A fully remote employee who never spends a day in New York does not have NY source income. To be subject to NY tax, you have to have worked “within” and “without” of New York.
See: New York’s Convenience Rule: Under the COVID Microscope
See That said, New York is very aggressive about taxing remote employees and there have been cases where the facts appear to favor the taxpayer, but they have lost.
You can file a nonresident NY return and get back all your withholding. Change your NY wages to $0.
- On New York Income Allocation, say No to Were all of your wages and/or your self-employment income earned in New York State?
- Edit Your W-2 on Your Form W-2 Summary
- Choose Allocate by Percentage on Allocate Wages to New York and enter 0%.
If your employer agrees that you are working remotely for their convenience, speak to them about stopping NY withholding and classifying you are a Tennessee employee.
You will probably have to file Form IT-2104-E Certificate of Exemption from Withholding.
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