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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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What is the income allocated based on in NYC?

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For a part year NYC resident, is the income allocated to NYC based on the number of days lived in NYC or on the actual income received while a resident? For example, if one lived in NYC for 6 months but during the period received only 20% the pay (because of bonus or pay raise), should 50% or 20% of the income be allocated to NYC?

Hi and welcome to JustAnswer!

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

http://www.tax.ny.gov/pdf/2010/inc/it360_1i_2010.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)?

LEV:

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!

Lev and 6 other Tax Specialists are ready to help you
Customer: replied 6 years ago.

I just noticed in the last sentence of the following paragraph of IT-360.1 instruction that New York State sourced income accrued prior to becoming a NYC resident is not excluded from NYC income.

"If you became a New York City resident during the tax year,
you must accrue any item of income, gain, loss, or deduction
which, under an accrual method of accounting, would be
reportable at the time you changed your residence, except that
no accrual is required or allowed for items of income, gain, loss,
or deduction derived from or connected with New York State
sources."

I'd like to just clarify that this only applies to accrued income. So actual income received from NY state source prior to becoming a NYC resident is still excluded as NYC income, right? Otherwise, the prior paragraph made it sound like the minute you become a NYC resident, all the income received prior from New York state source is all included as NYC income. If you could clarify that, I 'd really appreciate it. Thanks a lot.

In your situation - the bonus was received in February - before you became NYC resident in May. In your situation - the bonus or any other wages are not taxable for NYC because you simply were not a NYC resident neither at the time it was paid nor earned.

The sentence you referenced describes the situation if bonus for previous year would be paid in May - after you became a NYC resident - in this case accrual rules will be in effect.

Accrual rules might be in effect if the bonus was received after you became NYC resident.

Lev and 6 other Tax Specialists are ready to help you
Customer: replied 6 years ago.

Got it. Thank you very much. Really appreciate it.