I did not live in NY state nor is my company HQ'd in NY state, but I did travel there for work. NY state is now asking for taxes. What do I do?

[modernproperty123]

Just received a letter from NY saying I owe a large penalty for not filing NY state taxes in 2018.

1. At this time, I was not living in NY (domiciled in a different state)

2. I did not stay in NY >183d

3. My company is not HQ'd in NY (it is based in CA). 

However, I did travel there semi frequently for work (maybe 8-10 weeks in the year). I checked and it turns out my employer did create a W2 for me in NY but I'm not sure why. Any advice? Do I have a reason to object or is the sad reality that I did, in fact, owe taxes? 

[xmasbaby0]

I RECEIVED A LETTER FROM THE IRS/STATE

TurboTax does not receive any information from the IRS or your state after your return was filed, so no one at TurboTax knows about a letter you received from the IRS or the state.

(what the letters from the IRS mean)

I GOT A LETTER FROM THE IRS   

https://ttlc.intuit.com/questions/3605673-i-got-a-letter-or-notice-from-the-irs

I AM BEING AUDITED

If you purchased Audit Defense:

https://ttlc.intuit.com/questions/2924451-i-bought-max-or-audit-defense-and-now-i-m-being-audited

AUDIT SUPPORT

TurboTax has a special phone number for help with IRS/state tax letters, which will be easier than going through regular Customer Support.   At the page below, click on the blue button that says "Get Help from TurboTax Support".  Then it will ask you what tax year is your letter.  Then it will ask you what the letter concerns. Then it will show you the phone number during posted business hours.

https://support.turbotax.intuit.com/irs-notice/audit-support/

[TomD8]

Here's how it works:

New York can tax non-residents on income earned from work physically performed or carried out within New York State.  So YES, you do owe New York State income tax on that portion of your earnings.

New York is no different in this respect than any other state with an income tax.

If your resident state has an income tax, your NY earnings would also be taxable there, because your resident state can tax ALL your income, regardless of where you earn it.

You'll be able to claim a credit on your home state return for the tax you pay to NY on the dollars taxed by both, so you won't be double-taxed.  But you must file a tax return in both states.

This TurboTax help article explains how to file a non-resident state tax return:

How do I file a nonresident state return? (intuit.com)

So your employer was correct in providing you with a New York W-2 for 2018.  And since you did physically work in NY that year, you would in fact owe NY taxes.

[Opus 17]

I would be thinking about statute of limitations.  You might want some professional advice.

It is likely that the statute of limitations starts when you file, so there is no statute of limitations for NY and they can tax you even though it was more than 5 years ago.  

The problem will come when you file an amended return in your home state for 2018 to claim the offsetting credit for taxes paid to another state.  It might be too late to get that credit refunded to you (but there might be an exception when you have to amend due to a problem from another state).

Also, Turbotax is not supported for 2018 any more, so even if you have the program installed on your own computer with the state module for your home state, you won't be able to install the NY module.  So you will either need to prepare your returns by hand or see a professional.

Note:

You report and pay income tax in your home state on all your world-wide income, no matter where you were living or working when it was paid.  You owe a New York return for income that was earned or paid while you were living or working in New York--the difference with the 183 day is whether you are considered a resident or non-resident.  You are a non-resident for 2018, but that still means you own tax on the portion of income that you earned while physically living or working in NY.  But, the tax NY is proposing may not be calculated correctly, since they may not be allocating the right amount of NY income.  So you should prepare a 2018 return and allocate your income yourself, based on how many days or weeks you were physically in NY.  Then, you can file an amended return in your home state to claim a tax credit for taxes paid to NY.  But this may have issues since it is so late, and you may want to check with a professional. 

[TomD8]

"The New York Statute of Limitations does not apply for any period during which a taxpayer failed to file a return."

https://www.tax.ny.gov/pdf/publications/general/pub131.pdf

[Opus 17]

---

@TomD8 wrote:

"The New York Statute of Limitations does not apply for any period during which a taxpayer failed to file a return."

https://www.tax.ny.gov/pdf/publications/general/pub131.pdf

---

Right.  I'm thinking more about the home state amended return to claim the offsetting credit.  In Virginia, the time limit to amend is 3 years from date of filing, or 1 year after you file an amended return with any other state that affects your VA state return.  The taxpayer here will have to check with their own home state as to amending to get the credit.