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For part-year residents New York source income is the sum of the following with adjustments for special accruals on all income reported on your federal return for the period you are a resident of New York State;
Income accrues to you as a taxpayer when the amount of income becomes fixed and determinable and you have an unrestricted right to receive it. For instance, if you earned wages while NYC resident but received them after you became a nonresident - these are taxable.
See for reference - http://www.tax.ny.gov/pdf/2010/fillin/inc/it360_1_2010_fill_in.pdf
Customer: Hi, thanks for the quick reply. Let me see if I understand the answer exactly through an example. Lets say the total income for the year is $100, which consists of $5/month salary for total of $60 and $40 bonus (for the previous year) received February. If the person lives in NYC for six months from May to Nov, is the attribution to NYC 6 x $5 = $30?
LEV: No - because at the time income was received - the person was not a NYC resident. All February income should not be reported as NYC income.
Customer: I didn't include the Feb income. I just included the 6 months of salary. So 6 times $5/month which is $30. Even though by the number of days stayed in NYC, the attribution should be 50% which is $50. The sixth month salary from May to Nov - 12 months of $5/month salary + $40 of bonus = $100 total income.
LEV: If you were a resident of New York City for only part of 2010, you are subject to New York City tax on all income you received while you were a resident.
Customer: If only the May to Nov salary is received during the May to Nov period of residency, is that the only part attributed to NYC? i.e. does not include bonus payments in Feb?
LEV: That is correct.
Customer: What about the bonus for this year that's payable next year? There will be some bonus payable the next year due to the work done this year which should of course include part of the work from May to Nov residency period this year? Is that considered as part of the accrual?
LEV: You might need to include the bonus under special accruals rules that paid in December that was announced in November while you were a NYC resident. But that is not the case. Income accrues to you when the amount of income becomes fixed and determinable and you have an unrestricted right to receive it. For instance, - commissions that you ear, know the amount, have rights to receive, but paid at the end of the year.
Customer: In the common case where the amount is not fixed and not determinable until the next year and there's no unrestricted right to it (i.e. if leave the firm in December, then the amount is forfeited), would the amount not be attributable to NYC?
LEV: That is correct.
Customer: That's very helpful. Thanks a lot!
LEV: If the amount of bonus is not determined and is not guaranteed - you have no unrestricted rights on the money. You simply may not get it.
Customer: One last question - since there is a lot of vague information online (for example, NYC website says the tax should be accrued based on the number of days), can you give me a reference on where I can find your calculation method from a publication (esp. the determinable and unrestricted right language)?
http://www.tax.ny.gov/pdf/2010/inc/it360_1i_2010.pdf - page 2 left column - special accruals.
Customer: Great. This was very helpful. Thanks a lot!