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This is a very interesting thread. i'd like to put in my two bits on the original subject regarding something that has not been brought up in this thread:

The IRS will not allow a deduction for state income taxes paid when the employee is not required to pay the taxes. So..... if this tax payer ends up paying any taxes to NY and the IRS determines that NY has no authority to tax the employee there is NO tax deduction for the IRS. Of course the employee will want to and need to try to get a refund under these circumstances but neither the "tax" nor any such "refund" from NY will impact IRS taxes.

this sort of thing happens under just these circumstances, when a taxpayer files as a non resident when he/she is not actually required to do so. And yes under these specifics it's not the taxpayer's idea but still the same.

Joe Varga
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