Live in KY but work for a company located in NY.

[rdchevy2ss]

I accepted a remote job April of 2021 for a start up company in NY as a digital designer. The company headquarters is located in NYC and had limited office space for the number of employees they have.  I just started my taxes for this year using Turbotax and when I came to the question: "Did either of you make any money in other states?" I was unsure how to answer. After doing some online research I am even more confused as to how to answer that question and if I will need to file a tax return for NY since it's one of seven "convenience" states. As far as I know my job has only taken taxes out for KY as that is what my W2 showed when it arrived my mail. Side note if it helps: The company I work for employees more out of state workers than NY workers; they employee workers in all US states, as well as internationally, due to lack of qualified designers in the field I am in. Didn't know if that would make a difference since it benefits my company I work outside of NYC/state.  Please help? TY!

[ErnieS0]

If your company did not withhold New York income tax, they do not consider you to fall under the "convenience of the employer rule".

You mentioned limited office space. One of the factors NY considers is "The employer does not provide the employee with designated office space or other regular work accommodations at one of its regular places of business." 

Double check with your payroll department. However it does not appear that you are NY-based remote employee. 

These cases are all facts and circumstance based, but if your employer is not withholding NY tax, you generally will not have an issue with NY.

[Rick19744]

I am going to offer another opinion, in that I believe you have some risk.

This is a hot issue for states at the moment and there is state litigation that will make its way through the court system all the way to the Supreme Court.  But this will take years.

In the meantime, states, and NY in particular, are aggressively taking the position that remote workers are subject to NY state tax.  In order to prevail on the "convenience of the employer rule" the employee must be obligated to work outside of the state.  This exception is very narrow.   A well noted tax attorney lost his case in this very area.

So once again, I am just going to say that "yes" you could have some exposure here regardless of how your employer is handling your withholding.

While you are completing your return based on how your employer issued your W-2, that doesn't always mean companies are handling this correctly.  Interpretations can change and / or vary.

[rdchevy2ss]

Thank you both for your replies! The company I work for currently does business in all 50 states, as we provide dental restorations in the US and internationally. Sounds like I should press forward with the mind set that my income will be taxed by just KY this year, but be aware of the possibility this may change in future years. However, I will not proceed to E-file or file in general until I contact my company about my withholdings. I actually asked this question of my employee Friday and am waiting for a reply. If I am wrong in this "press forward" approach please let me know so I can change my plans. For the question: "Did you make money in any other state?" I am going to reply NO for now. Again, much thanks!

[ErnieS0]

Yes. Speak with your employer.

Tax Champ @Rick19744 has excellent points. New York is very aggressive about chasing people who work in other states who do not pay New York income tax.

Your employer's withholding is not a 100% guarantee that they are right. However they do know the law and your situation, especially if they've been doing this across other states with multiple employees.

The safest route is to report your income to New York. Since there was no NY withholding, you would owe a lot. You can claim a credit on your Kentucky return for tax paid to NY and get a KY refund. The NY tax rate is usually higher so you'd pay more total tax and you may not be required to pay NY tax.

Once you start that route, you'd have to continue. Doing it one year and stopping would attract attention.