Domicile in NY, employed in NJ for national employer, but teleworking almost 100% from NY. How do I file?

[nys464]

Hello.  I am domiciled in NY and work for a company that has offices in every state.  My assigned office is in NJ.  In 2020, I almost exclusively teleworked from my home.  I had the option to go back to the office in NJ late in the year but continued to telework.  I only ventured into NJ for specific assignments about 3 times in 2020.     

In the past, when I only teleworked occasionally for my own convenience, I simply filed a NJ Non-resident return first, followed by a NY return.  NY credited me for taxes paid in NJ and it was almost a wash anyway.  I understand that I have to do that again, because I have a small amount of NJ sourced income (and my W2 shows all my income is from NJ).  

My real issue is that NJ taxes 100% of my deferred retirement contributions and NY does not, even though I am barely even working in NJ.  My employer will not switch my work location to NY because the position will always be funded for an office in NJ, no matter where we are actually working from.

Can I apportion the days I worked in NJ and shift the income mostly to NY to gain the benefit of paying tax on roughly $20k less income (the deferred compensation retirement plan amount)?  If so, how? 

The NJ return has an area for adjustments that allows counting of the days worked in NJ and to enter the amount earned in NJ.  But how do I go about correcting the NY sourced income on the W2 for NY return purposes?  Is doing this illegal even though I actually did not work in NJ?  I believe that if the tables were turned and my working from home caused an increase in tax liability, the affected state would come knocking. 

Any help is appreciated. 

B   

[ErnieS0 · Accepted solution]

New Jersey and New York both kept pre-pandemic work arrangements in place for teleworkers working at home due to COVID-19.

Your normal work days from home are considered to be working in NJ so you would report as NJ income whatever is listed on your W-2 as NJ income and claim a credit on your NY return for tax paid to NJ, the same as you did in past years.

New Jersey says: "New Jersey sourcing rules dictate that income is sourced based on where the service or employment is performed based on a day’s method of allocation. However, during the temporary period of COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employer’s jurisdiction."

Learn more at Telecommuter COVID-19 Employer and Employee FAQ. See the section entitled Personal Income Tax and for NY Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York Stat...

[nys464]

Thank you very much for the clarification!