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Client moved from NYC to Chicago mid year but continued to work for the NYC company remote. How to allocate income to states

bgoldsmith
Level 2

I have a client who moved from NYC to Chicago mid way through 2020 but continued to work for the NYC company. Lets say the move date May 2020. NYS wages were the same as the Federal wages but the NYC wages were cut in half. The taxes that were withheld were proportionate to the wages. How should I be filing the state returns... Is the client now a full time resident of Illinois and a non resident of NYS & NYC or is the client a part year resident of both? In addition, how should the clients interest and capital gains earned be allocated to various states?

 

Thank you in advance.

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Terry53029
Level 11
Level 11

PY for both states, and allocate wages accordingly Investment income I believe is all to state of residence. 

bgoldsmith
Level 2

Thank you and just to confirm.... all wages from the w2 should only be taxed by NYS, as the employer is located in NYS and the client is working remote?

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Terry53029
Level 11
Level 11

The basic rule for states is: The resident state, taxes world wide income. The nonresident taxes only income earned in their state. In your case all income is taxed to NY, and all income after becoming a IL resident is taxed to IL. IL will give a credit for the tax paid to NY while a resident of IL.