Live in VA, Work Remotely for NY Company

[alyssarchristian]

Hello! In September of last year, I moved from NY to VA, and I continue to work remotely for the company based in NY. Since this is my first full year working remotely from VA, I'm not sure if and how to adjust my W-4. My NY employer currently only withholds NY State Income Tax (due to the NY “convenience of employer” rule), and I don't know if I should be making estimated quarterly tax payments to VA State, or ask my employer to withhold VA taxes (in addition to NY taxes), to avoid underpayment penalties come tax season? How do I accomplish this without overwithholding (as last year I received a large NY tax refund)? If so, how should I estimate these payments if I only have a part-year VA resident return from last year? Thank you!

[Alicia65]

You are required to pay tax to the state that you live in and in your case to New York. The easiest thing would be for your employer to withhold VA taxes. You will receive a credit for the taxes paid to New York so you won't be double taxed on the same income when filing your state returns.

If there are no withholding or estimates paid to VA you will more than likely owe VA.

How to pay VA estimated tax 

[maryg52]

The simplest solution would be if your employer will withhold VA taxes in addition to the NY taxes.  Virginia will give you a credit for the taxes that you are paying to NY which will reduce much of your tax liability to VA.  However, any additional income that you receive [i.e. dividends, interest, etc.] would only be taxed to VA, so if that is a substantial amount, you will need to factor that amount into your VA tax liability. 

If your income is fairly stable, you can make an estimate of your VA tax liability by using the partial year tax return percentage from last year to calculate an entire year.