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I work for a New York-based company that withholds NY State income tax on my checks. I live and work in Utah.

NY's tax rate is higher than UT, so I'm paying a hefty amount in taxes and don't want to withhold more each month to eventually pay UT at the end of the year.

My understanding is I'll have to file both a NY state return and a UT state return at the end of the year and that I should receive a full refund from NY, but will have to pay UT everything I've owed them during the year, so it should be a wash (or maybe I'll get back a little more from NY than I'll pay to UT).

Can someone confirm this to be true and furthermore, that it's a good way to be handling this situation so I don't run into a big surprise at the end of the year?

Submitted: 164 days and 20 hours ago.

Category: Tax

Value: $15

Status: CLOSED

Utah

Already Tried:
Asked a local accountant over the phone who tried to bill me $100 for a 5 minute call that didn't answer my question.

Posted by Marvin,EA 164 days and 20 hours ago.

Answer

Hello and thank you for using Just Answer. You are a nonresident of New York. Nonresidents pay tax on income derived from or connected with New York State sources. You will not receive a full refund of taxes paid from New York.

As a resident of Utah all income received during the period of Utah residence is taxable in Utah, regardless of the source of income. As a Utah residence you are allowed a credit for taxes paid to other states (New York) on income that is also taxed by Utah. Complete Form TC-40S to calculate the credit.

164 days and 19 hours ago.

Reply

Wow! I'm glad I asked. But I'm still unclear. So regardless, I'll have to file a NY-state return and either will get a refund for overpayment or have to pay more for underpayment based on NY tax tables?

And at the same time, I'll have to file and likely pay UT as well, but should get some amount of credit to help lessen the blow? Any idea how impactful the credit usually is? Will it cancel out most of my UT tax?

Do I understand correctly?

Posted by Marvin,EA 164 days and 19 hours ago.

Answer

You are correct about New York tax. You will get a credit from Utah for paying New York State tax. Here is the web address to compute your credit, www.tax.utah.gov/forms/current/tc-40s.pdf,.

164 days and 19 hours ago.

Reply

Thanks - one last thing. What do you mean by my payment and bonus if any might be tax deductible. How do I find out for sure?

Posted by Marvin,EA 164 days and 19 hours ago.

Answer

The amounts you paid for any tax services or tax advices can be deducted on your federal tax return if your itemized. The deduction is a Miscellaneous Itemized Deductions.

164 days and 19 hours ago.

Reply

Sorry! Thought of something else. A basic principle question:

How can my employer take out State INCOME Tax from a State I don't earn INCOME? Is this unique to NY?

Meanwhile, will I be penalized by UT by not paying them until the end of the year? Is there any benefit to me calculating any paying them quarterly taxes so I don't get hit at the end?

(this is it for the questions - I promise!)

Accepted Answer

If you employer does not withhold Utah income tax you must pay the amount due when you file your Utah Income Tax Return. You will not be penalized by Utah for not paying your taxes during the year as long as any taxes due is paid by due date of the tax return. You can read more about penalties at www.tax.utah.gov/forms/current/tc-40inst.pdf , page 16.

Accepts:
Expert:	Marvin,EA
Pos. Feedback:	98.5 %
Answered:	6/11/2009

Enrolled Agent

10 years self employed , Income Tax Preparation & Representation

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You are correct about New York tax. You will get a credit from Utah for paying New York State tax. Here is the web address to compute your credit, www.tax.utah.gov/forms/current/tc-40s.pdf,.

Reply

Thanks - one last thing. What do you mean by my payment and bonus if any might be tax deductible. How do I find out for sure?

Answer

The amounts you paid for any tax services or tax advices can be deducted on your federal tax return if your itemized. The deduction is a Miscellaneous Itemized Deductions.

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You are correct about New York tax. You will get a credit from Utah for paying New York State tax. Here is the web address to compute your credit, www.tax.utah.gov/forms/current/tc-40s.pdf,.

Reply

Thanks - one last thing. What do you mean by my payment and bonus if any might be tax deductible. How do I find out for sure?

Answer

The amounts you paid for any tax services or tax advices can be deducted on your federal tax return if your itemized. The deduction is a Miscellaneous Itemized Deductions.

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Utah

Already Tried:
Asked a local accountant over the phone who tried to bill me $100 for a 5 minute call that didn't answer my question.