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New York State remote work problem

I live in Connecticut but my wife works remotely for a NY based company. She worked in Connecticut this past year for her New York employer and I thought I answered the TurboTax questions accurately but I ended up paying CT money when I filed and NY owed us the same amount of money. We paid CT and now NY is asking for additional information about my wife’s remote work. After reading some of the comments here, I fear I claimed her work for CT instead of NY and now we are going to be asked to pay State income tax twice on her 2022 earnings. Can anyone help navigate me through how to fix this since NY is withholding my refund and asking that additional forms be completed?

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5 Replies
TomD8
Level 15

New York State remote work problem

If your wife as a non-resident of NY never physically worked within New York State - not even for a single day, then her income from her remote work is not subject to NY income tax.  NY does not tax the income of non-residents who never physically work inside NY.  It does, however tax non-residents on income earned from work actually performed within NY.

 

Since she is a resident of CT, all her income regardless of source is taxable by CT.

 

What forms is NY asking you to complete?

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

New York State remote work problem

We are being asked for Income Allocation Questionnaire (Form AU-262.55); Form IT-203-B and Form IT-203-F along with her last paystub, a signed statement from her employer discussing job duties, primary work location, number of days in NY and explanation of why NYS taxes were withheld. 

TomD8
Level 15

New York State remote work problem

You'll have to submit the requested forms.  If your wife never worked a day in New York, she'll owe no NY income tax and you should receive a refund of all the withheld NY tax.

 

If she worked both remotely and in person in New York, NY will want to know if the remote portion of her work was done by her own choice for convenience' sake, or because she was required to work remotely by her employer.  If she worked remotely for her own convenience, NY may tax that remote income.

 

If you do have to pay NY income tax, you'll be able to claim a "other state credit" on your CT tax return for the taxes paid to NY, so as to offset any double taxation.

 

If she still has the same employment situation, she should complete NY Form IT-2104.1 and submit it to her New York employer.  Here's a link to the form:

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

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

New York State remote work problem

First of all, thank you @TomD8 for all your articulate insight. 

She worked about 20 days in the NYC office and her ability to WFH is for her convenience, so it does appear that this income was taxable by NY and was properly withheld from her checks. From what I have gathered from this community, if had I done New York as my first state, TurboTax would have sorted this all correctly. I probably did that in years past, but don’t recall.

 

You mentioned I could (should) get credit for taxes paid to New York from my home state of Connecticut . . . which I believe is what happened in years past when I handled this situation correctly . . . but when I filed this year, I paid Connecticut what I calculated I owed and no longer anticipate seeing it returned by New York. 

Do you know how I would open up my accepted tax return from CT to show I amended NY and am no longer getting my tax money back? I am definitely nervous that correcting my NY return is going to leave me paying State Taxes twice. 

TomD8
Level 15

New York State remote work problem

"...if had I done New York as my first state, TurboTax would have sorted this all correctly."

 

Yes.  In a two-state situation using TurboTax, it's critical to complete the non-resident state return before the home state return.  (There are a few exceptions to this rule, all involving the state of California.)  This is the only way the software can correctly calculate and apply the "other state credit."

 

TurboTax has a help article on how to amend a state return:

How do I amend my state tax return? (intuit.com)

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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