I work for a NY company, remotely from NC. I spent 1 day in 2017 on site, but my W-2 has full salary in the state earnings boxes for both NC and NY. How can I allocate?

[Loro]

Thx. 

[Archman]

I too work for a company in NYC, but the office shut down the week of the 16th of March after someone tested positive for COVID-19.  Since then all non essential businesses have been closed.  I am now working from home in NJ.  Do I now pay NJ taxes, although my employer is withholding NY taxes?

My employer is talking about not opening the office until after the July 4th holiday.

thank you,

[Hal_Al]

@Archman 

In general, you pay tax to both the state in you live in and the one you work in.  Your home state gives you a credit for the tax you pay to the work state.  You should already know that, unless this is your first year working in NY.

Working at home (in NJ), for a NY employer is usually still considered as working in NY, for tax purposes, if you work outside New York for your own convenience, and not the convenience of the employer.*

The circumstances of this situation, are not clear.  It sounds like convenience of the employer to me. But, your employer has continued to withhold NY tax.  You should ask your employer for guidance.  They should be in contact with the NY tax authorities.  Since NY and NJ are both high tax states, it may make little or no difference. 

*See : http://www.journalofaccountancy.com/issues/2009/jun/20091371.html

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

[newyorker51]

So, of course I have a similar situation:

- Lived & worked in NYC, where my company is based until the offices closed and we moved to WFH

- Came to visit MD in March, worked from here until July, then went back to NYC for a month. 

- Moved to MD in August, changed my mailing address in the company HR system (at this point, I've slept in Maryland for 180+ days, making me a 'resident', I think) 

- This triggered some change in my tax forms as well, because when I looked at my paystubs, I'm no longer paying NYS tax. Only Federal tax is being taken out of my paychecks. 

Should I try to file new paperwork to pay for MD state tax? Should I try to continue to pay NYS tax? Should I expect to be hit and owe a bit of money to some state next spring? At this point, it's been two pay periods without paying state tax anywhere, so I'm already saving as if I'll owe a bit of money. 

[kristinelbly]

Your situation is more complex than an allocation question, as it potentially involves changing your domicile. So I have to ask more questions. 

When you went to MD in March was it with the intention of living there indefinitely? Do you plan to come back to NY after COVID, or is this move temporary? Did you keep your place in NY? How frequently would you expect to be in NY in 2021?

I presume you've been staying in a house in MD you own or lease, but please confirm. Have you had that residence, or expect to, for more than 6 months this year?

For wage allocation purposes, do you have an office in MD or were you working from a personal residence?

Depending on your income level, you could be at an incredibly high risk for a tax audit. NYS has an aggressive nonresident audit program, where it audits the vast majority of NYers with Federal Adjusted Gross Income over $500k who claim a move you of the State.

[kristinelbly]

@Nellisardelli Yes, the case that my guidance is based off is Matter of Hayes. However, its based on a calendar year. So if you moved from NYS to CO this year, and he worked in NYS at all, then Hayes doesn't apply. It could apply in 2021 if he doesn't work from NY any days during the full calendar year. 

Also, if you moved to CO because of COVID and you intend to return to NYS when the pandemic is over, you are still a resident of NYS. 

For anyone else reading this thread, if you were a NYer and you spent less than 183 days in NY because of COVID, you may still be taxed as a resident of NYS depending on your circumstances.

[kristinelbly]

@Loro It sounds like the NJ construction site would be a New Jersey workday. He is there out of his employer's necessity and not his own convenience, and while its not a "bona fide" office of his employer persay, characteristically its similar. You likely should not have paid NYS taxes in these years. However, NJ and NYS have a very similar tax rate and its likely you got a credit in NJ for taxes paid to NY. If you are ever audited by NJ, you should upon receiving that notice file an amended return in NYS to protect your right to claim a refund for any potential taxes you may owe to NJ. 

Regarding unemployment, its different than personal income tax. From my limited understanding I believe its based on physical presence, so his employer should have been paying that in NJ where he was primarily working. 

[kristinelbly]

@Nellisardelli I didn't see your reply. If you never stepped foot in NYS, you do not have to allocate your wage income even if from a NY employer. Most NY employers will continue to withhold, even with Hayes, so you'd have to apply for the refund. This is because the witholding guidelines are different than the personal income tax guidelines. 

You will need to continue to file NYS nonresident returns if you have any other source income or loss in the State such as flow-through income/loss,  rental income or loss from a NY property, etc.

If you moved in 2018, and haven't stepped foot in NYS since, you shouldn't have any issues with your domicile change. Best of luck, and enjoy CO!

[Archman]

So, I live in NJ as a permanent resident.  My employer is NYC based, but our office is operating with a limited number of people.  I have been working from home since the middle of March.  Do I now pay taxes to NJ and not NYS for those work days since March?

thank you.

[Hal_Al]

I suspect that it won't be until  tax filing time  (early 2021) that the states  publish firmer guidelines 

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

[newyorker51]

No, I did not have the intention of living in MD indefinitely when I visited in March, and yes I plan on coming back to NY. I kept my lease on my NY apartment until the lease was over in August. I'll be returning to NY sometime in Q1'21 and staying there. 

So, I'm in my mid-20s so I've been staying with my dad. It's his house, he owns it, I'm not paying rent, but it is my permanent address. It's also the location I've been working from. 

---

Depending on your income level, you could be at an incredibly high risk for a tax audit. NYS has an aggressive nonresident audit program, where it audits the vast majority of NYers with Federal Adjusted Gross Income over $500k who claim a move you of the State.

---

Lol, I make less than $100K. 

[kristinelbly]

@Hal_Al Id expect it sooner than that. Glad that you find Noonans Notes useful! Ill be sure to mention that to Tim. There is also the Taxes in New York (TiNY) Blog thats a weekly report of DTA decisions, that you may also find useful if not already subscribed. 

[kristinelbly]

@newyorker51 Unfortunately then you have not changed your domicile to Maryland. To change ones domicile you must move to a new location with the intention of indefinitely remaining there. You will owe both NYS and NYC taxes on your worldwide income in 2020.  The days that you work from home in Maryland are NY workdays, and will be NYS source income.  Your employer should still be withholding these taxes.

You may be a Maryland statutory resident. However, MD is not imposing tax on people telecommuting from the State because of COVID (TAX ALERT 5-4-20). Therefore you'd get a full tax credit in Maryland, for taxes paid to NY on NY wage income, and essentially owe no tax there.

While you may not qualify for an indepth field audit, I would still suspect its likely you'd be subject to a desk audit. NYS is probably going to flag every single return. The penalty for failing to file and pay can be up to almost 50% of the tax due, plus interest on tax at 7.5% compounded daily.  

[kristinelbly]

@Archman those will still be treated by NYS as NY workdays.

NJ's position is likely to allow a credit for those taxes, because your employers jurisdiction is in NY. Although NJ does not have specific telecommuting guidance. 

[boomintruth]

I recently took a role with a company based in NYC.  I live AND work in Florida full-time - I will never need to visit or work in NYS.  I am in account management / sales working only with car dealerships in Florida.  I would not have been offered the position if I had been located anywhere else, and actually my proximity to the Orlando airport was key in my hiring.  Regardless, my company is insisting that NYS taxes be withheld due to "convenience" law.  I spoke with my Tax accountant here in Orlando and she said this is very common, but she is usually successful getting full-refunds when filing non-resident returns for her FL clients who work for NY-based companies. I mean, great, but is there anything i can do to exempt myself from the tax in the first place or is this just the way it is?  It adds up to around $8,000 a year in taxes I really shouldn't owe, so any help on this is appreciated.