I work for a company that is based in NY however I live and work from VA. My company has begun taking out NY taxes but not VA. Is this right and which state will I owe?

[ParkNYC]

You might have to file a nonresident NY income tax and your VA tax. You should be able to get credit for taxes paid to NYS on your VA resident tax.

[TomD8 · Accepted solution]

If you will never physically perform any work within New York State, not even for a single day, then you will have no income tax obligation to the state of New York.  If that's your situation, your employer should not withhold NY income tax from your pay.  Submit NY Form IT-2104.1 to your New York employer.  Here's a link:

https://www.tax.ny.gov/pdf/current_forms/it/it2104_1_fill_in.pdf

Your income ius 100% taxable by your resident state of Virginia.  If your employer does not withhold Virginia income tax from your pay, then you must make quarterly estimated tax payments to Virginia.  See this for details:

https://www.tax.virginia.gov/individual-estimated-tax-payments

[Opus 17]

You owe income tax to VA because that is where you live (on a Resident return).  If you never set foot in NY, you do not owe NY tax.  You will have to file a non-resident return, report zero taxable income, and claim a full refund.  Expect NY to ask some questions.  (And get your company to change your withholding.)

If you spend even one day of the year in NY, both states tax your income.  NY taxes only your wages from the NY company (on a non-resident return) and VA taxes all your world-wide income (wages, plus investments, pension, or whatever else).  VA will give you a partial credit for tax you paid to NY on the work income.  

[ParkNYC]

@Opus 17 

My wife lives and works remotely in NJ, we've been asking her company to stop withdrawing NYS taxes because we live and work in NJ , they refused. They said the company has an office in NYC and that office address is on her contract. She never went to that office and we also filed IT-2104.1 form. They still charge her NY tax. I guess it doesn't matter for NYS tax department where you live, as long as you work for a company with a NYC office they'll charge you NY taxes and force you to file a nonresident IT-203 form.

[Opus 17]

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@ParkNYC wrote:

@Opus 17 

My wife lives and works remotely in NJ, we've been asking her company to stop withdrawing NYS taxes because we live and work in NJ , they refused. They said the company has an office in NYC and that office address is on her contract. She never went to that office and we also filed IT-2104.1 form. They still charge her NY tax. I guess it doesn't matter for NYS tax department where you live, as long as you work for a company with a NYC office they'll charge you NY taxes and force you to file a nonresident IT-203 form.

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That's not the NY tax department, that's on the employer for refusing to follow your wife's instructions.  They may be under pressure to withhold from out of state employees, but it is ultimately up to the company to fight or fold.

As long as your wife does not work even one day in New York (such as for a mandatory training session, or mandatory meeting once a month, or something like that) she is not subject to NYS tax, and if the company won't honor her request, then she just has to keep filing the non-resident return to get a refund.  She should also be making estimated payments to New Jersey, which is unfortunately going to take a temporary bite out of your finances until you get that NYS refund.  Of course, if she does work even one day physically in NYS, she is subject to NYS tax on her full year of income.  

[TomD8]

@ParkNYC --

It may not help, but you might acquaint your wife's employer with this ruling from the Appellate Division of the New York Supreme Court:

"A nonresident who works in another State but who performs no work in New York is not subject to New York State tax liability no matter for whose convenience or necessity he performs the work."

https://casetext.com/case/hayes-v-state-tax-comm

[ParkNYC]

Thank you both @TomD8 @Opus 17. Unfortunately, we lived two months in NYC in 2024 so that's why they're so aggressive and not willing to change withholding taxes. We'll see what happens. Right now, we are dealing with W2 forms mess, it appears, that although we lived only two months in NY and they in July finally stopped charging NY taxes, the box 16 (state wages) on NY state W2 form matches Box 1 (federal), which is untrue.  NJ W2 forms show properly, NJ income for 10 months is smaller that Box 1,  but I know that NY in 2003 changed the law and require employers to match state wages with federal wages on W2 forms. How do we adjust this? Should we adjust this on It-203 nonresident Federal-State Income and Adjustments worksheet? For example, if we lived in NYS for 2 months and they charged us NY tax for 6 months, should we only calculate those 2 months as the NY state taxable amount? What about 4 months extra we were charged NY taxes?

Thank you,

[Opus 17]

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@ParkNYC wrote:

Thank you both @TomD8 @Opus 17. Unfortunately, we lived two months in NYC in 2024 so that's why they're so aggressive and not willing to change withholding taxes. We'll see what happens. Right now, we are dealing with W2 forms mess, it appears, that although we lived only two months in NY and they in July finally stopped charging NY taxes, the box 16 (state wages) on NY state W2 form matches Box 1 (federal), which is untrue.  NJ W2 forms show properly, NJ income for 10 months is smaller that Box 1,  but I know that NY in 2003 changed the law and require employers to match state wages with federal wages on W2 forms. How do we adjust this? Should we adjust this on It-203 nonresident Federal-State Income and Adjustments worksheet? For example, if we lived in NYS for 2 months and they charged us NY tax for 6 months, should we only calculate those 2 months as the NY state taxable amount? What about 4 months extra we were charged NY taxes?

Thank you,

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If you lived in NY at any time in 2024, and you work remotely for your own convenience, then ALL the income from the NY employer is considered NY taxable income.   If she works remotely for the convenience of her employer, then only income earned while living in NY is taxable to NY.  

Were you permanent residents of NY for 2 months before moving?  If so, you need to file as a part-year NY resident.  Or did you always have your permanent residence in NJ, and temporarily lived in NY?  Then you are a non-resident the whole year.

Regardless, unless her employer assigned her to work in NJ for their reasons, you are subject to the full weight of the convenience of the employer rule.  All her NY income is taxable to NY on a non-resident return, regardless of what box 16 and 17 say.   In Turbotax, you must indicate that you are residents of NJ and have non-resident income in NJ.  Turbotax may attempt to allocate the income based on the W-2 but you can also manually adjust the allocation.  All her employee income is NY income, but any other income (pension, gambling, interest, investments, etc.) is only NJ income (unless it is effectively connected to NY, such as selling real estate in NY).  She pays non-resident income tax on the NY income, and you pay resident tax in NJ on all your world-wide income.  NJ will give you a credit against double taxation.