Living in Ohio, but accepting a remote job in New York, How will I pay taxes?

[pantherfanrh]

Hi all!

I recently accepted a Job (remote) based out of an office in NYC. While I may visit a few times just to meet people in person (like less than 2 weeks of the year in total) I will be working 99% of the time out of my house in Ohio. 

My understanding is that I will pay state tax and withhold for New York, (since its the higher tax) and then New York would credit me for Ohio. Is that true? Or do I need to double pay State tax? What about city? Would I only pay to the city I live in Ohio? Or do I have to pay New York City as well?

[SundayInSalem]

Alumni Tax Expert @ErnieS0 says New York follows what's called the "convenience of the employer" rule meaning many telecommuters must pay NY income tax if their employer considers their "office" to be the company's NY location, even if you never set foot in the building.

See: State Tax remote worker NY company living in MN

In your case, 100% of your income will be taxed by New York — days you worked remotely and days you worked in New York City.

Other state tax credit

You will file a nonresident New York return and a resident Ohio return. Ohio (not NY) will give you a credit for tax paid to the other state since OH is your resident state.

TurboTax will automatically calculate the credit on your OH return if you first prepare the NY return.

See: How do I file a nonresident state return?

City tax

You are liable for OH city tax since your are working from your home in OH. Most likely, your employer will only withhold NY state tax and not Ohio state or city tax. 

New York has a higher tax rate than Ohio, so the credit for NY tax paid on your OH return should cover the tax liability from your job — so you won't owe OH tax. However you will probably owe city tax. You might want to make quarterly tax payments so you don't owe a whole lot at tax time.

You do not have to pay New York City tax.

[TomD8]

@pantherfanrh wrote:  "...New York would credit me for Ohio."

It's the reverse.  OH will credit you for NY.  You will claim a credit on your OH state return for the taxes paid to NY, on the portion of your income that is taxed by both states.  

To elaborate on @SundayInSalem 's correct answer, "convenience of the employer" means that if you're working remotely for your own convenience, rather than your employer's, your income is fully taxable by NY.  And any income you earn by physically working inside NY is fully taxable by NY.

ALL your income is taxable by your home state of OH, but because of the "other state credit" you won't be double-taxed.

[Opus 17]

If you are working out of state for your employer's convenience (they want you to work from home, they don't provide an office), then you only owe NY tax for the days you actually live or work in New York State.  (2 weeks per year is 3.85%, not 1%).  You will prepare a non-resident return for NY and you will need to manually allocate your income (how much was earned while living or working in NY, even temporarily).  Then, file a resident return for your home state reporting all your world-wide income, and your home state will give you a tax credit agains the tax you paid in NY.

If you are working out of state for your own convenience, you must pay NY income tax on all your NY income.  You would still file a NY non-resident return, and you would manually allocate your income, but in this case it would be all your wages from that job.  Note that other income, like investments, prizes, bank interest and so on, is only taxed where you live.  Again, you file a resident return for your home state reporting all your world-wide income, and your home state will give you a tax credit agains the tax you paid in NY.

Here is the NY tax memo setting out the factors used to determine the convenience of the employer rule.

https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf