New York State Return income going down this year

[TaxpayerNYNJ]

Hi all - I have historically filed state returns in NY and NJ (with NJ being the state where I lived and NY being the principal office of my employer that I attended few days a week). In 2022, the state taxes I paid mainly came from NY as I was tagged to the NY office of my employer. However, they do have offices in NJ as well and in 2023, I updated my home office address to be NJ since I lived in NJ and often worked from the NJ office. As I am filing my 2023 return, I am now reviewing this situation where my NYS return for 2023 will go down significantly in terms of income and NJ return will go up significantly as I will show most of my income in the NJ return. I still have about 20% of my W-2 income apportioned to NY given few days a week worth of work in NY throughout the year but it has gone from 100% W-2 income in NY in 2022 to 20% only in 2023.

Wondering if that will trigger an audit from NYS or draw any unnecessary attention from NYS and how to think / handle those situations?

Appreciate any insights from the group.  

[rjs]

Your W-2 will have two lines of state information in boxes 15, 16, and 17, one line for NY and one line for NJ. If box 16 on the NJ line shows the correct amount of NJ income I would not anticipate any problems. Hopefully your employer has been keeping track of how many days you worked in each state, and will report the income accordingly. (Also hopefully they have been withholding tax for the two states based on the days that you worked in each state.)

Box 16 on the NY line will have your total income, the same as the federal amount in box 1, because New York has an unusual rule that it has to be that way. Any adjustment to New York income is made on the New York tax return. But obviously New York knows that the income shown on the NY line might not all have been earned in New York. That's why the NJ amount in box 16 is important. The higher NJ income on your W-2 will explain the lower NY income.

[Hal_Al]

"Often worked from the NJ office" is not the same as being assigned to ("tagged") to the NJ office.  It sounds like you are still assigned to the NY office, but mostly work from home. I'm of the opinion that makes you subject to NY's remote worker rules ("convenience of the employer rules"). 

So, yes there's some risk of coming to the attention of the NY tax people.  

[rjs]

@TaxpayerNYNJ  Please clarify exactly where you physically work. Do you sometimes work from home in New Jersey, or do you only work in the employer's offices in New Jersey and New York?

[TaxpayerNYNJ]

I am under a hybrid work schedule. I used to work 2-3 days from home in NJ and the remaining days were in employer's office in NY.

Post transferring to the Hoboken office in NJ, everything remained the same except for the fact that for my office days, I started to work in the employer's NJ office, as opposed to the NY office, serving clients that had NJ presence as well.

[TaxpayerNYNJ]

My home office in the employer's system has been changed to NJ office now and I physically visit the NJ office now as opposed to NY office given it is closer to my home in NJ. I have a hybrid schedule, with 2-3 days remote work (from home in NJ) and the rest from the office (previously employer's office in NY but post transfer to NJ office, its been that particular office, as opposed to NY office).

Let me know if that helps clarify.