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Swattie07 · Mar 21, 2008, 09:14 PM

Hello,

I am working in NYC, but I am having trouble deciding which state to claim as residence. I do not want to pay NYC & NYS taxes because they are too high for my income bracket:mad: . I am trying to choose between PA or DE and that leaves me with a list of questions that I sort of know the answers to, but just want to make sure I am making the right choice. They are...

1. Which would be the most beneficial to claim, PA or DE?

2. When it comes to income tax, will I be paying NYS & NYC tax as a non-resident because I work in NYC or just the income tax for the state I choose as residence? :confused:

3. What state/city taxes are unavoidable as a consequence of working in NYS/NYC?:(

4. Will I be left in the hole by making this decision when it comes time to files taxes (i.e IT-203)?:eek:

Any help would be appreciated. Thanks!:) and sorry about the conflicting title and questions. Forgot to edit that.

ebaines · Mar 25, 2008, 08:06 AM

First, let me make sure I understand what you are asking - you work in NYC but are planning to commute from either DE or PA each day - is that correct? I think you'll find that DE's income tax rates are less than PA's, but that would be one brutal commute to make every day! Remember, your state of residency is the one where you spend the most time - for most people it's where you sleep at night when you go home from work. You can't just decide to claim DE as your state of residence if you don't actually live there!

Assuming that you are not a resident of NY State, you will still pay NY state income tax on the wages you earn in NY state (form IT-203). You would not have to pay the NYC resident tax. You will also have to file income tax for the state you reside in, but unless you have other income than your NY state wages that tax bill should be quite small (maybe even $0), as your home state gives you a credit for taxes paid to other jurisdictions.

To answer your last question, commuting from out of state to a job in NYC is typically less expensive tax-wise than living in NYC (because of the NYC resident tax and also housing costs may be lower). However, you need to factor in your commuting expense to really know for sure, and figure out whether the time and aggravation of long-distance commuting are worth it to you.