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New York · Resident Credit & Double Taxation

Statutory residents get NO New York credit for their home state's tax on investment income.

The resident credit looks like full double-tax protection. It is not: it only covers income sourced to the other state, and intangible investment income has no source — the exact trap dual residents fall into.

I'm domiciled in Connecticut but a New York statutory resident. Connecticut taxed my dividends and capital gains — does New York credit that tax?
Commonly misreported
No. Tax Law §620 allows a resident credit only for other-state tax on income 'derived from' sources within that state. Interest, dividends and capital gains from securities are intangible income with no geographic source, so the credit is denied — both states tax the same income. The Court of Appeals upheld this in Tamagni (1998).
Sources: Tax Law § 620 · Tamagni v. Tax Appeals Tribunal, 91 N.Y.2d 530 (1998)
Didn't the U.S. Supreme Court's Wynne decision make this double taxation unconstitutional?
Commonly misreported
New York courts say no. Post-Wynne constitutional challenges were rejected in Edelman (1st Dep't 2018) and Chamberlain (3d Dep't 2018), and the U.S. Supreme Court declined to hear both in October 2019. Tamagni remains current law: statutory residents bear unrelieved double tax on intangibles.
Sources: Tamagni v. Tax Appeals Tribunal, 91 N.Y.2d 530 (1998) · Tax Law § 620
What income DOES the resident credit cover?
Income actually sourced to the other jurisdiction — wages for work performed there, income of a business carried on there, rents from real property located there — where that jurisdiction (another state, D.C., or a Canadian province) imposed an income tax on it. Dual residents should also check the proration rules in the audit guidelines.
Sources: Tax Law § 620 · Nonresident Audit Guidelines (Dec. 2021)
How do I avoid the trap?
The exposure comes from statutory-resident status itself: it usually requires either giving up the New York permanent place of abode or keeping New York days at or below 183. Once you are a statutory resident for a year, the intangible double tax for that year generally cannot be credited away.
Sources: Tax Law § 605(b) · Tamagni v. Tax Appeals Tribunal, 91 N.Y.2d 530 (1998)
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Related New York tax questions: Statutory Residency (183-Day Rule) · Domicile & Leaving New York · New York City Income Tax

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