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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29800
Experience:  Taxes, Immigration, Labor Relations
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I am currently a resident of New York, which has a high income

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I am currently a resident of New York, which has a high income tax rate. I am currently in the process of moving to Texas, which has no state income tax, and I will be a resident of Texas prior to year end 2013.

I recently separated from my company, and I will be receiving the majority of my severance payments in 2014. Am I responsible for paying state income tax for New York (where I was an employee) for severance payments received in 2014? Or, am I not responsible for New York state income tax given that I will be a resident of a state with no income tax when I receive the severance payments? Does the type of payment or the way it is structured matter at all.

Thanks for your help.

Lev :

Hi and welcome to our site!
Unfortunately - because that severance payment is related to work done in NY - it is considered as income from NY sources - and as such is taxable for NY.
In general state income tax liabilities are based on both - residency and source of income.
Even you will be nonresident of NY in 2014 - that income will be taxable on the state level because it is a compensation for services performed in New York State.
See for reference -
You will be required to file your tax return as a nonresident - and only income from NY sources will be subject of NY state income tax.

Lev :

Most likely - your employer will have withholding out of your severance payment - and most likely - you will claim a partial refund on your tax return.
You should file Form IT-203, Nonresident and Part-Year Resident Income Tax Return -
Here are instructions -

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