Non resident NY filing for MA resident who did not relocate due to Covid

[corgi7892]

I have been an MA resident since August 2019 with a large consulting firm based in NY, but working with clients in Boston. In June 2020, I accepted a position in NY, but due to COVID, the company's offices were closed and I never established residency in NY. Both W-2s show a split between wages and taxes withheld to MA and NY. I have filed a MA state return based on the portion of wages marked as MA on my W-2. Do I allocate any or all of my 2020 earnings to NYS?

[mamh11]

NYS has some guidance on this: https://www.tax.ny.gov/pit/file/nonresident-faqs.htm#telecommuting

[DanielV01]

@corgi7892  Your situation could be complex.  However, if all of the income earned was earned either physically working in New York or telecommuting to the New York office, then 100% of the income is also New York income, and you must then claim a credit for the tax you pay on  income you must report to New York on your Massachusetts tax return.  As @mamh11 points out, New York treats the telecommuter working for a New York location from outside of New York to be taxed as if they were physically working within New York state.

However, since you have worked for the New York company at a Massachusetts office in the past and have developed Massachusetts clients related to that work, you could have non-NY income that you must allocate on the New York return.  New York requires that on your W-2, all of your Box 1 income be also reported to New York, but that does not mean you necessarily end up paying tax on all of that income.  If you did have work that you performed at or on behalf of the Boston office, or did work that required meeting with your Massachusetts clients, these days can be allocated out of the New York income.

On the New York Allocation screens, use the number of days method.  First, you report the number of days in the year (366).  Next, you report the number of nonworking days (usually weekends, holidays, vacation days, etc.).  Then you count the calendar work days which were not physically worked in New York or telecommuting from home, but was work at the Boston office, in contact with Massachusetts' clients, etc.  Your New York income will be prorated to the percentage of the New York work days divided by the overall work days.  New York tax will be calculated on that result, and the result should be carried over to the Massachusetts return.  Always prepare the nonresident return first (in this case, New York), because then the credit for taxes paid to New York can be calculated and transferred to the Massachusetts return.