Yonkers Withholding Error - Employer incorrectly withheld in NYC & Yonkers

[vmaccounting]

Hi Everybody, 

Client never worked or lived in Yonkers, he is a resident of NYC - but employer incorrectly withheld Yonkers taxes on W-2 form. So the client has 2 localities on his W-2 form: NYC and Yonkers. When I am trying to enter it, the form IT-201 generates Yonkers NR Earnings tax and Form Y-203. So generally speaking the client loosing these, lets say $200, for Yonkers NR Earnings tax when he never lived or worked there. 

How can I fix it on the tax return? 

Or he has no choice but to file Yonkers NR until employer fox this error? 

Thanks a lot!!! 

Maryna

[itonewbie]

I am always amazed that taxpayers don't notice extra withholding for the wrong state/locality had been deducted from their pay through the year until when it comes time to file their returns.  Your client should, hopefully, have approached the employer by now to fix it for 2023.

Under Income > Wages, Salaries, Tips (W-2), on the W-2 tab, scroll down to the New York section, and enter -1 (which stands for 0, PTO/Lacerte-speak) on the line for Wages subject to Y-203 (1=all).

This way, Y-203 won't be prepared but Yonkers LIT will still flow through to IT-201, line 74.

If your client gets a notice for Yonkers nonresident tax, a W-2C may then need to be issued but you can probably cross the bridge when you come to it.

[vmaccounting]

Thank you so much for your help! I asked client to request employer to issue a W2-C, he can wait as he is not showing balances due. I would not want him to deal with residency audit from Yonkers- it will come back to me. But I explained him all options 🙂 He fixed withholdings started 2023. He had this issue in 2021 as well.