Understanding New York's TSB-M-06(5)I Bona Fide Employer Office Requirements

[icelandman2]

Hello,

I have W-2 income from New York state and am a part-year resident of New York. I moved out of state in March of 2020 (early COVID) and have not returned since, though I have continued to work remotely for the same employer. I have established residency in another state and have no plans to return. I have read this guide to determine NY and non-NY working days and believe I may qualify under secondary factors 1, 3, 5, and 6, as well as additional factors 1, 3, and 10. My question is twofold:

1. Some of the requirements that have been fulfilled only became fulfilled due to COVID (e.g. a home telephone line, completion of core duties, and the elimination of my desk space in the physical NY office). Would that qualify as establishment of a "bona fide employer office" under the FAQ/rules here?

2. Assuming I qualify to consider these days as non NY source income, how can I go about documenting/demonstrating that on my return and in case of audit? My employer did not want to get involved in this either way -  even if I'm right here, I imagine a significant mismatch between the number listed on my W-2 and on my return could invite greater scrutiny, and especially if it were to come years down the line I want to ensure I have all the necessary documentation. 

Thanks in advance!

[MaryK4]

New York was and is very strict on their telecommuter rules, even before the pandemic. The New York Department of Taxation and Finance has provided guidance regarding telecommuting tax liability for nonresident employees working outside of New York because of the COVID-19 pandemic- employees telecommuting because of COVID-19 will still be required to pay New York taxes on income they earn. 

Although a home office could meet the eligibility factors laid out in the bulletin, generally it would not qualify as a bona fide employer office outside of New York.  An employee working from his or her home office would be considered to be working in New York for tax purposes.

You cannot provide any substantiation on or with the return and you are correct that changing the W2 is a cause for examination (note: your employer does not want to get involved which means they are unlikely to help support your claim if you are audited.)  However, gather as much evidence as you can now and keep it with your tax records.  New York is rather aggressive at pursuing this particular issue.