NY, PA state tax filing requirement question

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Material Guy
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Joined: Sun Dec 04, 2011 11:28 am

NY, PA state tax filing requirement question

Post by Material Guy »

Background: DS was a student in 2020 and graduated at the end of 2020 from NYU with a master's. We claimed him as a dependent on our tax return for 2020. Since he had a small income for the last two years, he filed appropriate Federal, PA state, and local taxes in 2020. For 2020, he also filed a NY state return.

For the year 2021: He is currently a freelancer and continues to live in New York City. He plans to stay in NYC for the rest of the year. He uses our PA home address for paperwork. He also still has a PA Driver's License.

Question: For 2021, does he need to file both NY and PA state tax returns, or just a NY return? He will not be listed as a dependent on our 2021 tax return and will be filing Single. Being a freelancer, his clients are in various states.
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grabiner
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Re: NY, PA state tax filing requirement question

Post by grabiner »

For questions such as residency, the best source of information is the state tax bureaus of New York and Pennsylvania.

If he has a residence in NY and spent 183 days in the state, he is a NY resident for tax purposes.

If PA is his domicile (as would be indicated by his maintaining a PA home address and PA driver's license), he is a resident for tax purposes if he maintains a permanent place of abode in PA (which would be your house) or spends 30 days in PA.

In both states, residents pay tax on all their income. According to the Dual Residency (NESTOA Agreement), PA and NY appear to have an agreement to prevent residents from being double-taxed on any income; he would get a PA credit for earned income with a source in NY, and a NY credit for income such as bank interest which both states consider sourced to that state.

If he is a non-resident of either state for tax purposes, he would pay tax only on income with a source in that state, and could take a credit for tax paid to the other state. Both states require non-residents to file a return if they have $1 of income with a source in that state, and enough total income to meet the filing requirements.
Wiki David Grabiner
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Material Guy
Posts: 103
Joined: Sun Dec 04, 2011 11:28 am

Re: NY, PA state tax filing requirement question

Post by Material Guy »

David, Thanks for this excellent information and the pointers!
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