PA and new York State tax - WFH

[phillyfan11]

My son worked from home in PA for a NYC based company during last summer internship. Never went to NYC office or lived there. I think he would be considered non-resident for NY.  His employer withheld NY state tax in his W2. Please advise how I should file state taxes for PA and NY.

Can I file NY state tax with zero wages and pay PA state on 100% wages to keep it simple 

[Vanessa A · Accepted solution]

It depends.  NY has a Convenience of the Employer Rule that would need to be met in order for your son to not pay taxes to NY.  If your son meets the criteria for the Convenience of the Employer Rule, then yes, you would file $0 for the NY return, then file the PA return and pay taxes on the income in PA.  

If this is the case, then he should contact his employer and have them withhold taxes for PA instead of NY.

If your son does not meet the criteria in the link above for the Convenience of the employer, then he is subject to NY taxes and would need to pay tax on all the income he earned working remotely for the company based in NY. 

He would then get a credit on his PA taxes for the taxes he paid on the income earned in NY. He would still need to include ALL income on his PA return. 

[Vanessa A]

It depends.  NY has a Convenience of the Employer Rule that would need to be met in order for your son to not pay taxes to NY.  If your son meets the criteria for the Convenience of the Employer Rule, then yes, you would file $0 for the NY return, then file the PA return and pay taxes on the income in PA.  

If this is the case, then he should contact his employer and have them withhold taxes for PA instead of NY.

If your son does not meet the criteria in the link above for the Convenience of the employer, then he is subject to NY taxes and would need to pay tax on all the income he earned working remotely for the company based in NY. 

He would then get a credit on his PA taxes for the taxes he paid on the income earned in NY. He would still need to include ALL income on his PA return. 

[phillyfan11 · Accepted solution]

As you know it was internship for 3 months only and due to COVID he was asked to work from home in PA  and not to come to NYC office. What you suggest in that case. 

[DianeW777 · Accepted solution]

Due to COVID you would have an argument that it was for the convenience of the employer.  Your son was asked to perform the work and was also asked to refrain from coming into the office.  Keep all of your records and any correspondence from the employer about working from home.

1. File the New York (NY) return as nonresident with zero income. All state withholding should be refunded.
2. File Pennsylvania (PA) as full year resident and tax all of his income. There will be a tax balance due on this return.
3. TurboTax will walk you through each state return.  Make sure there is no taxable income on NY once you complete it.