Do I have to pay estimated tax on my personal business run out of Connecticut if I just moved here this year?

Question

I am from New York City, and I started a business there last year. I also work a full time job in New York City that I receive a w2 for. This past month, I moved to Connecticut, and also moved my personal business to Connecticut, but I still work my regular job in New York City. My accountant only gave me vouchers to pay federal estimated taxes, but not state estimates. I also recall him telling me that if I work a regular job in New York, that all my income, including my personal business will be taxed at the New York rate, even though the personal business is run out of Connecticut. Why then did I not get vouchers to pay New York State tax? Is this a mistake?

2 things -

1. I am told that I will be penalized if I do not pay my estimated tax of 100% of last years earnings, or 90% of this years earnings, which is why I am making sure that I pay the correct taxes.

2. Last year, I did not file my taxes with a Tax ID for my business. I used my Social Security number, so that should move with me where ever I go.

3. My tax guy had told me very clearly that it is New York State law that I must pay New York State taxes on all money that I earn, if I had other income coming from NY, even if all of it did not come from NY.

Answer 1

the issue you need to be concerned with is how the irs and ny and ct define your tax home. you are definitely a part year resident of ny up until the time you moved to ct. and you would be required to report all income up to the move as ny source income. once you have moved completely and no longer have a ny address,license,car registration,business license or receive mail in ny then you are on your way to changing your tax home and would need to declare ct your domicile(legal requirement that differs by state,check with your new county court clerk for rules and procedures to achieve this) and then you may declare your self a resident of ct. though this year you would be a part year resident of ct and should report ALL income from all sources during your residency period as ct source income subject to ct state income taxes.the new york job would still be taxable to ny and next year you would file a ny non resident income tax return and report and pay ny state tax (nyc or yonkers possibly if located there) on your ny source income (ny job) you would continue to file ny non resident returns for each year you work and do not ive there.

your question really deals with estimated taxes to ct and whether you will be subject to an underpayment penalty for failure to pay them. the short answer is no most states follow the same rules as the irs as to whether a person is subject to them. you must pay (generall) the lesser of
1) 90% of the current years tax or
2) 100% of the prior year tax liability
the key point here is if a taxpayer had no tax liability for the previous year they would not be subject to the penalty.
BUT if estimated taxes are not paid during the year(generally in four installments) then all tax due for the year would be due and owing at the time of filing. (though with no penalty)
once you legally change your domicile to ct, you may be challenged by ny state as still as resident and they may demand taxes on your other income this is reason enough to be very deliberate in your actions when changing your domicile or tax home and should really should acquaint yourself with your individual states to determine when they consider you a resident and when they would NO LONGER consider you a resident.

Answer 2

It is hard in NY because alot of people live outside the city and work within. The taxes for your business, for last year shold be submitted to NY. If you are paying estimated taxes , you are estimating what you would have to pay for in this YEAR. But was your business opened and filed in NY with a tax key # in NY? you would have to get a tax ID # in conn, to file returns and taxes for anything in thier state. you would probably have to close out the taxID for NY because the business is no longer located in NY. I think that filing the tax in CON is ok but at the end of the year, include your earnings W@ From other job with your business taxes in CONN>
Contact the Fed , and or IRS. Laws vary from state to state.

Answer 3

Doesn't sound right that you'd pay tax in NY on a business based out of CT if you also live in CT, even if you do have a separate job in NY. Ask again about that.

If you lived in NY for part of the year, then yes, the business would be taxed in NY for the part of the year when you lived there.