Will I be double taxed if I work remote in CT but the company is headquartered in NYC?

[Csenn1988]

Hi - I currently make $150,000 - I recently moved and I work remote in CT and I currently have no withholding for CT coming out of my paycheck. All of my withholding is coming out of New York. I know that there is a tax agreement between NY and CT. I am trying to figure out how much I will owe the state of CT after I receive the credit from one of the states based off my income. Essentially, I do not know how much to without from my paycheck for the State of CT- should I be withholding anything and will I be double taxed? 

[Vanessa A]

NY is actually a state that does not have reciprocal agreements with any other states.  

However, if you are a resident of CT, they will give you a credit for taxes paid to other states.  This means that you won't really be double taxed, you will just be taxed by NY, then if your only income is from NY you likely won't owe anything in CT so you really do not need to have anything withheld for CT. 

[Csenn1988]

Thank you for getting back to me! I just had two tax advisors tell me that I need to pay state income tax to both NY and estimate payments to CT because I am considered in a higher income bracket. Thus I would be paying CT and NY from my paychecks and it will greatly reduce my cash flow. So essentially, I should not be paying anything to CT because I will pay $8,000 or so to NY and my CT tax rate is around the same $8,050. 

I am trying to understand this part from that website "The credit allowed will be the lesser of the tax paid to the other state or the tax which Connecticut imposes on the resident's out-of-state wages." 

Is there a way that I can calculate how much I will owe the state of CT for 2022 tax purposes? 

[Vanessa A]

The credit allowed will be the lesser of the tax paid to the other state or the tax which Connecticut imposes on the resident's out-of-state wages." means that if you owe CT $4,000, but you owed the other state $6,000, your credit would only be $4,000 as CT is not going to give you a refund for the amount you paid to another state, but you can eliminate what you owe to CT with what you paid to the other state. 

With the numbers you posted you would need to file a return, however, if CT taxes are $8,050 and NY is $8,000, you will owe CT $50. So you wouldn't need to make estimated tax payments for the $50. 

You can walk through your TurboTax CT return to see what you would owe for 2021 without the credit which will likely be the same as the amount you would owe for 2022. 

[Csenn1988]

Thanks so much for getting back to me again. I just spoke to my employer and they said that I need to set up a remote location for myself in CT. Then my only withholding would be from CT. Would New York end up giving me a credit for all the tax I paid to CT or should I keep my withholding in NY only? 

[Vanessa A]

NY is a convenience of the employer state, so depending on your specific situation, you may have to pay taxes to NYS even if you set yourself up a remote home office. If you do not meet the criteria for Convenience of the employer, you must pay taxes to NY if your employer is based in NY. 

If your employer is based in multiple states and one of them is CT, and they can have your "home office" their CT office, then you would not need to pay taxes to NY. 

[Csenn1988]

Got it! In reading the attached that you sent my home office meets this condition - Does this mean that I should not be paying NY state income tax and only CT income tax? Is there a way to let the State of NY know this?

- The home office is a requirement or condition of employment. If the employer requires the employee to work from his or her home office as a condition of employment, the home office will meet this factor. For example, if a written employment contract states the employee must work from home to perform specific duties for the employer, then the home office will meet this factor.

- The employer does not provide the employee with designated office space or other regular work accommodations at one of its regular places of business. If the employer does not provide the employee with designated office space or other regular work accommodations at one of its regular places of business, then the home office will meet this factor. For example, an employer wishes to reduce the size of the office space maintained in New York to decrease rental expenses and, therefore, no longer provides designated office space or other regular work accommodations for one of its employees. Instead, the employer allows the employee to work from the employee’s home. If the employee must come to the office, the employee must use the “visitors” cubicle, conference room, or other available space that is also used by the other employees of the company. In this instance, the home office will meet this factor.

[Csenn1988]

I also think I would meet the primary factor as we do not have a physical office and only use Regus for mailing and address. Do you think this would meet the primary factor? 

The home office contains or is near specialized facilities. If the employee’s duties require the use of special facilities that cannot be made available at the employer’s place of business, but those facilities are available at or near the employee’s home, then the home office will meet this factor. For example, if the employee’s duties require the use of a test track to test new cars, and a test track is not available at the employer’s offices in New York City, but is available near the employee’s home, then the home office will meet this factor. In the alternative, if the employee’s duties require the use of specialized scientific equipment that is set up at the employee’s home (or at a facility near the employee’s home) but could physically be set up at the employer’s place of business located in New York, then the home office would not meet this factor.

[Csenn1988]

I also meet the primary factor as our office is through Regus in NY and it is a virtual office only. No designated phones, computers, or an office. Is there a way to let the State of NY know this?

If the employee’s duties require the use of special facilities that cannot be made available at the employer’s place of business, but those facilities are available at or near the employee’s home, then the home office will meet this factor. For example, if the employee’s duties require the use of a test track to test new cars, and a test track is not available at the employer’s offices in New York City, but is available near the employee’s home, then the home office will meet this factor. In the alternative, if the employee’s duties require the use of specialized scientific equipment that is set up at the employee’s home (or at a facility near the employee’s home) but could physically be set up at the employer’s place of business located in New York, then the home office would not meet this factor.

[Vanessa A]

Does this mean that I should not be paying NY state income tax and only CT income tax?

Correct, if you meet the criteria, then you should not be paying taxes to NY state, only CT.

 Is there a way to let the State of NY know this? Yes, file your tax return as a NY non resident and allocate $0 to NY.  This will give you a refund of all of the taxes paid to NYS. 

You will then need to have your employer change the state of withholding.  Since they are probably still withholding for NY, you will need to probably file the same way again for next year. 

[Csenn1988]

Got it- so I would have to file for $0 to New York State. And going forward I only need to pay CT taxes? Thank you so much I have been looking for these answers everywhere. When I file $0 to NY State do I have to tell them how I meet the criteria and back it up ? Is this a hard process to go through? 

[ThomasM125]

On your New York tax return, you will be asked to enter the income earned in New York, to which you will answer $0. That is all you need to do.

You should tell your employer to not list New York wages on your W-2 form and not take any New York taxes out of your pay. Then, you won't need to deal with New York taxes next year.

[Hal_Al]

Whether you have to pay NY tax depends on why you are working in CT; whether it is for your convenience or the convenience of the employer, and whether you actually work in NY at any time.  Don't be surprised if NY rejects your request for a refund.  Please let us know, either way to help others with the similar  situations.

For a long thread on this topic ,See

https://ttlc.intuit.com/community/state-taxes/discussion/re-i-work-for-a-ny-company-remotely-from-nc... 

[Csenn1988]

Hi- thank you for this answer- I currently have switched to only having CT taxes withheld from my paychecks. 

It looks like the taxes I pay to CT yearly comes to around 8,775 while my taxes owed to NY due to earning income there would be 9,727? Does this mean that I will end up owing the state of NY around $952 dollars?

[TomD8]

@Csenn1988 --

Assuming you are a full-year resident of CT:

ALL your income is taxable by CT, regardless of where you earn it.

Any income you earn by physically working in NY is taxable by NY as well.  

If you physically worked in both states, and the work in CT was done remotely from CT for your own convenience, then all the income from that work would be taxable by both NY and CT.

You may claim a credit on your CT return for the income tax you pay to NY on the income that is taxed by both states.  Thus the credit may reduce your CT tax bill (but not below zero), but it will not reduce your NY tax bill.