Same Job - Worked in State is NY and Live in State is WA

[jennifervphan]

I have the same job but relocated from NY to WA. My work in state is still NY and my live in state is WA. Right now I am taxed as if I still live in NY. How will this affect my taxes since WA has no state income tax? Will I receive a refund coming the next tax cycle for my time in WA? I read NY has a Convenience of the Employer rule - does this still apply?

[NateTheGrEAt]

Hi jennifervphan,

NY, like most states with a state income tax, taxes income earned in the state whether you are a resident or not. So unfortunately, based on the circumstances you described, since you are still working in NY you still pay NY taxes on the income received from that job. 

By relocating to WA, a state with no income tax, you now would not be liable to pay taxes on any other types of income you received from WA sources or from other states with no tax. But that does not get you out of paying NY taxes as long as you continue to work in NY. 

Sorry that probably isn't the answer you were hoping for, but at least you know what to expect now and can plan accordingly. 

[Opus 17]

@NateTheGrEAt 

There are only 7 states that tax income from the state even if you live elsewhere (although NY is one of them).

@jennifervphan 

The answer depends on why you relocated.  Most states only tax income you receive when you live or work in the state.  If you live and work in WA, most states won't tax you if you work for an employer based in that state.

NY is one of the exceptions.  NY applies a "convenience of the employer" rule.  Here is the state regulation.

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

Briefly, if you are working out of NY for your employer's benefit, your income is not considered NY taxable income.  For example, you are a salesperson and your territory is WA.  Or, the employer requires you to work remotely and provides you an office in WA, or reimburses you for office expenses.  Those factors would tend to show that you are working in WA for your employer's benefit.

If you are working in WA for your own convenience, then your NY income is NY taxable income.  You would file a non-resident tax return to report your NY-source income.  That would include this job, but would not include other income like other jobs and side-gigs, interest or investments.  

Then, in most states, you would owe a tax return for the state you live in to report all your world-wide taxable income, and you would get a credit for the out of state taxes you paid.  But that doesn't apply to you. 

[NateTheGrEAt]

@Opus 17 All states with a state income tax will tax income earned while physically working in the state. The "convenience of the employer" rule in NY enables NY to extend their reach to people who are working outside NY if such work is only being done for the "convenience of the employer", not out of necessity. 

I interpreted the original post to mean that the poster is still working inside NY. However, as you noted correctly, since this is NY we are discussing, the income would still likely be sourced to NY even if she is working outside NY.

[Akil C]

Hi Jenniffer!

Thanks for your question. Do you mean that you still travel to New York to work? Or are you working remotely from Washington, and the company is in New York. Can you please clarify? Thanks! - Akil C.