Your employer has reported this correctly. New York has a very aggressive telecommuting law that considers you to be a nonresident worker in
their state if the company for whom you are telecommuting is located in their
state. Their legal justification for
doing so is called the convenience of the
employer test. Take, for example the
following excerpt from this New York State memo regarding telecommuting
taxation (click on link for full memo in pdf format):
“If a nonresident employee . . .
performs services for his employer both within and without New York State, his
income derived from New York State sources includes that proportion of his
total compensation for services rendered as an employee which the total number
of working days employed within New York State bears to the total number of
working days employed both within and without New York State… . However, any
allowance claimed for days worked outside New York State must be based upon the
performance of services which of necessity, as distinguished from convenience,
obligate the employee to out-of-state duties in the service of his employer.
[The convenience of the employer test.] In making the allocation
provided for in this section, no account is taken of nonworking days, including
Saturdays, Sundays, holidays, days of absence because of illness or personal
injury, vacation, or leave with or without pay.”
What that means for a
telecommuter is: the job he/she is doing
for the company could be performed at the company’s place of business inside of
the state. Since working at home outside
of NYS is a convenience for you and
the employer, but not a necessity, NY
has the right to tax your income. Thus, you will need to file a nonresident
return for NY (even though you only worked physically one day there). If you are filing a resident return for the state where you live, you will be given a
credit for the amount of tax you must pay on this telecommuting income to the
other state.
Because you are married, NY gives you the option to file either joint (your wife's income is exempted from NY) or separately. If you choose to file a NY return Married Filing Separately, you will need to use one of the desktop versions of TurboTax to do this.
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