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?

[DanielV01]

@20TCon  I respect your take on this.  Your comments go to the legality of the position.  My point was how NY has applied their stance.  And they have taken this to court (and been taken to court) over this issue many times, and with a few exceptions (such as the case you cited earlier) have consistently won up until now.  A number of years ago there was talk of national legislation to in essence disallow this, but it never came to fruition.  

[isamr2000]

I teleworked for a university in NY city parttime but lived and worked in VA. It was more of a necessity as the facilities were in VA.  My W2 form also only shows VA withhold. Do I need to file a NY tax as I never worked in NY (not even a single day)? Thanks

[JohnW222]

No, you don't.

[isamr2000]

Thanks. So since NY deductible is much higher than VA deductible, are there any issues if I want to file a NY tax return for the NY icome (even I know that I am not required too) and then subtract that from VA taxable income?

[MaryK4]

No, unfortunately, in this particular case, since the Virginia location was "necessary" you would only be able to file in Virginia.  

@isamr2000

[kristinelbly]

Apologies 20TCon, I'm just seeing this, and I don't know to the extent I will see notifications in the future.

Regarding your question- let me break it down a little more simply:

1. You never step foot in NYS. Your employer is not required to withhold and you are not required to pay NYS taxes on your wage income. 

2. You come to NYS < 14 days. Your employer is not required to withhold, but you may be required to file, if your NYS source income exceeds the filing threshold. 

3. You come to NYS = or >14 days. Your employer should be withholding, but even if they are not, you likely still have a filing requirement. 

There is no day threshold for personal tax purposes, only withholding. For instance, if you made $1M a year and you worked one day in NY, you would still have to file and pay tax on that one day. The above applies to ALL nonresident employees working in the State, even for an out-of-State employer. 

Its the convenience rule that makes it a bit more complicated, but it only applies to individuals who have NYS employers. So we have to do the above again:

1. You have a NY employer, you work ZERO days a year in NY. You do not have to pay NYS tax. You do not meet the minimum threshold under Federal due process. Your employer shouldn't be withholding either. 

2. You have a NY employer, you work 1-24% of your work year in NY.  First, check to see if the convenience rule may not apply. This is true if you your home office qualifies as a "bona fide home office of your employer", those rules are available in TSB-M-06(5)I. If your home office doesn't qualify, you exist in a "grey area" where there is no solid direction. Obviously the closer you are to 0% than 24%, the more likely you would be to succeed on your case, even at the audit level. Also, many audit cases agree with some settlement of less than 100% tax due, even in these "grey areas". So it may behoove you to take the position, fully disclose on your return, and have that discussion with an auditor. 

3. You have a NY employer, you work 25% or more in NY, and your home office does not meet the bona fide office exclusion- all days worked from home and in NY are allocated to NYS. 

**It should be noted that in Huckaby, Judge R.S. Smith had a strong dissent (you may read that here https://law.justia.com/cases/new-york/court-of-appeals/2005/2005-02413.html).  If I had a taxpayer in the grey area range, I would point to that dissenting opinion. 

Here is a good article about all of the relevant case law on the topic (as it stood in 2006) - https://www.hodgsonruss.com/newsroom-publications-NewYork_srevisedconvenienceruleprovidessomeclarity... 

The entire 84 page PDF of the NYS Nonresident Allocation Guidelines - nonresident employees starts at page 11 https://www.hodgsonruss.com/media/publication/915_Nonresident%20Allocation%20Guidelines%202013.pdf  

If the above still does not answer your question- please Google my username- and the word tax. Not difficult to track me down. 

[Nellisardelli]

@kristinelbly Thank you for your reply, it is super informative and helpful! Could you please also recommend what sources I could use to defend the position that “1. You have a NY employer, you work ZERO days a year in NY. You do not have to pay NYS tax. You do not meet the minimum threshold under Federal due process. Your employer shouldn't be withholding either.”

My husband is in exact same situation. NY employer, did not step a foot in NY. His employer withheld some NY and mostly CO taxes but reported full NY and CO income on w-2. So now if we file NY taxes we have to pay an underpayment penalty in addition to the full amount of taxes we owe in NY. I know we’re getting a credit from CO but it doesn’t cover the full amount of taxes owe to NY. 

I have read through the links you posted and the PDF for NYS auditors (the allocation guide), and I cannot find a straightforward backup. It all seems to come down to the convenience test which we don’t pass (we moved from NYS to CO for personal reasons, and NY employer was ok with him working from home remotely). My husband doesn’t have clients, his employer is the “client”. 

The only case that explicitly says that we might not need to file NY taxes is described in the allocation guideline (pg19 and see below) but I’m not 100% sure if it is fully applicable in our case (was the person in the case still a w-2 employee working for a NY company? Where were his clients?). 

From page 19 of the guide: “Moreover, it is important to remember that the convenience rule does not apply where an employee works entirely out of state and performs no services within New York. Thus, in the Matter of Arthur Hull Hayes, 61 AD2d 62, a nonresident formerly employed in New York performed consulting duties at his home in Connecticut. He no longer had an office in New York and performed no services in New York. In determining that he was not subject to New York taxation, the State Supreme Court stated:
“A nonresident who works in another state but who performs no work in New York is not subject to New York State tax liability no matter for whose convenience or necessity he performs the work.”

If you could clarify that point (why if you don’t step a foot in NY - you don’t need to pay NY tax) - I’d greatly appreciate it!

[ThomasM125]

It's hard to imagine how the New York Department of Revenue would have any jurisdiction over an employee who never stepped foot in New York. 

[Nellisardelli]

@ThomasM125 I agree, it is hard to imagine but that’s the conclusion we coming to after reading through the tax guidance. I am just having a hard time making a strong case for not paying tax to New York. I’d appreciate any support/references to back up the idea that he doesn’t need to pay NY tax as a telecommuter. Also a side note: we did not step a foot in NY in 2019 but we moved from NY in 2018.

[MaryK4]

Maybe they will not catch you, but if they do, it is likely you will pay more to defend yourself than simply pay the tax now- you can google the aforementioned reply by the attorney and ask her how much it would cost for a consultation to get a ballpark figure.

See NY’s Telecommuting Tax Penalty

New York Tax Treatment of Nonresidents and Part-Year Residents Application of the Convenience of the...

@Nellisardelli

[Loro]

My husband is an architect who was assigned for the last 3 years to a major construction site in NJ. He NEVER worked in the NY office. He was laid off this week as a result of covid and I notice that his NY employer deducted taxes and we filed taxes in NY primarily. 
First, did his employer tax him properly.  We are looking at that as well as trying to figure out where he will need to claim unemployment. Thx. 

[MaryK4]

What is your state if residence?  Most remote workers can file unemployment in their resident state.

@Their

[Hal_Al]

You're most likely going to have to direct that question to the unemployment office .  It's usually based on where the employer is located. For example, if you live in NY, but worked in NJ for an NJ employer, you file for UIC in NJ.

Your situation, working long term, in NJ, for a NY employer is not as clear. 

[Hal_Al]

On the tax question, it's not clear where you live, NJ or NY?

But,in general, you pay tax to both the state in you live in and the one you work in.  You home state gives you a credit for the tax you pay to the work state. So, the "proper" way would be for the employer to withhold for the work state.

[Loro]

We live in NJ. The company taxed him as if he worked in NY where they are located. He worked at the NJ construction site for the past three years.