NY Tax for Nonresident

"Stuart A. Bronstein" wrote

Oh yeah. New York (as with other states) will be aggressive about it. Get return(s) prepared and filed and pay the tax and interest, but beg for the penalties to be abated. They might do that given the circumstances.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Yes, of course, if the gain results in any tax liability to New York. the property was located in New York, so the gain is New York source income. When you divide the $10,000 gain three ways, it may not be enough to create a tax liability for any of the sisters. Nevertheless, an easy way to dispose of the issue (since NY has picked up on it) is to go ahead and file the returns. The state(s) where your friend and her sisters resided at the time of the sale will allow credit for any tax paid to NY, limited to the proportion of the resident state tax that arose from the double-taxed income. Katie in San Diego

She found a statute that apparently says that a NY return is only required if there's more than $7500 of income. That's the reason I asked - each sister had under $3400 of taxable income. But I suppose they should file anyway.

Stu

Read the IT-203 instructions carefully. The $7,500 is New York adjusted gross income, which is your FEDERAL AGI adjusted for NY specific additions and subtractions. It is NOT your NY sourced income. NY is one of the states that calculated your non-resident tax be first figuring the tax as if you were a resident, and then taking a proportional part of that.

-- Don EA in Upstate NY

This a good example of when one should file even though a statute says it is not necessary. Upon the sale, NY was informed (probably by a 1099-S) that real property located in NY changed hands. NY only has the gross selling price. Without the filing of a return, NY will continue to hound the taxpayer(s). NY is not the only state that follows up on unreported sales of capital assets.

A NY return is required if FEDERAL AGI is more than $7500 and the nonresident has any NY source income at all. (The threshold actually depends on filing status. $7500 is for single and who cannot be claimed as a dependent on someone else's federal return. And there could be some adjustments to the federal AGI. See NY instructions for Form IT-203 for details.) Bob Sandler

Since they are under the de minimis threshold, a letter to the state explaining the facts is sufficient. No need to file returns. Katie