calculated. Maybe a research program, especially one that can be accessed from within your tax prep program.