My son is a legal resident of NYS and goes to college full time in NYS. In July he lived and worked in Connecticut. Does he have to file a CT tax return, or can he just assume the withholding covers it? If he has to file, what about dividends he got in July. Do they go on his NY or CT tax return?
His employer provided room and board at no charge. Does that have to be accounted for on income tax?
(He was a surprisingly well paid intern at a boarding school)
In article you write:
Given that this was a short term job, I would guess that NYS would consider him a resident all year, so he should file a CT tax return for his CT income, but he can credit the tax he paid against his NYS tax.
If he's a NYS resident, he pays NYS tax on unearned (dividend) income.
There are complicated rules about employer provided room and board, and living on campus at a school has special rules. My imperfect understanding is that if the housing is a) on campus, b) for the convenience of the employer, and c) a condition of employment, the value of the housing is probably tax exempt, particularly since it was a temporary (less than a year) job away from his tax home. The rule on meals is similar, has to be on premises and for the employer's convenience.
Frankly, this is complex enough that it may well be time to give up and have a pro prepare his taxes.
I concur with the previous poster. In addition to the concerns noted there, the questions of whether the CT rules for determining whether the room and board is taxable differ from the Federal or NY rules, and whether NY use tax need be paid on purchases made in CT (with a credit for CT sales tax paid) require serious consideration.
-- Arthur Rubin CRTP, AFSP, in Brea, CA
He got paid $2,000 and the room and board was valued at perhaps $1,000; so there is not a whole lot involved; I would just like to get it pretty much right.
Reading your replies,and reading through the H&RBlockAtHome material, he files a non-resident CT return, AND he has to include the CT income on his NYS return. IF he owes any CT tax beyond his CT withholding, he can claim it as a credit on his NY return. Is that pretty much it?
No. He can generally claim all of his CT tax on his NY return, not just any additional tax.
Ira Smilovitz
The "other state tax credit" applies to the tax *liability*, not the balance due. In other words, whether his CT withholding was not enough (balance due) or too much (refund) is irrelevant to what he can use for calculating the other state tax credit. It's his tax liability that matters (although technically, the tax also needs to be paid, whether during the year or by the payment deadline, but I haven't checked NY rules on this).
I have never set foot in CT, but a quick look on the web seems to indicate that he does not need to file a CT return since his CT income was less than his CT personal exemption. Why he allowed any CT withholding is the real question. Is it worth filing a CT income tax return to get back his CT withholding?
I foolishly made an assumption that he had CT withholding. I looked at his pay stub, and there is only Federal withholding. I see the CT personal exemption is $14,000; so he doesn't have to file a CT return?! That will save a lot of work.
You might need to double check the exemption amount if your son was claimed as a dependent on your tax return. The federal government and some (many? most?) states have a version of the so-called "kiddie tax" that limits the standard deductions of dependent minors.
It may be the case that even the lower deduction is high enough, since it is often tied to earned income (as opposed to the dividend income). But it would be good to check that.
The federal standard deduction for dependents is usually less than the regular standard deduction, whether or not the dependent is a minor, and whether or not the dependent is claimed on someone's tax return. The limit on the standard deduction applies to anyone who CAN be claimed as a dependent, whether or not he is actually claimed.
The reduced standard deduction for a dependent has nothing to do with kiddie tax. The kiddie tax is tax calculated at the parents' rate on a child's investment income over a certain amount. Kiddie tax does not apply to wages (W-2 income).
Bob Sandler
There's a lot of confusion here. Neither the "Kiddie tax" nor the reduction of the standard deduction (at least for Federal and CA; I'd have to look up CT) applies to earned income. The personal exemption, though, is lost, if the taxpayer _can_ be claimed as a dependent.
Arthur Rubin, CRTP, AFSP Brea, CA
But can the reduction affect the requirement to file a return?
Once you guys told me it was called non-resident, I found:
Not necessarily. Note that if your son has more than $14,500 of gross income *anywhere* (not CT-source) he still has to file a CT NR return.
Ira Smilovitz
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.