I live in New York, I work for a Boston based company remotely. My employer is taking state tax for Ma and not NY. How do I file for the year?

[Jacob8080]

Hello, I have filed my taxes on my own for previous jobs, but for the 2023 year my situation is a little more complicated then previous years and I want to make sure that I am doing things correctly/understand the situation.

I am employed by a MA based company in Boston, doing remote technical work. I do not travel to MA for work. I was employed in April, with the intention of eventually moving to MA to work more locally. (The hasn't been possible for a few reasons but not important)

All of the work I do, I do where I currently live in New York, none of the work I do has required me to go to Boston, or cross state lines. I am a resident of New York.

Looking over my paystubs, my employer, has on every paycheck paid Massachusetts's income tax, and not New York. 

Looking around it seems like there are three possible situations, and I am trying to figure out which one applies to me.

1) I am a New York resident, and a New York employee, I owe New York, and only New York income tax. When I fill out my tax information at the end of the year, I need to get a full refund from Mass, and then pay full taxes to New York.

2) I am a remote worker for Mass who is a Resident of New York. I owe some theoretical tax to both, however income is only taxable once, so any taxes I have to pay to New York, my Mass taxes will cover partially as tax credits.

3) Worst scenario, I do MA work, and make income in New York, I owe both states full income tax.

I was hoping somebody might point at which is most correct, or if there is something I am missing, I have been looking through online threads but have gotten some conflicting information and don't know where to continue.

[Bsch4477]

Complete a federal return first, then a non resident MA return and finally a resident NYS return. NYS will give you credit for any tax paid to MA. 

[Jacob8080]

Thanks boss

[radioman5]

I suggest that you do some quick research.  You may be under-withheld for NY income taxes due.  Check into it, and, if you are, the sooner that you make estimated tax payments to NYS, the better.  Timing of those payments matters, too.  You might also be subject to NYS penalties and interest on filing in early 2024.

I'm an ex-New Yorker and had to worry about NYS taxes for 2+ decades.

[TomD8]

@Jacob8080 --

Your Scenario (1) is correct.

If you're a non-resident of MA, and you never physically perform any work within MA, then your income from that work is not taxable by MA.  MA does not tax non-resident remote workers.

In order to obtain a refund of the incorrectly withheld MA taxes, you'll have to file a non-resident MA tax return at year's end, on which you allocate zero income to MA.  This should result in your receiving a full refund from MA.

Your income is of course100% taxable by your home state of New York.

You cannot claim an "other state credit" on your NY return, because in actual fact you owe no taxes to MA.

Your employer should be withholding NY taxes only from your pay.  If they cannot or will not do that, then you must make quarterly estimated tax payments to NY.  See this:

https://www.tax.ny.gov/pit/estimated_tax/

[Hal_Al]

A few states (New York, Pennsylvania, Nebraska, Delaware and Arkansas) tax remote workers)*. Massachusetts is not one of them.  MA  briefly had such a rule during Covid, but it only applied in certain situations (not yours)**. 

You may want to consider filing a paper (instead of e-filing) MA return, so that you can attach an explanation statement. 

*CT and NJ "convenience of the employer" rule imposes CT/NJ tax on some out-of-state remote workers. But it only applies if you live in a state that has the same rule. 

**Massachusetts put in place temporary pandemic rules from 10 March 2020 to 13 September 2021 saying nonresident employees who worked in Massachusetts before 10 March 2020 are still subject to Massachusetts tax until 13 September 2021.