I highly doubt that this would ever amount to a legal battle in New York State on this issue. It's a pretty reasonable argument that abby pro-se taxpayer could make. The language in Huckaby makes it pretty evident that had it only been one day, their ruling would have been different. Turbotax should defend any position where there is substantial authority. Clearly the statute isn't 100% clear or cases such as Huckaby wouldn't exist. I think this advice is being hyperconservative, and causing the taxpayer to pay taxes to NYS that they do not owe in the first place.
First, IF they get a resident credit, it will only be up to the amount of tax that would be due in their home state. If their home state has marginal tax brackets less than NY, and most do, they will be out of pocket the delta in the tax rates.
What if their home State doesn't have a telecommuting rule (most don't) and instead are a physical presence state? The days worked at home are counted as workdays in that state too. So no resident credit would be allowed. Connecticut just changed their law as of this year, to recognize this issue, since so many taxpayers were being whipsawed in both states.
Telling someone to just pay the tax and take a resident credit, is in my opinion a far less defensible position. If your home state gets around to auditing you for an excessive resident credit, it may be after the statute of limitations on a claim for refund has expired in NYS, potentially subjecting a taxpayer to taxation in two states on the same income.
Kristine L. Bly, EA Private Client Services / Residency / Tax Controversy
Partner, Cohen & Company
