I'm a W2 employee at a firm in NY, I work from home in NJ. Can I deduct my home as a home office?The second question is if I should pay NY taxes at all(subtracted now)

[ChristinaS · Accepted solution]

NY is very aggressive in this area. In order to not pay taxes to NY, you must be working from home entirely for the convenience of the employer. In order to deduct a home office (for IRS purposes), you must also be working from home entirely for your employer's convenience.

If you truly work from home because the employer makes you, NY shouldn't be listed as the state on your W2 at all- NJ should be listed. If you want to allocate 0% of wages to NY, you need to discuss this with your employer first.

NJ is aggressive too. If your employer has an employee working from home in NJ, NJ considers that establishing a business location in NJ.

If your employer agrees to let you work from home, you work in NY every single day for tax purposes. And you cannot deduct a home office on your federal return. You take a tax credit on your NJ return for paying taxes to NY.

Before allocating 0% of NY wages to NY, talk to your employer. If NY were to question this, it would impact them too.

[alvaro212]

Thanks for the quick and informative answer.

[ChristinaS]

You're welcome