NY W2 box 16 same as box 1 after moving states

[Horatio_Underpants]

I work for a company based in NY state, offer letter says I will work remotely full-time.  Jan-Jun I lived in CT and paid NY taxes, which I usually offset at tax time.  Jul onwards I lived in CO and just paid CO taxes, no NY.  However my W2 for NY box 16 is the same as box 1 (i.e. the entire year)

I assume as my company requires me to work remotely I do not need to file for NY for the 2nd half of the year, and just file for CO?

[BillM223]

It sounds as if you will still need to file a NYS return; however, you will need to subtract the apparent extra income on your NYS return. See below.

New York State taxes most telecommuters who work for New York based companies, even if they live out of state.

The exception is generally those employees who live and work out of state at the employers' convenience, i.e., they require you to live out of state (as opposed to for your convenience).

Please see the memorandum concerning the "New York Tax Treatment of Nonresidents and Part-Year Residents Application of the Convenience of the...".

I take it that your company's HR department believes that you are in Colorado for your convenience, not for your employer's. If you disagree with your company's assessment, you need to take that up with your payroll department.

Please don't change the W-2 entry in TurboTax, because that just attracts the IRS's attention (the IRS gets a copy of your W-2, and the two copies won't match).

Unfortunately, since your company has already sent all the withholdings to New York State, if you are correct that the company made a mistake, you will have to get the money back on your New York return. That is, you will have to find a place on the NY return where you can remove the amount of income erroneously allocated to NYS. 

[Horatio_Underpants]

Thanks very much.  So it makes no difference if my employer requires me to work remotely and I didn't step foot in NY state?

[BillM223]

It makes no difference if you never stepped foot in NY state, but it does make a difference if your employer required you to work remotely.

As that memorandum I referred to says (paraphrasing), if you are living in CO because you want to, then you owe NY tax, but if you are living in CO because your employer wants you there, then you don't owe NY tax. As the memo states:

Under this rule, days worked at home are considered New York work days only if the employee’s assigned or primary work location is at an established office or other bona fide place of business of the employer (hereinafter, a bona fide employer office) in New York State. If the employee’s assigned or primary work location is at an established office or other bona fide place of business of the employer outside New York State, then any normal work day worked at home would be treated as a day worked outside New York State.

[TomD8]

@Horatio_Underpants --

With regard to your W-2, it's a quirk of New York tax rules that the New York wages reported in Box 16 must match the total wages reported in Box 1.  Per New York, it's up to the taxpayer to make any necessary corrections on their New York tax return.  See page 3 of this New York tax memorandum:

TSB-M-02(3)I:(5/02):Employer Requirements Concerning the Reporting of New York State, City of New Yo...

[Horatio_Underpants]

Thank you.  So going forward I must submit estimated taxes to NY as well as my withholding to CO?  Presumably I can reduce CO as I will get it all back at tax time.

[TomD8]

For tax year 2025, if you as a full year non-resident of NY will never physically work within NY, then you will have no income tax obligation to the state of NY and no need to pay NY estimated tax.  If that's your situation, then your employer should withhold CO taxes only.

[The_One_And_Only]

I am in a near-identical situation.  Working remotely in CO for the whole of 2025, paying CO taxes only,  for an NY employer that requires us to be remote.

It's confusing to me as to whether this counts as NY-sourced income?  But it seems there is no requirement to pay NY state taxes.

[TomD8]

@The_One_And_Only 

"But it seems there is no requirement to pay NY state taxes."

Assuming you will never physically work within New York State, not even for a day, your statement is correct.