To New York Enrolled Agent

[Snaggletooth]

...anonymous perhaps, but you have signed your post thusly. I have a question for you.

You mentioned credits to other states are not allowed to NY residents if the credit pertains to gambling income. Any other surprises that results in NY double taxing income from other states? I know there is heavy competition for tax dollars between NY and NJ, but I at least thought New York would honor conventions and reciprocities with other states on the matter of state income tax.

A couple years ago we had an anonymous post from a NY preparer who was facing a $30,000 penalty from New Jersey for failing to report NJ income on a corporate return operating in both states. What made this unusual was the fact that NY had already taxed the same income and claimed this as NY source income. The corporation was a NY corporation. I asked this person to keep us posted as to how this turned out, but we never heard from him/her again.

Egad NYEA, how can you even survive with stuff like that going on up there?

Snaggletooth

[Unregistered]

Snags

We struggle through it all.

I know you're from TN. One of the worst cases of NY aggression in pursuing taxpayers is in regards to a Nashville, TN resident named Thomas Huckaby. Huckaby worked for a NY company but spent the vast majority of his time in TN working from home. NY has a "convenience of the employer" rule which it used on Huckaby. NY held that Huckaby worked at home for HIS convenience and thus deemed him to be a resident of NY for tax purposes. He was forced to pay full year NY resident taxes on all his wages. NY's highest Court upheld the state. The only "good" news is that TN has no state tax - so Huckaby only paid one state tax.

Another guy named Zelinsky had it even worse. He worked as a law professor in NYC and lived in CT. Using the convenience of the employer rule again, Zelinsky was taxed as a resident of both NY & CT. Unfortunately, he was allowed a credit on his CT taxes only for a portion of the NY earnings. Some of his income was taxed in BOTH states. Even though he filed suit that this arrangement violated the Commerce Clause of the Constitution, NY's highest Court ruled against him. I think he may be appealing to the SC.

It's a cruel world out here!!

New York Enrolled Agent

[Snaggletoof]

More NY stuff

NYEA, we gripe a lot down here about TN, GA, MS, etc. but these cases are a testimony not only to aggression on part of the Revenue people, but also tunnelvision on the part of the courts to throw out any concept of right or wrong for the sake of revenue.

I know also that New York has no reciprocity agreement with any other state, even on just wages. Seems like states would "gang up" on unjust practices and not share info with states who do this. There needs to be a convention on just what constitutes "state source income" and all the states should live with it.

I know for a fact NY and NJ hate each other. Goes back to the Meadowlands and maybe even further back than that. In all honesty, however, I've been involved in a few NJ situations and I can't say they are really any better, and certainly just as aggressive.

If you want to e-mail me privately with your contact information, please feel free. Never know when I'll run into someone fraught with New York tax tentacles. Look under "Snaggletooth" instead of my unregistered name on this post.

[Unregistered]

Tax in two states

Sure it will/can happen, but you will always get credit for the taxes against the state of residency. ALWAYS

[Snaggletooth]

Not What I Understood

Thanks for your post, but as I understand it, we were told that NY does not allow credit on their resident returns for taxes paid to other states IF the taxes are the result of gambling income. Don't know this for a fact, but we were told that on a recent post.

[Unregistered]

I suggest the poster who said ALWAYS go to the following site and open TSB-A-02(4)I

http://www.nystax.gov/pubs_and_bulls/advisory_opinions/income_ao_2002.htm

Here is the final sentence: "Accordingly, Petitioner is NOT (emphasis added) entitled to a resident tax credit under section 620 of the Tax Law for income taxes paid to the state of New Jersey on the slot machine winninings."

New York Enrolled Agent

[BOB W]

I guess.......

...... I'm not the only one who didn't know!!!!!?????

[theresa d]

offset losses

i too did not know that NJ required a return for gambling winnings. i had one client last year who had 20,000 in atlantic city winnings throughout the year. he has documented losses to offset. i just did a nj nonresident return to see the impact & the nj non resident return indicated zero gambling winnings. the losses were offset against directly against the income on the return. WHEW! no impact.

thought i should share this with everyone.

[Unregistered]

Sure it will/can happen, but you will always get credit for the taxes against the state of residency. ALWAYS

The Zelinsky case referenced in my prior post also illustrates you cannot use the word always. Zelinsky was taxed on some of his wages in BOTH states. Zelinsky was a full time law professor in NY, but spent a good deal of time working at home in CT. NY taxed all his income, CT only gives a credit for tax attributable to the days worked outside of CT. This is a snip from the NYS Tax Tribunal which ruled against the taxpayer.

"He was also aware that CT provides a credit against CT income tax for income tax imposed by NY on income earned from services performed by a CT residence in NY (citation omitted) but it does NOT (emphasis added) provide a credit for NY tax on income generated for services performed in CT, which is considered CT source income".

The NYS Tax Tribunal is the highest body in NY tax law. After Zelinsky lost, he did appeal to the SC but was not granted certiorari.

These cases show - Its very hard to use never or always in tax discussions.

New York Enrolled Agent

[Unregistered]

Why does New Jersey have so many toxic waste dumps and New York so many lawyers?

New Jersey got first choice