NY taxes / AL resident

You will definitely have to file a NY return and pay NY tax on the gain. You will probably also have to include the income in your AL income, but check the AL instructions.

Usually the residence state offers some sort of credit paid to another state. Again, look to the AL instructions.

Yes, you must file a NY return to report and pay tax on the gain. IT-203 is the form.

Alabama will give you credit for the tax you pay to NY; see Form 40, Schedule CR. However, the credit will be limited to the proportion of your Alabama tax liability that relates to that income. Since it is likely that the NY tax rate will be higher than the AL rate, you may not get credit for all of the tax you pay to NY. Net, you will pay state income tax on that income at the higher of the two states' average rates for your income level, filing status, number of dependents, etc.

Katie in San Diego

Katie, even though we don't have any numbers to work with here, I dare say that he'll come out okay on the Alabama return. Just a hunch based on 35 years of doing Alabama form40's. (grin

ChEAr$$$, Harlan Lunsford, EA n LA

Well, I would expect the average rate in Alabama (2% to 5%, right?) to be lower than the average rate in NY (4% to 6.85%), but of course there are other variables that could change the result. I just like to warn people that they may not get every dollar of source state tax back from the residence state, so they don't get surprised.

Katie

Thanks to all who replied, particularly to Katie for pointing me to AL Sch-CR.

Regards