Posted on 03/07/2019 6:24:56 AM PST by tired&retired
I'm doing a New York Non-Resident Tax Return and it is the most unfair tax law on non-residents I have seen in over 40 years of doing taxes.
New York, with one of the highest tax rates in the USA computes your NY Tax by applying their high rate to all your income on the Federal Return and then allocating the tax based upon the percentage of NY income to total Federal income. The effect of this is to tax your out of state income at the New York higher tax rate which is illegal.
Example: $8,500 income from wages in NY. $31,500 income in Pennsylvania where residency was maintained all year.
NY computes the tax on the $40,000 Federal total and then allocates it by the ratio of $8,500 divided by $40,000.
This effectively has NY taxing PA income which is illegal.
And bugs! Big, bad, awful to look at bugs!
Red-dawg, you forgot to also mention the vicious cacti and man-sized weeds that exist in Texas!
Did I miss anything?
Flies! Terrible, deadly flies!
Just had another friend move to Delaware of all places.
He said at the local general store you can by an egg and cheese sammich, a coffee and a handgun. LOL
He just paid his half year taxes at something like 350 bucks on a raised ranch on half acre.
It is common for states to calculate their tax bill based on your total AGI and then take a percentage of that based on the percentage earned in state. IIRC, Arizona does it too. It is probably the most common way to calculate non-resident state taxes.
“But California might be even more greedy. They tried to tax the pensions of people who had moved out of the state after retiring. “You can check out, but you can never leave.”
Apparently, they are still trying. We have friends, who both just took early retirement from their jobs. They had planned to move to Oregone to be near his brother and his wife and no sales tax.
The friend is an accountant and was a CFO for a major northern California firm. However, he was not aware of the tax sucking vampires in both Oregone and Californicator land of evil with citizens in his situation.
I warned him about these two states. Then, he checked out the vampire tax laws.
Apparently, he could get taxed on the sale of their excellent home in California by both Californicator and Oregone. Their pensions might be taxed by both states.
I suggested that he get a reverse mortgage on his home here, and rent or buy a two bed room home in Oregone. Then “live here during the winter months (6 months) and let a newly married son and his family live in the Cali home for free and pay the utilities and keep up the house/yard in good shape.
They may do that. We have one neighbor, who did that and supposedly lives in Washington state with no income tax.
Illinois changed its income tax rate from 3% to 5% July of two years ago. Income starting in July was taxed at the higher rate.
However, for anyone who left the state and had no income after June, you had to pay state income tax at the rate of over 4%, because that was their “easy way” to compute taxes for you that year.
You paid 1/3 MORE state income tax than everyone else for those months!
I'm not saying the mosquitoes are big, but some of them have landing lights.
Sometimes it doesn't rain for a while.
Droughts so bad even the catfish have ticks.
Or pensions.
That happened to me as well; only spent one year at DLI, but made the ‘mistake’ of mailing my federal income taxes from a CA address. By the time we were overseas, the CA Franchise Tax Board tracked us down and started threatening to garnish my pay.
I was told, and verified it, that CA has a law on the books concerning retired military pay; they want a percentage of the tax on income based on the percentage of years served in CA. They admit there’s no way to enforce it, but it’s there.
Their ultimate goal is to take it all, and give us what they think we need. Except for them-they will have everything they want, plus cost of living adjustments.
So, after leaving the company, I totaled up all the CA withholding, and called the California Franchise Tax Board. I asked how I could get the withheld money back. They told me "no way." So I asked where I vote on Election Day.
Within two week, I got a check for every dime.
In Delaware you can buy the sammich and coffee at the general store, but not the handgun. Since it turned blue with all the NJ and NY people moving in, everything has gone to pot [which the Dems are now planning to legalize here]. Low property taxes are rising for more and more schools and the income tax is pretty high compared to PA.
I think most states do it that way. Sorry.
Most states compute the tax only to the income attributable to their state for non-residents. Part year residents you are correct. They are different.
I did a sample calculation based on your numbers and don’t see the problem...
Say NY tax is 10%.
10% of $8,500 = $850.
Then, 10% of $40,000 = $4,000.
$4,000/$40,000 = 0.1 (i.e., 10%) 0.1 x $8,500 = $ 850.
Same, same. What did I miss?
“Most states compute the tax only to the income attributable to their state for non-residents.”
Actually, most of the states I know of compute non-resident tax using the federal AGI as the basis for their tax, and then adjust it using the money earned in state to calculate a percentage. Arizona does it that way. Colorado. Oklahoma. That is 3 for 3 of states I just checked. Apparently NY does it as well.
New York did always do it that way in the past.
They use to look only at the income you, as a non-resident, actually earned in New York/New York City. Then as a non-resident, they took into consideration the actual number of days of the year you actually were working in New York, limiting your tax as a non-resident to the fraction of 365 days that you were actually in New York, and you could deduct the taxes you paid on that New York income, as a resident of some other state.
Also, New York’s formula now, together with the the way it employs its “progressive” tax rates, winds up charging a non-resident at a higher effective tax rate than their NY-only income would have otherwise obtained, when they have income outside NY as well. The outside income takes the total income into a higher tax bracket than the NY-only income would obtain.
PA has big problems that are fixing to get bigger.
Plus, there are rumors that Harrisburg want to tax pension income.
SOP for high-tax states.
“It is common for states to calculate their tax bill based on your total AGI and then take a percentage of that based on the percentage earned in state. IIRC, Arizona does it too. It is probably the most common way to calculate non-resident state taxes.”
They do it on the pretense that it is “tax simplification”.
They use a common factor, the federal adjusted income. The simplification pretense is since the adjustments have already been done, they don’t have to have their own rules and formulas for those adjustments, and you don’t need to go through that individual state’s steps for taking those adjustments. That’s a lie.
They KNOW what it does is it lumps all your income, regardless of state of origin together. They know that merely making the income ratio between their state and the federal total can wind up effectively taxing income from another state that would not be taxed, if their state tax rate was simply applied to an “adjusted state income” for their state - as my remarks pointed out.
“Flies! Terrible, deadly flies!”
You forgot the man eating feral hogs, the scorpions big as dinner plates, snakes LOOKING to bite someone and the lung sucking humidity along the gulf coast.
Who, other than a native, could live with that I ask?
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