ErnieS0
Expert Alumni

State tax filing

New York state follows the "convenience of the employer rule," meaning you are subject to NY tax regardless of where you work unless you are teleworking for a legitimate business reason.

 

From your description, it seems to me that your entire earnings are subject to NY state tax since you continued to work for the same NY-based employer who is asking you return to your NY office in 2021. However, if your employer stopped withholding NY state tax, it may be their opinion that you meet the qualifications to be a remote employee not subject to NY state tax. I would discuss this situation with your payroll department as the facts and circumstances of each situation are different.

 

It further appears you are subject to New York City income tax from January to June since you paid rent and maintained an apartment in NYC, If you use March, on audit, you may have to show steps of your efforts to establish residency in Illinois from March.

 

New York aggressively audits telecommuters. If audited you will be asked to provide an allocation of days worked and evidence that you worked from a bona fide office during days outside NY.

 

New York says:

 

If you are a nonresident whose primary office is in New York State, your days telecommuting during the pandemic are considered days worked in the state unless your employer has established a bona fide employer office at your telecommuting location.

 

There are a number of factors that determine whether your employer has established a bona fide employer office at your telecommuting location. In general, unless your employer specifically acted to establish a bona fide employer office at your telecommuting location, you will continue to owe New York State income tax on income earned while telecommuting.

 

See: Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York Stat...

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