State taxes

[Kingstrom]

I live full time in Arizona but the company that I work for resides in New York.   Since I receive no benefits from the state of New York, should I pay NY state tax or should my state taxes be withheld for only Arizona since I reside in that state?   

[TomK2023]

You will need to file a New York nonresident tax return and an Arizona resident tax return.  

If your employer is based in Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York, or Pennsylvania, you must pay income taxes where your employer’s office is located.

If you are a New York State nonresident you must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return, if you meet any of the following conditions:

1. You are a nonresident with New York source income and your New York adjusted gross income Federal amount column (Form IT-203, line 31) exceeds your New York standard deduction.
2. You want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from your pay.
3. You want to claim any of the refundable or carryover credits available.
4. You had a net operating loss for New York State personal income tax purposes for the tax year, without having a similar net operating loss for federal income tax purposes.

New York State Department of Taxation and Finance - Filing information for New York State non

New York Source Income of Nonresident Individuals, Estates, and Trusts, and Part-Year Resident Indiv...

Note: Always complete the nonresident return first if filing in multiple states because your resident state might give you a credit for any taxes paid in that situation.

[Kingstrom]

Thanks for the reply.  So it appears that I should be paying NY state taxes, but should I have Arizona State tax withheld also?

If so, is this not double taxation?

[TomD8 · Accepted solution]

If you as a non-resident of New York never physically work within New York State, not even for a single day, then you have no tax obligation to the State of New York, and your employer should NOT withhold NY taxes.

Per Hayes v. State Tax Commissioner, 401 N.Y.S. 2d 876, “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.”

Hayes v. State Tax Comm, 61 A.D.2d 62 | Casetext Search + Citator

On the other hand, your income as an Arizona resident is fully taxable by Arizona, regardless of the income source.  Therefore you should request that your employer withhold AZ taxes only.

If you expect to perform no work within New York State during the tax year, then you should file NY Form 2104.1 with your NY employer.  Here's a link to the form with its instructions:

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

@Kingstrom 

[Kingstrom]

Thank you.  This is great information.

Would you happen to know if I still need to file a NY Non-Resident income tax return?

[TomD8]

If you were a full-year resident of AZ in 2023 and you never worked a day in New York, and there is no NY tax withheld on your W-2, and you have no other NY-source income (such as rental income from property located in NY), then there is no need for you to file an NY tax return. 

Of course you would still need to file an AZ resident tax return, reporting ALL your 2023 income.

[Kingstrom]

Awesome.  Thanks TomD8.  I greatly appreciate the information.