I am posting this for my daughter who is having difficulty getting a 2020 refund from New Jersey.
Here are the basic facts:.
1/1/20 - 2/29/20: She worked for a New York City-based subsidiary of a media company. She worked in their NYC office until mid-February and then began working remotely from her NYC apartment per her employer’s Covid remote work policy.
3/1/20 - 12/31/20: She was re-assigned to a second NYC-based subsidiary of the same media company (the sub has a NYC W2 address) and was assigned to work from an office located in New Jersey. She submitted a NJ W4 per the guidance of her payroll department and her employer began to withhold NJ state (and New York City) taxes. However, per her employer’s Covid policy she continued to work remotely from her NYC apartment. On 3/16/20 she vacated her NYC apartment and moved to Maryland. She continued to work remotely for the remainder of 2020 from Maryland. She never worked in her assigned New Jersey office during 2020.
She filed three 2020 state returns:
- New Jersey Non-Resident (NJ-1040NR) requesting a full refund of taxes (0 days lived or worked in New Jersey)
- New York Part-Year Resident (IT-203) for the period she worked/lived in New York (1/1/20 - 3/16/20)
- Maryland Resident (502) for the period she lived in Maryland (3/17/20 - 12/31/20)
New York and Maryland processed her returns. After a long delay, New Jersey responded and indicated that they will not process the refund until she submits a corrected W-2 or a letter from her employer stating that a) she did not live or work in New Jersey in 2020, b) had New Jersey Income Tax erroneously withheld, and c) is claiming a full refund of the withholding. Her employer is unwilling to issue the letter, claiming that the NJ tax was not erroneously withheld because their policy is to withhold state taxes based on an employee’s assigned work location for employees who would, if not for Covid, be required to work in the office.
I have two questions. First, were we correct in our interpretation of the NY/NJ/MD tax law by allocating her state taxes to only New York and Maryland based on days worked from each state and requesting a full refund from New Jersey? Second, if that was correct, what recourse might we have if the employer is unwilling to issue the requested letter?
