Paul Thomas, CPA wrote:
- quote -

Uhh ... isn't that what I said?? Oops. Guess not.

Thanks for the catch, Paul.

Katie

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"Katie" <katiej_1958[at]yahoo.com> wrote
- quote -

Actually it's the other way around. The lower the number of
withholding allowances, the higher the amount of
withholding.

Increases in the withholding allowances ~decreases~ your
withholdings.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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quests...[at]hotmail.com wrote:

- quote -

Well, it is true that if you claim zero exemptions, less will be
withheld from your paychecks than if you claim one or more exemptions
on your W-4. However, there is no guarantee that you will get a refund
if you claim zero exemptions. You may still owe tax at the end of the
year, but in that case you will owe less than you would have owed if
you had claimed more exemptions.

When you figure your 2005 taxes, if you are underwithheld (i.e., you
owe additional tax with your return), you can come closer to breaking
even or getting a refund next year if you decrease your exemptions (or,
if you're already at zero exemptions, arrange to have an additional
amount withheld from each paycheck). If you are overwithheld (i.e.,
your return shows an overpayment), you can change your W-4 to claim one
or more additional exemptions to come closer to breaking even. All
this, of course, assumes that your 2006 tax situation will be
substantially the same as 2005. If you expect your tax situation to
change (e.g., you will get married, or buy a house, or change jobs, or
become self-employed), the analysis is more difficult.

The more exemptions you claim on your W-2, the less will be withheld
from your paychecks, and the smaller your refund or the greater your
additional tax will be when you file your return. Ideally you would
want to arrange things so that you break even. A big refund is just
an interest-free loan to the government.

Katie in San Diego

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Thanks for the explanation,

One more question, if my Status is single. Should my
paycheck have Tax Exempt 0 or 1 for Federal, State?

I was told if I put 0, I pay more taxes and will get a
refund at the end of the year. If I put 1, I pay less but
may owe money at the end of the year.

Is this correct?

Thank You.

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quests123[at]hotmail.com wrote:

- quote -

Just the part from the time when you lived there. Even if
you had been working in NYC, your income would not be
subject to the NYC tax after you moved to NJ.

You will be responsible to NY state for the income you
earned while you were a resident, plus any income you earned
from performing services at your employer's NY office after
you became a nonresident.

Since you worked at your employer's NJ office, rather than
at your residence, after moving to NJ, it is not likely that
you would be subject to NY's peculiar "convenience of the
employer" sourcing rule. Presumably you worked at the NJ
office because your services were required to be performed
there out of necessity rather than for the convenience of
either you or your employer.

- quote -

All of your salary is subject to NJ tax for the entire year,
because all of your services were performed there. NY
(state) will give you credit for the tax you pay to NJ on
the portion of your salary that you earned in NJ while you
were a NY resident.

If you have income other than your salary, it will be taxed
on a residence basis by each state for the part of the year
when you were a resident, and on a source basis for the part
when you were a nonresident. Income from intangibles (e.g.,
interest, dividends, gain/loss on sale of stocks, bonds,
etc.) has its source at the residence of the owner.
Therefore, NY (state) will tax all of your intangible income
for the first 3 months of the year, and NJ will tax all of
it for the remainder of the year. There shouldn't be any
overlap.

Suppose you owned rental real estate in NY for the entire
year. The net rental income would be subject to NY tax on a
source basis after you became a NJ resident. NJ would give
you credit for the tax you paid to NY on that income to the
extent it arose while you were a NJ resident.

- quote -

The W-2 is wrong. Best to get the employer to fix it, if
possible. If not, attach a statement to your NYC and NY
state part-year resident returns explaining the difference.

- quote -

You will need part-year resident forms for NYC, NY state,
and NJ.

- quote -

Resisting the temptation to elaborate on the distinction
between a professional accountant and a person <G> ... you
may need professional help this year. However, if you get
the correct forms and follow the instructions, you may be
able to do it yourself, especially if your salary is your
only income.

Katie in San Diego

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My question is the following.

I lived in NY from March until June while working in NJ and
in the middle of June I moved to NJ while working in NJ.

The employers address is in NY but they have an office in
NJ.

I used to pay NYC taxes and NJ taxes while living in NY.
Once I moved in June I no longer paid NYC taxes because my
payroll changed my address and I was tax blocked.

Now am I still responsible for ALL my yearly income to NYC
or just the part from March until June when I lived there?

Same question for NJ. Am I responsible for all the income to
NJ even though I lived in NYC for 3 months?

On my W2 it lists my total taxable income for local as NYC
for the whole years worth of salary. While taxes paid only
lists the amount I paid from March to June. Is that right?
If I only paid NYC taxes from March until June. Will I owe
them money for the rest of the year?

Will I need part time resident forms for NYC and the same
for NJ?

Should I go for a professional accountant or is this doeable
by a person.

Thank You.

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