State tax filing

@b87lar the issue, is that whether you realize it or not, you've potentially subjected yourself to tax exposure in two states. The resident tax credit you took in years 2020 and 2021, on your Utah tax return, was not correct. In order for you to receive a tax credit in your home state, the income must be sourced to New York, under the laws of Utah. There are only a few states that have a "Convenience of Employer" rule (Connecticut, Delaware, Nebraska, New York and Pennsylvania) and Utah is not one of them. 

Which means Utah considers your days worked at home, as Utah workdays. New York considers your days worked at home as NY workdays, unless you have a valid argument otherwise. There is no reciprocity between the states. So you would owe tax on your wages both to NY and UT. 

So I would advise that you take the correct position, and request a refund from New York, and pay the taxes owed to Utah. Whether you choose to amend and correct the issue for 2020/2021 is up to you, you will owe interest and potential penalties to Utah to correct the mistake (I think you could request a penalty abatement, citing your employers treatment of the income). Depending on your income threshold, the tax rate in Utah may be lower than your tax rate in New York. 

My clients who have 0 workdays, and are able to produce a letter from their employer to that fact, have had no issues on desk audits. Its a respond to the audit notice with the letter from your employer, cite 132.18(a) and Matter of Hayes referenced herein, and get your money back. Its a pretty black and white issue. Based on the Withholding Guidelines issued by the State of New York for employers, your employer shouldnt have been withholding NY wages anyhow. 

2009 NYS Withholding Guidelines (p. 41) states:

Employees who expect to perform no services in New York may submit, but are not

required to submit, an IT-2104.1 to their employer estimating a percentage of services

performed in New York of 0%. The employer may rely on the IT-2104.1 as long as the

employer does not have actual knowledge or reason to know that the Form IT-2104.1 is

or has become incorrect or unreliable.

The 2004 Withholding Guidelines (p.25) are even clearer to the point:

Days Worked at Home and Telecommuting - Days worked at home by New York State

nonresidents are usually considered to be days worked in New York if the

employee’s primary work location is in New York State. In general, if the

employee is working at home for the convenience of the employee, as opposed to

the necessity of the employer, these days will be considered days worked in New

York State. However, if the employee does not enter New York State during the

tax year, income tax withholding is not required.