I live in MA but work for a company in NYC remotely - should I be filing a NY state return or an MA state return?

[DanielV01]

Both.  New York considers that an individual telecommuting for a NY company is working in NY also and will tax them as a NY nonresident.  MA will tax all of your income no matter where you earned it.  However, Massachusetts will allow you to claim a credit for the tax you pay to NY on the income you earn there.

[milucarelli]

what form do I file in New York?

[milucarelli]

I’m in the same situation, what form do I file in New York?

[Hal_Al]

You file a NY non-resident form (IT-203).  You'l have to purchase the NY software from TurboTax (TT). TT will select the right form. Do the NY return first, then MA, so that TT can correctly calculate the credit.

Non resident instructions https://www.tax.ny.gov/pit/ads/it203_information.htm

For more on NY's notorious telecommuter tax, see http://www.journalofaccountancy.com/issues/2009/jun/20091371.html

If you work outside the state as a job requirement, you are only subject to New York State income tax on the days you work in New York. But if you work outside New York for your own convenience, you are subject to New York State income tax on all your income. Pennsylvania, Nebraska, Delaware and New Jersey have the same rule. 

[TomD8]

Here's a link to New York's memorandum on its "convenience of the employer" tax doctrine regarding non-resident telecommuters: https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf

[harptree2005]

Has any of this changed because of covid?

[Hal_Al]

Q. Has any of this changed because of covid?

A. Sort of.  I expect by tax filing time  (early 2021) the states will publish firmer guidelines 

See https://www.hodgsonruss.com/blogs-Noonans-Notes-Blog,state-guidance-related-to-covid-19-telecommutin...

[TomD8]

@harptree2005 --

This Covid-related bill is in committee in the New York State Senate:  

https://www.nysenate.gov/legislation/bills/2019/s8386

[Tenleyramenkfb]

I am asking about the same predicament between living in Boston and working for a company in NYC and I want to make sure I understand you correctly. When you say you file to both states but then MA gives you the "credit" from your NYC taxes paid, that means you're not paying taxes on anything twice, correct? Like you're losing you're money because it's taxes and that's what paying taxes means.... however you're not losing extra money because you're paying it TWICE?   It's just a matter of filing to both and following  the rules via the extra form? 

[Tenleyramenkfb]

In other words, does it cost you extra to be in this situation (versus someone who lives AND works in either MA or NYC)

[TomD8]

If you live in MA and physically work in NY, it works like this:

NY can tax you on the income you earn by working in NY.

MA can tax ALL your income from any source, including your NY income.

You'll be able to claim a credit on your MA return for the taxes you pay to NY on the portion of your income that is taxed by both states.  So in effect you will not be double-taxed on that income.

[DaveF1006]

Yes, this could cost you extra because NYS will expect you to pay state income tax even if you are working remotely and live in another state. In addition, you may need to pay income taxes in the other state. Most states do not tax remote workers but states like New York and California are exceptions to this rule.

To receive a credit for the taxes paid in New York, you will prepare your NYS non-resident return first and then your resident MA return last.  This way the New York State tax paid will properly be credited to your Massachusetts state return.

@Tenleyramenkfb 

[Tenleyramenkfb]

Thanks for the help! If I understand correctly - when you say it could cost me extra -  it's costing me extra given that the NYS tax rate is the HIGHER of the two (NYS higher than MA), so yes, I am forced to pay the higher rate of the two, despite living in MA - but if I've already been paying NYS tax as someone who used to reside their permanently, and now I am switching to a MA residence, what I'm not doing (given the credit I will receive back on the NYS Income Taxes I pay) is paying taxes on anything twice. I'm still paying the higher NYS tax rate, but in the end given the tax credit I would get back, it's not costing me anything more the higher NYS rate. Is that correct?

[BrittanyS]

That is correct.  You will be paying the higher rate but will receive a credit for taxes paid to another state.  This will reduce the MA resident return which stops the double tax payment.

@Tenleyramenkfb