aargh Taxes! ??'s TaxCut doesn't answer!

[phred52]

I'm going in circles here! Sooo frustrating!

Doing our taxes at home with the help of TaxCut. All was fine until I tried to do my 19 yo DD's taxes. We claim her as a dependent, full time student. In 2009, she was in Disney's college program. Went to school full time (12 credit hours per semester) AND worked full time @ Disney. Because she literally lived there 7 months, I declared her as a part time resident of NYState.

DD moved back to NY in August and still attends college full time. Now here comes the confusing part.

Tax Cut says I can't claim DD as a dependent on my NY income tax return because she only lived in NY part time. If we do declare her as a full time NY resident, then she must pay NYState income tax on her earnings from Florida. Neither option seems right.

What does one do when your child works while going to college out of state ??? I know I'm not the first Mom to run into this..... please tell me your experience with your kids working/college/taxes......

Thanks!

 

[msmayor]

Your problem is the part-time resident thing. She's most likely a full-time resident of NY if that is where her driver's license is issued and where she is registered to vote.

 

[deva]

I don't know any specifics about NY, but generally speaking when you are a resident of a state and have income earned in another state, you get to take a credit for taxes paid to the other state so you don't get double taxed. Trouble with your situation is that FL has no state income tax, so there are no taxes to claim for credit.

Check your NY State's Dept of Tax website. You can find instructions which might give you some additional guidance.

 

[silmarg]

I am a NY tax professional... it sounds to me that your child was a full year resident of New York.

Let me give you some snippets from NY Taxation & Finance literature to support my conclusion:

"To determine whether or not you are considered a New York State resident for income tax purposes, you must consider where your domicile was and where you maintained a permanent place of abode during the tax year"

"In general, your domicile is the place you intend to have as your permanent home. Your domicile is, in effect, where your permanent home is located. It is the place you intend to return to after being away (as on vacation abroad, business assignments, educational leave, or military assignment).

You can have only one domicile. Your New York domicile does not change until you can demonstrate that you have abandoned your New York domicile and established a new domicile outside New York State."

"A change of domicile is clear and convincing"

"If you move to a new location but intend to stay there only for a limited amount of time (no matter how long), for work, school, or any other purpose, your domicile does not change. "

There are some exceptions to these rules, but they would only come into place if your DD spent less than 30 days in NY and did not have a permanent place of abode in NY (which would not be the case as your home is still in NY).

So the good news is she is your dependent, but the bad news is she must pay NY tax on all her income.

Read pages 5-8 in the attached for all the gory details:
http://www.tax.state.ny.us/pdf/publications/income/pub80.pdf

 

[phred52]

OOoooo. Thank you for the replies! I got hung up on her living in Florida from January to August. But obviously something was 'off'. Now that I know what I did and why, I'm heading back into taxcut and do it right.

Thanks Guys!! I just knew my Budget board friends would be able to help!

 

[tar heel]

Her doing the college program was like her going to college in Florida - if she's your dependent, she is a New York resident. My son owed North Carolina tax after his semester in the college program, so don't be suprised if she gets to send a check to the State of New York.

 

[Traveliz]

Not from NY but my daughter also had to pay IL taxes on her CP year at Disney.

Liz

 

[silmarg]

As one of the previous posters mentioned, when you earn income from a state you are not a resident in you would owe income taxes to that state for that income. You would then get a credit on your NY taxes - to avoid double taxation.

Problem in this situation is that FL does not have an income tax. So nothing has been withheld and you are stuck writing the big check to NY.

 

[TheDISneyFamily]

Yup. Too confusing. My daughter is dealing with doing her taxes right now. She started her CP last Aug. & will be done in May. I wish someone would have mentioned the state tax thing along the way. She has to pay taxes to our home state. (Having no income tax is a foreign concept! LOL!) Not only that, but Disney didn't hold out enough for the federal taxes, & she had to pay extra on that as well.

 

[msmayor]

Yup. Too confusing. My daughter is dealing with doing her taxes right now. She started her CP last Aug. & will be done in May. I wish someone would have mentioned the state tax thing along the way. She has to pay taxes to our home state. (Having no income tax is a foreign concept! LOL!) Not only that, but Disney didn't hold out enough for the federal taxes, & she had to pay extra on that as well.

That's not Disney's fault...they take out only what they are permitted based on the W-4 on file that is filled out by the employee, in this case your daughter.