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Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
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The optimal filing status for you is married filing jointly
Sorry, I am confused, I thought a tax lawyer was going to answer this.
I am a CPA.
CPA, EA, and Tax attorneys can all practice before the IRS
So what filing status makes sense for DC and is the deferred comp taxable?
Deferred compensation is taxable when received.
Is the deferred compensation a qualified or non qualified plan?
neither. It is overtime she earned in years 2011 and prior. The city pays it out at her salary at the time of termination. Her last check date was late August.
Okay - yes this is taxable both for federal and DC
New York wants to tax it too though. Seems unfair to pay in both places.
Well, did she live in New York when she earned the income?
Did she live in both DC and New York?
She moved to DC in December 2011.
She started working in DC in June 2012.
Well then DC should not tax the vacation pay
She lived in NYC till December 2011.
You would file joint federal returns
and then file separate for DC
and she would file separate for NY and NYC
OK. I don't know if this is out of scope of the original question, but she owns a coop in Brooklyn, which she rents out to a friend.
That's fine. You paid a good price for this session, so I want you to get all the answers you need
So what is your question about the apartment in Brooklyn?
Sorry, ... just wondering how that works with mortgage deductions. Are there state mortgage deductions?
Well, she would have a schedule e on her federal return, and that income would flow through to your state or DC return
Her mortgage interest would be deductible
What's a schedule e?
You mean rental income?
Deductible in DC?
What about New York, does she have to declare the rental income there?
Yes, she will always have to declare the rental income in New York state and NYC
Because that income is earned there.
But, she will receive credit on her DC return for the tax she paid to New York state
ok. so its a credit on the botXXXXX XXXXXne?
It's a credit on the tax due yes
But just for the New York state tax, she won't get a credit for the NYC taxes
So you're basically paying DC tax rates overall.
Basically - but you have to file both returns
at least state-wise...
ok, so the new york state tax form has this crazy allocation formula, which assumes you worked in the state. what should she do with that? basically act as if her last check date was her last employment date?
She would file as a part year resident
So she would pay tax on income earned up until the point she moved to DC.
IF she did not live in NY during the year she would file a non-resident return
but she moved 12/2011.
ok, so non-resident.
what about the allocation formula? they ask about days worked...but it was paid out time.
How many days were the compensation for?
about 8 months.
till 8/25 payroll.
Then I would use that as the time worked
OK. cool. Thanks for your help.
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ok. thanks again! good answers!
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