Will NY penalize me for incorrect state withholding?

[BrianG]

Jurisdiction

New York

I lived in NYC from Jan 1 through Nov 30 last year. My work correctly withheld for NYC all year, but from Jan through Oct they accidentally withheld for CA instead of NY. I've contacted them, and they will send me a corrected W2 in a few weeks (but will not be changing my withholding). I'm trying to figure out the right way to file now.

I've been told by a CPA that I should do the following:

1) File an extension with NY. Don't pay anything, since the CA withholding exceeds the NY liability (and counts as a credit).
2) File an extension with CA. When I get the corrected W-2, file and get a full refund.
3) File with NY and pay whatever I owe.

But I don't understand why NY wouldn't penalize me for (1) under-withholding, and (2) delayed payment beyond Apr 15. I imagine they'll just tell me I should have noticed and corrected it earlier. Is there reason to believe otherwise, and if so, how do I let them know what happened?

If they penalize me for under-withholding, there's nothing much I can do I suppose. But to mitigate (2) maybe I ought to scrape together the money and pay the estimated amount now.

 

[army judge]

In the interest of full disclosure, the "federal tax goons" came at me alleging I owed $35K for something or the other.

I negotiated with the goons, and was able to make the "goons" leave me alone if I paid tribute of $20K.

I paid the $20K, the goons were last seen giggling, glad handing, belly slapping each other; as they slithered away with MY $20K attached to their tails.

I saved myself about 3/7 of what the goons were demanding by negotiating and being ready to pay within 24 hours of reaching an agreement.

It cost me NOTHING to negotiate, because I saved 3/7 of the original $35K

The goons appear to have left me alone for the present.

I've been told by a CPA that I should do the following:

1) File an extension with NY. Don't pay anything, since the CA withholding exceeds the NY liability (and counts as a credit).
2) File an extension with CA. When I get the corrected W-2, file and get a full refund.
3) File with NY and pay whatever I owe.

If you TRUST what the CPA told you, do it.

If you DISTRUST the advice offered you by the CPA you consulted, ignore it, HIRE another CPA or tax attorney to advise you.

If you want to avoid issues with the "tax thieves who MASQUERADE as gubmint goons", don't seek advice from anonymous (entirely unaccountable and anonymous to the "tax thieves") persons or "Russkie bots" who might be assisting the "goons" as they fleece you dry!

But I don't understand why NY wouldn't penalize me for (1) under-withholding, and (2) delayed payment beyond Apr 15. I imagine they'll just tell me I should have noticed and corrected it earlier. Is there reason to believe otherwise, and if so, how do I let them know what happened?

I'm one of those UNACCOUNTABLE strangers I suggested you NOT to seek their counsel.

If they penalize me for under-withholding, there's nothing much I can do I suppose. But to mitigate (2) maybe I ought to scrape together the money and pay the estimated amount now.

Once the "tax thieves" receive the tribute they demanded from you, they generally leave you alone for a period of time.

 

[Tax Counsel]

But I don't understand why NY wouldn't penalize me for (1) under-withholding, and (2) delayed payment beyond Apr 15. I imagine they'll just tell me I should have noticed and corrected it earlier.

That is indeed very likely the response that the NY Department of Taxation and Finance is likely have if you ask for abatement of the penalty based on these circumstances, at least assuming your paystubs during the year clearly indicated CA tax was being withheld and NY tax wasn't.

But to mitigate (2) maybe I ought to scrape together the money and pay the estimated amount now.

Doing that would reduce your penalty a little bit. If you pay up what is owed before April 15 the penalty will be reduced by a very small amount. NY uses the computation that each day it is paid prior to April 15 will reduce the amount you are considered to have underpaid by 0.00023. So if the underpaid tax was $10,000 and you paid it today, April 9, it would reduce the penalty amount by $10,000 x .00023 x 6 days = $13.80. See NY Form IT-2105. The number of days counted will likely be done based on when the state gets the money, not the date mailed, in this instance.

Once you hit April 15, payment of the tax will not help you reduce this penalty. But if the tax is not paid by April 15, there is a chance the state might apply the late payment penalty. I would not recommend waiting for California to pay you before paying your NY tax.