Salary Continuation - State Tax

[daveabby]

I’m taking an early retirement package from a Fortune 500 company on February 10th. After 30 years of service, I will receive 52 weeks of salary continuation. I live in CT and work in NY (my desk in NY) – for years I have paid NY state tax and get a credit on my CT state tax – even through the pandemic when I was 100% work from home in CT.
Now that I am on salary continuation (no desk in NY, no access to systems, etc.) do I pay state tax to CT or to NY?
Thank you - first post...

[pshonore]

What does the state code box on your W2 or 1099R say? Assuming it says "CT", you will be paying tax only to CT. If it says NY I would try to get it corrected.

[fabdog]

I live in CT and work in NY (my desk in NY) – for years I have paid NY state tax and get a credit on my CT state tax – even through the pandemic when I was 100% work from home in CT.
Now that I am on salary continuation (no desk in NY, no access to systems, etc.) do I pay state tax to CT or to NY?

Why would you think it would be any different than when you were working? The company had you as working in NY... and I would assume that's how they'll report this

When I retired on a package I was in AZ, but moved to VA. All my payments on the package and any trailing earnings or bonus were reported as AZ income even though I was no where near AZ.

I would expect you'll need to report NY and get your CT credit as you have previously done

Mike

[daveabby]

Thank you

[piper]

I don't see why you would have to pay NY any tax. They are not involved at this point. You are basically being given a severance package, not a paid salary even though its getting paid out over the year.

[bsteiner]

I had a similar case. H and W lived in NJ. H worked for a large company about half in NY and about half in NJ. Then he took a buyout offer. He claimed none of it was NY income,

H and W then got divorced. New York sought additional tax from them. I represented W. While the case was pending, a court decision in New York held that if only one spouse had NY source income, NY has no jurisdiction over the other spouse. NY then dropped the case against W.

Now if only one spouse has NY source income, he/she files a joint return and signs a certification that he/she is the only spouse with NY source income.

[9Iron]

Keep in mind that you will get a W-2 for NY this year, because you worked in NY.

NY W-2 wage reporting requirement is that NY wages should equal Federal Wages. Therefore, all of these payments will be reported this year.

[MarkNYC]

I’m taking an early retirement package from a Fortune 500 company on February 10th. After 30 years of service, I will receive 52 weeks of salary continuation. I live in CT and work in NY (my desk in NY) – for years I have paid NY state tax and get a credit on my CT state tax – even through the pandemic when I was 100% work from home in CT.
Now that I am on salary continuation (no desk in NY, no access to systems, etc.) do I pay state tax to CT or to NY?

It is going to be taxable to NY. Per NY law Sec 631(b)(1)(F), NY source income includes "income received by nonresidents related to a business, trade, profession, or occupation previously carried on in this state, whether or not as an employee..."

If wages for prior years were 100% sourced to NY then the same will apply to the salary continuation wages. If wages in prior years were less than 100% NY source, then the NY apportionment of the wages for the year of termination plus the 3 prior years can be used to apportion the salary continuation wages. See TSB-M-10(9)

The above does not apply to income that qualifies as pension/retirement plan income.