Who Must Pay New York State Income Tax?

Generally, you must file a tax return and pay New York State income tax if you’re a New York State resident and are required to file a federal return. However, you may also have to file a New York State return and pay if you’re a nonresident or part-year resident of New York and you have income from New York State sources. New York residency rules can be complicated so it is best to be proactive and get the advice of a tax professional before you file. If you file incorrectly and get audited, consult a tax attorney for help because the Tax Department is very aggressive at enforcing its residency rules.

Who Is a New York State Resident for New York Income Tax Purposes?

There are two tests for New York residency – the domicile test and the statutory residency test. If you meet the requirements of either test, you may owe taxes to New York. Importantly, residents must pay taxes on all income regardless of where it is earned. Nonresidents only pay taxes to New York on New York-sourced income. For more details on the residency tests, download our eBook.

When Does a New York State Resident Have to File a New York Income Tax Return?

New York residents must file a return if they meet any of the following conditions:

• They have to file a federal return.
• They did not have to file a federal return but their recomputed federal adjusted gross income plus New York additions were more than $4,000 ($3,100 if they are single and can be claimed as a dependent on another taxpayer’s federal return).
• They want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from their pay.
• They want to claim any of the refundable or carryover credits available.

Residents should use Form IT-201, Full-Year Resident Income Tax Return.

When Does a Nonresident Owe Income Taxes to New York State?

A taxpayer who was not a resident of New York State for any part of the year is considered a nonresident. Nonresidents owe income taxes to New York only on income allocable to New York State, such as wages earned for services provided within the State. For more information on the requirements for filing a nonresident income tax return, see our related post – When Does a Nonresident In New York Need to File a Tax Return?

Nonresidents should use Form IT-203, Nonresident and Part-Year Resident Income Tax Return.

When Does a Partial-Year Resident Owe Income Taxes to New York State?

Part-year residents must file a return if they meet any of these conditions:

• They had any income during their resident period or had New York source income during their nonresident period and their New York adjusted gross income Federal amount column (Form IT-203, line 31) exceeds their New York standard deduction.
• They want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from their pay.
• They want to claim any of the refundable or carryover credits available.
• They are a part-year resident and subject to a separate tax on any lump-sum distributions for their resident period derived from or connected with New York sources.
• They had a net operating loss for New York State personal income tax purposes for the tax year, without having a similar net operating loss for federal income tax purposes.

Taxpayers who meet one of the above requirements must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return.

What Happens If You Failed to File as a New York State Resident?

If you know you made a mistake and the New York Tax Department has not discovered your error, you may be able to admit your error, pay your taxes and avoid penalties through the Voluntary Disclosure Program. Alternatively, if you have received a residency questionnaire or audit notice, you should contact a New York tax attorney to assist you in challenging the audit or settling your case.

Contact our tax law firm if you are dealing with a potential residency audit. We have over 25 years of experience successfully handling these matters.