Opher Ganel at Wealthtender wrote about high-earning New Yorkers overpaying state income tax, and asked me where the mistakes come from.
The biggest misconception I hear from high earners in New York is that their federal strategy handles everything. It does not. New York State and New York City run their own tax systems, with their own rates, deductions and rules about what counts. A client making $300,000 in Manhattan faces a combined marginal rate that can push past 50% when you stack federal, state and city. Most people do not realize they are living in one of the most expensive tax jurisdictions in the country until it has already cost them.
The lever most employees never pull is timing. Restricted stock, deferred compensation and bonuses all have timing flexibility that most employees never use. New York taxes ordinary income aggressively and does not give the capital gains preference the federal code does, so when income lands can be worth tens of thousands of dollars, especially in a year when someone has discretion over a vesting election or a deferral window.
Not every dollar can be moved. But the ones that can, deferred comp elections, the timing of an RSU sale, the year a bonus is paid, deserve a conversation with someone who models the state and city layers, not just the federal return.
Read the full article at WealthTender →
