My spouse worked remotely from Texas until 2022 for an organization based in NY. Prior to moving to Texas (2021), we resided in IL and GA where we paid state taxes (IL and GA accordingly). Texas does not have state taxes. Do I need to pay NY state taxes. I am not a resident of NY, have not been NY in the past 3-4 years and the condition for employment was that i would work remotely when offered. Please advise.
HC
From your post it's not clear whether it's you or your spouse who worked remotely for the New York organization, or was it both of you? You wrote:
"My spouse worked remotely"
"i would work remotely"
Assuming it's you, if you never go to the New York office of the organization, you do not have to pay New York tax on the income from New York. Since Texas has no state income tax, you would therefore pay no state income tax on the income you earn for working remotely in Texas for a New York organization. However, if you go to the organization's New York location for even one day, then all of the income you earn for the remote work is considered New York source income. You would have to file a New York nonresident tax return and pay New York tax on all of the income for the remote work.
Thank you for the response. This is for my spouse. She has not been to NY in many years and works from home. Is there any documentation that can support this. I have usually paid Turbotax for the services in case IRS audits (which has never happened thanks to Turbotax) but good to have any documentation available. Please advise.
Thank you
HC
Is your wife an employee (she gets a W-2) or is she an independent contractor (she gets a 1099-NEC)? If she is an employee, boxes 15, 16, and 17 of her W-2 should be blank. It should not show any New York wages or New York tax.
If she is an independent contractor, probably the only useful documentation would be a letter from the client saying that she never worked in New York.
The IRS will not audit your state tax. In the unlikely event that New York audits you, Audit Defense should help you with the state audit.
Thanks for the response. She was an employee (she quit last year). The W2 for the boxes mentioned were blank.
Q. Is there any documentation that can support this?
Here's a link to New York's memorandum on its "convenience of the employer" tax doctrine regarding non-resident telecommuters: https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf
Also, see these previous discussions (which include other references), wherein posters say it requires at least 1 day in NY to be subject to NYS income tax, even when it's for your own convenience. https://ttlc.intuit.com/community/state-taxes/discussion/re-starting-new-job-with-office-in-new-york-city-but-i-work-remotely-from-kansas-what-will-my-income/01/2764880#M132605