NY City Income Tax

Q: I'm a new resident of NJ working in NYC. I understand the state income tax process. But what about the NYC income tax? Should I be paying it? Does it work the same as the state (credited back to me at filing time)?

A: -I've been in the same situation for some years. If you live not in NY State, there is no City of New York or City of Yonkers tax. Your employer should not deduct this. Of course, if you moved from NY City to NJ during the year you're in a situation where you have to prorate this. That would be true also for other income like dividends - No NY tax of any kind while you live in NJ, unoless it is from NY source income. -From 1966 until 1999, New York City imposed an income tax on nonresidents who worked in the city -- a so-called "commuter tax." In 1999 the Legislature amended the law to exempt New York State residents from the tax, while continuing to apply it to nonresidents of the city who were residents of other states. The New York Court of Appeal ruled that the amendment violated the Privileges & Immunities and Commerce clauses of the U.S. Constitution _City of New York, et al., v. State of New York, et al._, NY Court of Appeals, 94 NY2d 577, 730 NE2d 920, 709 NYS2d 122. The legislation that enacted the exemption for NYS residents contained a clause

specifying that, if the exemption was ruled unconstitutional, the commuter tax would be automatically repealed in its entirety. As a result, the tax was retroactively repealed as of July 1, 1999, the date on which the amendment took effect. Residents of the city still pay the resident personal income tax. But nonresidents are not subject to it. Note: if you are an owner of a business carried on in NYC through a flowthrough entity such as a partnership or LLC, or by yourself as a sole proprietor, the business income arising from NYC activity is subject to the NYC unincorporated business tax (UBT). This tax applies to businesses owned by residents and nonresidents alike. .