Living in Ohio, 100% Remote Work for a Company in New York City

[lemonswee]

Hi, I recently joined a company located in New York City. I work 100% remotely from my home in Ohio.

My employer has been deducting New York State income tax. I spoke with HR, and they said the company does not have a payroll system set up for Ohio, and it would cost more for them to implement it, so they currently have no plans to do so.

How should I handle New York State tax and Ohio State tax? Can I get the New York State tax refunded?

I also noticed two additional deductions:

New York State Short Term Disability (SDL) tax

New York Paid Family Leave (PFL) tax

According to New York State, these benefits are based on where the work is actually performed. Since I work 100% from my home in Ohio, I believe I would not qualify for these benefits. Should my employer stop deducting these two taxes? If they can't, can I get these taxes back?

Thank you!

[Hal_Al]

Yes, you should ask your employer to stop withholding NY income tax and SDL & PFL.

You will need to make estimated quarterly tax payment to Ohio (and maybe your city and/or school district). 

You will need to file a NY non resident return t get a refund of the NY income tax withheld. 

To request a refund for mistakenly withheld New York State Disability Insurance (SDI) and Paid Family Leave (PFL) premiums, you must first contact your employer. The issue must be resolved through your payroll department, as you cannot recover these insurance premiums through your NY tax return. 

You are not subject to NY tax if you work 100% outside NY. That changes if you spend even one day in NY.

[lemonswee]

Hi HAL_AI,

Thank you for your response. Regarding the New York State Income tax: I have spoken with my employer, and here is their response: the company does not currently file a tax return in Ohio. If they were to withhold Ohio/City tax, the company would have to file a return, which involves additional cost. There is currently no plan to do this, and it would require ELT approval. They also said that if they do not withhold New York State tax, it would trigger Ohio state tax, so they must withhold New York State tax.

As for the New York SDI and PFL taxes: I only found out about them after receiving my first paycheck. I will follow up with my employer to see what they say.

[Hal_Al]

It's fairly common that employers will not withhold Ohio (or other employee resident states) tax.  They just don't want to go thru the hassle.  They don't have to withhold NY income tax if you never work there. But the rules for NY withholding, for out of state workers, is messy and many employers just take the easy way out.  You'll have to file a NY return every year for a refund, if they won't stop withholding. 

Worse case: you end up paying NY tax, but get a credit on your OH tax return for the income tax you pay NY.  There's no credit for any  SDI and PFL taxes you end up paying. 

[lemonswee]

Hi HAL_AI,

Thank you so much for the information you provided. I contacted my HR, and they will stop withholding the NY SDL and NY PFL taxes.

I will handle the NY State tax when I file my tax return.
Can TurboTax file multiple state returns—in my case, NY (non-resident) and Ohio (resident)?

When I file the NY non-resident return, will TurboTax automatically calculate and provide a refund for the New York State tax my employer withheld?

Just wondering how this works in TurboTax.

Thank you! 

[Hal_Al]

Q. Can TurboTax file multiple state returns—in my case, NY (non-resident) and Ohio (resident)?

A. Yes. Your situation is very common. Do the NY  return first. 

Q. When I file the NY non-resident return, will TurboTax automatically calculate and provide a refund for the New York State tax my employer withheld?

A. Yes.   I'm not specifically familiar with the NY program.  What you need to do, in the NY interview,  is identify/allocate the NY wages as non NY income.   If you don't get an allocation screen, you may need to manipulate the W-2.*  Help will be available, in this forum and/or from TT support 

*Enter 2 lines for boxes 15-20. On the first line: NY in box 15, $0 in box 16 and the NY withholding in box 17.  On the 2nd line, OH in box 15,  the W-2 state wages in box 16 and 0 in box 17.

[lemonswee]

Thank you so much for all the information.