Multiple State Tax Filings

[nsundaragopalan]

Hello, I was hired by my employer (based in NY) in 2020 during the pandemic and I worked remotely from Nebraska until August 2021. In September, my employer asked me to relocate to NY since the offices were reopening. So i moved to NY and now live in NY. My Employer paid taxes in Nebraska for the first 8 months, and for the last 4 months paid taxes in NY. 
My Question is do I have to pay State taxes for the entire year in NY ? or should I just split and pay for the time I stayed there. While filing state taxes, I chose Part Resident for NY state tax, and mentioned the percentage of income I earned in NY while living here. However it then asks a question - "Tell us about your New York non resident income" -> How much of your remaining income (which I earned while working from Nebraska) did you earn from NY sources ? 
Should I enter 0 here ? since the income was earned when I lived in Nebraska and my employer paid state taxes to Nebraska ? 
Or should it be the full amount since my office is based in New york ? Please help

[Leen1]

For employment income, where you were physically present is often the key.  When you were in Nebraska that's Nebraska-sourced income, though if you took occasional trips to work in New York then a pro-rated portion of that income would be for New York.

[Vanessa A]

It depends.  New York is a Convenience of the Employer state which means if you work from home for your employers convenience then you are not subject to NY State tax when not a resident, but if it is for your convenience, you must pay taxes to NY as a non resident for the time you lived in Nebraska and worked remotely in NY. 

In order to meet the convenience of the employer rule it would need to contain or be near specialized facilities that cannot be made available at the employers place of business or: four of the following;

• Home office is a requirement of employment
• employer has a bona fide business purpose for your home office location
• You perform some of the core duties of your employment at your home office
• You meet or deal with clients regularly at your home office
• Your employer did not provide you with a designated office space
• Your employer reimbursed your home office expenses

AND three of the following:

• The employer maintains a separate telephone line and listing for the home office. 
• The employee’s home office address and phone number is listed on the business letterhead and/or business cards of the employer. 
• The employee uses a specific area of the home exclusively to conduct the business of the employer that is separate from the living area. The home office will not meet this factor if the area is used for both business and personal purposes.
• The employer’s business is selling products at wholesale or retail and the employee keeps an inventory of the products or product samples in the home office for use in the employer’s business. 
• Business records of the employer are stored at the employee’s home office. 
• The home office location has a sign indicating a place of business of the employer. 
• Advertising for the employer shows the employee’s home office as one of the employer’s places of business. 
• The home office is covered by a business insurance policy or by a business rider to the employee’s homeowner insurance policy.
• The employee is entitled to and actually claims a deduction for home office expenses for federal income tax purposes.
• The employee is not an officer of the company.

If you do NOT meet the above criteria, then your full income from NY should be included on your Part Year/Non Resident return.

If you DO meet the criteria above then you will enter $0 for the time you lived in Nebraska for your NY income.

@nsundaragopalan 

@Leen1 

[Vanessa A]

NY is one of the odd states that doesn't always go with the flow.  Yes, with many states, you pay taxes in the state where you perform the work and are physically present.  However, a few states like New York have what is known as the Convenience of the Employer Rule which can potentially cause a remote worker to be taxed as if they were working in the state of NY while living in another state if they are working in the other state for their own convenience and do not meet several standards (see above link) to prove they are working remotely for the convenience of their employer. 

@Leen1

[nsundaragopalan]

Thanks for your response. I definitely stayed out of state because the Employer required me to. Also the offices were closed due to Covid 19 pandemic for major part of 2021. 
The provided me with a work laptop which i used to perform my duties from home. Does that count as part of specialized facilities as part of the primary factor ?

[RaifH]

No, specialized facilities means some kind of facility that is only available in your work location in Nebraska that the employer could not procure in NY. The example on the bulletin @VanessaA provided is a test race track in a state different than NY because it is not available near the employer in New York. 

If you telecommute for a New York company, due to their convenience of the employer rule, it is very likely to be taxed by New York. It is only if they assign you to a different region for some specialized purpose that you would not be subject to NY tax. If you could be doing your job from anywhere, then they treat you as an in-house employee and subject to NY taxes. 

[nsundaragopalan]

Ok, so I am confused now.
So you are basically saying I will be double taxed in this case ? because I moved to NY because my employer asked to relocate to NY from Nebraska. I have never worked in NY previously and this was like a relocation for job hire which got pushed due to the pandemic. And during this time I worked from Nebraska, and my employer paid Nebraska state taxes as listed in my W2. So I paid State taxes to Nebraska for 8 months, NY taxes for 4 months, and now I owe NY taxes for the first 8 months ?
@RaifH 

[RaifH]

No, you will not be double-taxed. You will be taxed by NY on the income you earned while in Nebraska as well as the income earned in NY after you moved.

Enter your income earned while in Nebraska as New York nonresident income. The remainder is earned as a New York resident. When you are filling out your Nebraska return, you will not enter any of the income you earned from this job as Nebraska income. 

Nebraska's Schedule III instructions state that partial-year residents only enter Nebraska income that is not taxed by another state. Since this income is being taxed by NY due to the convenience of the employer rule, it does not need to be included on your Nebraska return. When asked to allocate your wages from this job, enter 0 as Nebraska sourced in Adjustments to Nebraska Income. That does mean that most, if not all the taxes withheld by Nebraska will be refunded to you and you will owe a large amount to New York.