@kristinelbly Thank you for your reply, it is super informative and helpful! Could you please also recommend what sources I could use to defend the position that “1. You have a NY employer, you work ZERO days a year in NY. You do not have to pay NYS tax. You do not meet the minimum threshold under Federal due process. Your employer shouldn't be withholding either.”
My husband is in exact same situation. NY employer, did not step a foot in NY. His employer withheld some NY and mostly CO taxes but reported full NY and CO income on w-2. So now if we file NY taxes we have to pay an underpayment penalty in addition to the full amount of taxes we owe in NY. I know we’re getting a credit from CO but it doesn’t cover the full amount of taxes owe to NY.
I have read through the links you posted and the PDF for NYS auditors (the allocation guide), and I cannot find a straightforward backup. It all seems to come down to the convenience test which we don’t pass (we moved from NYS to CO for personal reasons, and NY employer was ok with him working from home remotely). My husband doesn’t have clients, his employer is the “client”.
The only case that explicitly says that we might not need to file NY taxes is described in the allocation guideline (pg19 and see below) but I’m not 100% sure if it is fully applicable in our case (was the person in the case still a w-2 employee working for a NY company? Where were his clients?).
From page 19 of the guide: “Moreover, it is important to remember that the convenience rule does not apply where an employee works entirely out of state and performs no services within New York. Thus, in the Matter of Arthur Hull Hayes, 61 AD2d 62, a nonresident formerly employed in New York performed consulting duties at his home in Connecticut. He no longer had an office in New York and performed no services in New York. In determining that he was not subject to New York taxation, the State Supreme Court stated:
“A nonresident who works in another state but who performs no work in New York is not subject to New York State tax liability no matter for whose convenience or necessity he performs the work.”
If you could clarify that point (why if you don’t step a foot in NY - you don’t need to pay NY tax) - I’d greatly appreciate it!
