Discussion:Separating W-2 Income Between Two States

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Discussion Forum Index --> Tax Questions --> Separating W-2 Income Between Two States

Beckynewt (talk|edits) said:

12 June 2007
Good morning, my client moved recently from New York to Ohio (date of move 10-26-06). He received a compensation bonus as part of the relocation package. He received it after his move to Ohio. Consequently, his W-2 shows a larger proportion of income earned in Ohio than just what was earned in Nov-Dec.

My quesion is; is it protocol to show the compensation income as earned in Ohio or should I split his income based on how many days he lived in both states? If I split his income, should I include a note with the Ohio return explaining the difference between what is on his W-2 and what was reported (the NY W-2 shows the total income for the year).

thanks

Kevinh5 (talk|edits) said:

12 June 2007
Go with what is on the W-2 in the state earnings boxes. That is what is reported to them and that is what they will be expecting the return to say.

Death&Taxes (talk|edits) said:

12 June 2007
His income is large in Ohio because the relo package is taxed to the state he moved to, not the state he left. Were he to have moving expenses, these would be deducted in his new state, not his old. I agree with Kevin 100%.

JR1 (talk|edits) said:

June 12, 2007
I generally try to show the income that is earned based on residency. So cash basis, money is received in new state, it's new state income. I believe that that's how the state's view it, except for NY, who seems to believe that ALL the money is theirs. So it sounds as tho' the reporting is correct.

Beckynewt (talk|edits) said:

12 June 2007
Thanks - much appreciated.

Blrgcpa (talk|edits) said:

12 June 2007
If he's working for the same company, ask them to adjust the W-2 or issue a statement as to the breakdown of income between the states. File a NYS IT-203.

KatieJ (talk|edits) said:

13 June 2007
Becky, I agree with D&T: the relocation bonus was (a) paid to him while he was an Ohio resident and (b) was compensation for services to be performed in the new location (Ohio), not for services performed in the past. Therefore it is Ohio source income. NY doesn't get any of it. If he had received the payment while he was still in NY, it would also have been included in his NY taxable income on a residence basis; however, NY should give him credit for the Ohio tax, because it is Ohio source income.

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