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d1a1w
Level 1

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

I am moving to Raleigh NC.  I am keeping my job.  I am currently based out of our NYC office.  My firm has an office in Charlotte, NC.  After I move, should I stay based out of our NYC office or 'transfer' to be be based out of our Charlotte, NC office?  What is better for tax purposes?
7 Replies
Critter-3
Level 15

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

Unless you like filing 2 state returns I highly recommend you get registered to NC only. 

SteamTrain
Level 15

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

By basing yourself at the NC office...

 

IF you move in 2020, you will still have to file part-year NC & NY tax returns for 2020. But for subsequent years there should only be NC taxes to file (with a potentially lower tax rate, though that will depend on your taxable income)....unless you physically work in some other state in subsequent years.

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IF you remain associated with the NY office, then, along with the 2020 part-year NC and NY tax returns, you will likely be required to file both NC resident, and NY-nonresident tax returns in each subsequent year...because NY assesses a non-resident tax on work done by remote "telecommuters" in many instances...i.e. work that could just as well have been done by someone located in NY.  A lot depends on the nature of your work, and whether you re "required" to be in located NC for work reasons other than your personal decision move there.

 

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
d1a1w
Level 1

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

@SteamTrain, Many thanks - I am currently not required to remain part of the NY office, however, I am exploring both avenues.  If I am based out of the NC office, you said, "..But for subsequent years there should only be NC taxes to file (with a lower tax rate)..".

Should I expect to pay 'more' taxes if I remained based out of the NYC office and opted to file both state tax returns (NY and NC)?

Critter-3
Level 15

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

Since NY taxes at a higher rate you will naturally pay more in taxes if you have to keep paying NY.

SteamTrain
Level 15

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

@d1a1w   

 

No way to know for sure because it depends on your actual taxable income each year.  And whether you are married or not has a big effect too (working spouse or not too).

 

.....NY has a progressive tax rate of ~ 4% up to ~8.8%.  NC has a flat rate of 5.25%.   

 

Taxable income is your  gross income, minus your allowed deductions in each state.  The standard deduction is different for each state too...itemized deductions allowed may be different too, so there is no way any of us can give you a definite answer.

 

Look at the tax tables for NY and NC here....(but remember, the tax rates are applied to your income after deductions are applied)

 

https://www.tax-brackets.org/newyorktaxtable

 

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Of course, if you have the time over a couple weekends, you could buy the 2019 desktop software (Deluxe or higher) and model each of your potential income situations  using the 2019 software (should be close enough to 2020 or 2021) .  You'd get one free State software set, but would have to buy the other state software set to do all of the state calculations.  You could then use your 2019 tax situation, and create tax files for fully in NC-resident, and a separate one for NC-resident  plus NY-nonresident.  (Don't attempt to use the Online software, especially if you used "Online" for your 2019 taxes)

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
Opus 17
Level 15

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?


@d1a1w wrote:

@SteamTrain, Many thanks - I am currently not required to remain part of the NY office, however, I am exploring both avenues.  If I am based out of the NC office, you said, "..But for subsequent years there should only be NC taxes to file (with a lower tax rate)..".

Should I expect to pay 'more' taxes if I remained based out of the NYC office and opted to file both state tax returns (NY and NC)?


If you work at home for the convenience (or necessity) of your NY-based employer, then you do not pay NY state tax on your income.  If you live and work outside of NY for your own convenience, you are required to pay NY state tax on that income.

 

That's a little more challenging to apply when the company has offices (a physical presence) in more than one state.  I don't know that it would be essential for you to "transfer" to the NC office, when the business has a physical presence in both states.  But I suspect that if the place you go when you have to have an in person meeting (whether once a week or once a year) is in NY, you will probably be subject to NY tax.  Here is some guidance from NY. 

 

https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf

 

What is the downside of transferring to the NC office?  Even if the tax rates are equal, you would be having to file 2 state tax returns.  And NC's income tax rate is slightly lower than NY, so you will probably pay more if you are subject to the NY telecommuter tax. (NC is 5.25%, NY is about 6.2-6.5% for the typical middle class taxpayer.)

 

You definitely want to get the heck out of NYC, because that's another 4% you don't want to pay.  As best I can tell, you only owe NYC income tax if you have a physical presence there (live OR work physically in NYC), and NYC does not tax telecommuters, just the state. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
SteamTrain
Level 15

How will I be taxed if I move to Raleigh, NC permanently and still work my NYC job remotely? Is it best to make our Charlotte firm office my home office for tax purpose?

...and...in thinking about it some more, and ignoring slight differences in deductions allowed by each state

 

......at best, if you were at an income level that was taxed at only 4% by NY as a telecommuter...it would still be a wash state tax-wise, since as an NC-resident, NC would effectively collect an extra 1.25% tax on that same NY income to bring it up to the 5.25% that NC would have taxed it at.  (Actually, NC calculates the full 5.25% on all of it, but allows you a credit for the 4% you paid to NY, and you pay the remaining 1.25% amount to NC ) And you would still be stuck with the complexity of preparing and filing two state tax returns.

 

IF your NY telecommuter income was at higher NY progressive level, higher than 5.25%, then NC gives a credit for taxes paid to NY...but only up to the 5.25% that NC would-have charged...so you end up paying more in state taxes anyhow.

 

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
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