Does VITA provide service for New York performers only?
We answer questions from people all over the world.
What is different about taxes in New York City?
There are a couple of tax laws which are peculiar to New York, but it is important to remember that there are going to be exceptions to every rule. All I can give here are general guidelines.
1) New York City residents pay not only federal and state tax, but New York City income tax as well.
2) In addition to the city income tax, New York City charges an “Unincorporated Business Tax.” The city of New York considers artists who are independent contractors (definition: someone who is not an employee but who is paid fees) to be unincorporated businesses, and charges a unique tax. It applies only to those who gross over $75,000 a year, or whose unincorporated taxable income is $35,000. But if you incorporate, you have to pay New York City corporation taxes. [Editor’s note: Some companies are beginning to consider singers independent contractors.]
What about singers who don’t live in NYC, but work there occasionally?
All taxes apply to anyone who earns money in NYC, not just NY residents.
Many singers keep an apartment in NYC but are there only sporadically. What are the tax implications?
You are a New York State resident and you may be subject to NY resident tax if:
1) You maintain a permanent place of abode in NY; or
2) You spend 184 days or more in NY in the taxable year.
Generally speaking, if you maintain a permanent residence in the city or state of NY, you are considered a NY State resident, but there are inconsistencies in the law. Even if your domicile is not New York State, but you spend 184 days a year or more in New York during the taxable year, you are considered a taxable resident. The good news is that if you come to New York and maintain a temporary residence of less than 184 days, you will still pay state and city taxes but as a non-resident–which can save thousands.
What about a singer who goes to, say, Germany for a full year, but keeps an apartment in New York?
New York City residents who go abroad for 330 consecutive days or more are entitled to a foreign-earned income exclusion of up to $70,000. They do not pay United States federal taxes on money earned out the country. If, however, they keep popping in and out of the U.S., they are still entitled to some foreign tax credit for taxes paid to a foreign country, but they get no credit from New York State or New York City on taxes paid outside the U.S.
Does New York give tax credit when taxes are paid to another state?
Performers who work in other U.S. states get state tax credit for all or part of their income taxes paid to another state. New York City tax, however, does not give anything toward taxes paid in another state or city. If you work in Florida, Texas or Washington where no taxes are taken out, you’re going to have a big tax bill come April.
If a performer is about to relocate to New York City, would it be better to plan on living in the suburbs or in the city?
For tax purposes, it is better to live outside of New York City. New York state taxes are comparable to some other states’, but a New York City resident pays more income tax (combined New York State/New York City and possibly the unincorporated business tax) than anyplace else in the country.
Actor Conard Fowkes is the Coordinator for Volunteer Income Taxes (VITA), a program of the Internal Revenue Service. Open on Wednesdays, VITA can be reached at 212/869-8530. Members of Equity, AFTRA and SAG are welcome to use this service.
First Year in NYC
Income: $20,000 a year
Housing: NYC apt with roommates
FEDERAL TAXES: Although 15 percent is the lowest tax bracket paid, you would only end up paying less than 10 percent. Why? You wouldn’t pay taxes on at least $6,800 of your income. You can deduct $4,150–standard deduction for a single person; and $2,650–personal exemption, so you would only be paying the 15 percent on $13,200, not $20,000. Learning how to use deductions, you could pay even less but that’s for another article.
NEW YORK STATE TAXES: You would get a standard $7,500 deduction off your income of $20,000 which leaves $12,500. New York State taxes would be $535. The state also gives you a $45 credit since your income is not over $20,000.
NEW YORK CITY TAXES: $414.
SALES TAX: 8.25 percent charged on clothes. Many New Yorkers come to New Jersey to buy tax-free clothing. In NY, food is not taxable but certain junk foods are.
PARKING TAX: If you have to bring your car to New York, you will be paying extremely high parking rates as well as a parking tax. Monthly parking rates start at about $150!