I work in NY and live in NJ. I worked from home in NJ for much of 2020 due to Covid. Do I allocate NY wages to NJ?

[paradoxdl]

Hi,

I work in Manhattan and live in NJ. Due to Covid, I have not worked in my NY office since March of 2020. During most of this year, I worked from home in NJ.

When I do my NY taxes, in my NY Income Allocations, do I allocate any of my NY wages to NJ? I was home for 75% of the year. 

[ErnieS0]

No. Both New York and New Jersey have issued guidance that pre-pandemic arrangements regarding state taxation remain in plan for employees who are telecommuting due to COVID-19.

In other words, all your income is still taxable to New York as if you went to the office. And it’s still all taxable to NJ because you are a NJ resident.

File a nonresident NY return and a resident NJ return and claim a credit on the NJ return for tax paid to NY.

New York says: If you are a nonresident whose primary office is in New York State, your days telecommuting during the pandemic are considered days worked in the state unless your employer has established a bona fide employer office at your telecommuting location.

Learn more at Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York Stat...

[paradoxdl]

Thanks Ernie!

[tax2020states]

Hi, I have a similar question, although I worked/lived in Pennsylvania half the year, then moved to NY with my office location changing to CT. I never worked in CT office any of 2020, worked from home in NY. I received W-2's for PA, NY and CT. CT shows partial wages with no state income tax taken. PA shows partial wages with state income tax taken. NY shows full year wages with some state income tax taken. I'm confused! Do I need to file/pay CT income taxes. Do NY/CT have a similar rule as what you stated above for NY/NJ? Thank you!

[ErnieS0]

Connecticut has not issued guidance on the treatment of telecommuters. Your employer thinks you are subject to Connecticut income tax, which is why CT wages are listed on your W-2. I suggest filing a CT return.

I’m confused about what you mean by full-year New York wages since you said you lived and worked in PA. I’m assuming you mean you were telecommuting for a NY company while living and working in PA. That would explain why no PA tax was withheld, as you would receive credit on your PA return for tax paid to NY.

File a part-year PA return reporting the income you earned from NY while a resident of PA. You’ll have to manually figure the NY tax for PA tax credit. For example, if you earned $50,000 in PA and $100,000 total, you will use 50% (50k/100k) as the amount of NY tax eligible for credit. The tax rate for NY is much higher so you should not owe any money to PA, unless you have other PA income.

File a part-year NY tax return, but report your total NY income. Divide your NY income between NY income and NY source income. On New York Income Allocation, say Yes all you income was earned in NY state. Then enter the amount earned while a resident. Later you will see Tell us about your New York nonresident income. Enter the remaining amount. This should match the amount on your PA return as it represents the amount of NY income you earned while living in PA.

You can claim a credit for tax paid to CT. The NY program should pick this up automatically. You should get a refund for NY as you paying NY tax on CT income.

Last file a nonresident CT return and report the amount of income you earned while living in NY. You will owe CT income tax (since none was withheld). You should probably ask your employer to begin CT withholding for 2021.

Related Resource

• Nonresident Working in Connecticut

[tax2020states]

Hello, thank you for your reply. PA income tax WAS withheld, for the PA located office. The company has offices all over, but it would be considered a PA located company until 8/1, then I moved to NY and changed my office location to the CT office. So I correctly paid PA taxes, should be through 8/1.  I don't know why NY would show my full year wages, it should only be 8/1-12/31/20. I say that because I worked from home in NY from 8/1-12/31/20, but the company's location would be considered CT from 8/1-12/31/20.

[ErnieS0]

Yes. It appears the PA portion is correct. If you lived and worked in PA through August 1, then all your income up to that point would be reported on a part-year PA return.

New York state requires employers to show full year wages earned everywhere on the W-2, with the amount adjusted on the actual tax return. I believe it’s the only state that does that. Other states will show actual income taxable to that state.

Allocate your NY wages on your NY return to only show what you earned from August to December. That would be the same amount reported to Connecticut. You can claim a tax credit on your part-year NY return for CT tax.

[tax2020states]

Thank you so much!!!

[wenwang]

hello! does this mean "allocate to New York" wages is 100% when turbotax asked me ?

[ErnieS0]

It depends. If all your wages are taxed by New York, then allocate 100% of your W-2 to NY.

@wenwang