My employer is in New York, I telecommute from Massachusetts, do I need to file New York return?

[ramnsudha]

Here is the situation:

- My employer's primary office is in NY

- I work out of my home in MA 100% with a very occasional visit to my primary office (2 days last year).

- My W-2 only has MA state wages and withholding

- I do not have any property, rental or any other income source from NY

Do I have to file a NY non-resident state return? I find conflicting information on the NY tax website. 

If I do have to file a non-resident return, since there are no NY wages/withholding on my W-2, do I then use the Federal Wages for the NY wages in Turbotax?

Thank you!

[BillM223]

New York State says of your situation, "In general, unless your employer specifically acted to establish a bona fide employer office at your telecommuting location, you will continue to owe New York State income tax on income earned while telecommuting."

So you will file a New York non-resident return. Even without the New York entries on your W-2, TurboTax will use the federal income to start the New York return.

Normally, you would do the non-resident state (NY) first, then do your resident state (MA). You should see a dollar amount appear on line 30 of Form 1 (MA), which represents your New York tax as a credit to MA. This is how many states avoid double taxation.

[ramnsudha]

Thank you @BillM223 for your reply and pointers.

I downloaded the New York product from Turbotax and worked on it. However, in the New York income section (under "Form W-2 Summary"), it doesn't use the Federal wages as you said it should, it prefills in a zero. It does allow me to edit and change that. Should I then manually override the prefilled entry? (Note: I am using a "download" version for both Federal and States, not the online).

Also, Turbotax has a note that says that ".. your days telecommuting during the pandemic are considered days worked in the state .." I also noticed that the statement on bona fide employer office that you had above was under a question regarding COVID-19. I am wondering if that guidance is for people who were working in NY but moved to another state temporarily for the pandemic? In which case the employer would continue to put NY on their W-2's ? In my case, the employer only has MA state wages and withholding.

Turbotax also points to another page in the note . There, it says that  "..income derived from New York State sources includes that proportion of his total compensation for services rendered as an employee which the total number of working days employed within New York State bears to the total number of working days employed both within and without New York State. . . .".  But I never worked from WITHIN NY. 

I also looked for the definition of "New York Source Income" since that is referred to at the top of that link. In the instructions for Form IT-203 it gives a bunch of bullets which qualifies if it is a New York source (see under Nonresidents: New York source income). None of those bullets seem to say that if you lived in another state 100% of the time but were employed by a company headquartered in NY, it is NY source income? But I am no tax expert, so would be great to hear your opinion on it.

It would be great to hear your thoughts/interpretation on the above? Also, it looks like (I need to confirm this), that my net state taxes (to both MA and NY) would be considerably more even with the credit, than if I didn't file an NY return and only filed the MA return. So this decision is kind of important!

Thanks again!

[ErnieS0 · Accepted solution]

You owe New York tax on the days you worked in NY.

Nothing will show up in New York if you have a Massachusetts W-2 because TurboTax will not know you have NY income.

Here’s what to do:

1. In Personal Info, go to Other State Income, EDIT, and add New York
2. Tap State Taxes and START New York
3. On “New York Income Allocation” say NO
4. On “Your Form W-2 Summary” select EDIT
5. On "Allocate Wages to New York," choose Allocate by Number of Days and enter your information

Massachusetts will give you credit for tax paid to New York.