Job offer wondering how it will affect my taxes

[Michcintron]

I live In New York City and recently got a fully remote offer for a job that is located in Washington D.C.

From my understanding my federal taxes  will remain being the same but what will happen with my state taxes.

Will i be paying New York state taxes or what exactly since D.C. is not a sate and to my understanding we have no reciprocity agreement?

[GeorgeDenseff]

You cannot be double=taxed on state taxes.  DC is not a state but has a district income tax that works like most other states.  Your employer will probably take out just NY taxes.  Or may take out DC taxes, or might now do any state withholding if you apply to exempt from state withholding.

If there is no state/district withholding, then you can pay estimated taxes to NY state.  If taxes are withheld for DC, file a NY and a DC tax return.  You will have the DC tax refunded and pay for NY state.

[Michcintron]

Thanks!

[Opus 17]

You always pay state (or district) income taxes based on where you live when you perform the work, not where the employer is based.  There are 7 states that will also tax you if you live out of state but work remotely for an in-state company, but DC is not one of them.

So you will owe NY state taxes on all your world-wide income, since you are a NY state resident, regardless of where your employer is located.

However, if you perform any work in DC (such as, you are required to travel to DC for in-person meetings from time to time) you are liable for non-resident DC taxes on the proportion of income earned while living or staying in DC.  You will need to review DC's rules on this, there could be a time limit, or it could be just one day staying in a hotel.  When you file your tax return, you will start by preparing a DC non-resident return, and you will have to tell Turbotax how much income to allocate to DC.  Then you prepare your resident NY return, which taxes all your income, but will give you a credit for DC taxes you pay on the same income. 

You will want NY withholding, not DC withholding. 

[Michcintron]

So does that mean that in the biweekly paycheck I will see ny withholding and dc or just ny or just dc until the end of the year?

[Opus 17]

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@Michcintron  wrote:

So does that mean that in the biweekly paycheck I will see ny withholding and dc or just ny or just dc until the end of the year?

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If you are living in NY state, you should only have NY taxes taken out of your paycheck.  When that change can be made depends on your HR department.  You have to tell them what withholding to take.  If you have some DC taxes taken out but no DC-source income, you will still need to file a DC non-resident return to report no taxable income and get a refund of your withholding.  

(DC source income is income earned while working or living in DC, regardless of where the company is based.  Because you live and work in NY, your income is not considered DC-source except for days when you are working in DC such as for meetings or training.)

Meanwhile, if you are not having NY tax taken out, you should consider making NY estimated tax payments.  If you don't have withholding during the year, you may owe an under-withholding penalty even if you pay in full when you file your tax return.  If you over-pay your estimated payments, you would get that back as a refund on your NY return.  About 6.5% of your taxable income (after pre-tax deductions like health insurance and retirement plan contributions) should be fairly close.