State Income Tax Responsibility When Working Remote

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Topic Author
TargetingFI
Posts: 31
Joined: Sat Mar 10, 2018 12:00 pm

State Income Tax Responsibility When Working Remote

Post by TargetingFI »

I'm going to be moving from NY to Florida in 2022 and will remain with my company--working remotely. My understanding is once I gain Florida residency, I'll no longer be responsible for paying NYS and NYC income tax and my company's payroll department should stop withholding these taxes. However, in speaking with tax accountants, the messages I'm getting are unclear and, in some cases, conflicting.

Also, folks that have made a similar move have communicated different experiences. For example, some are saying that, yes, as soon as they've moved, their company stopped withholding state/city income tax. I heard someone else say that since their company doesn't have a Florida-based office, they are required to continue paying NY income tax.

If you have insight on this, it would be great if you could share. Thanks
VoiceOfReason
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Re: State Income Tax Responsibility When Working Remote

Post by VoiceOfReason »

I recently did the same thing.

I was remote with mega corp and moved. I went into HR software and changed my address effective the day I closed on the house, everything auto updated immediately. My wife was remote with a mega corp and did the exact same thing with the same outcome.

In speaking with others, I've found that complications enter the picture when you were not full remote prior to the pandemic. In those scenarios I've heard of companies not allowing the switch to be made immediately or requiring some other hurdle to be met. I could never understand that because the employer should just be executing where you claim residency for tax purposes. Ultimately where you pay taxes has nothing to do with your employer, it's between you and the IRS/state.
fabdog
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Re: State Income Tax Responsibility When Working Remote

Post by fabdog »

New York is quite efficient at claiming income for themselves even if you are not physically in NY. If your company has no presence in Florida, and all the work you are doing supports their operations located in NY, you likely have NY taxable income

https://www.tax.ny.gov/pdf/current_form ... pdf#page=7

I have had folks who were working in VA for a NY company, were never present in NY, but all their work supported the company operations in NY, they had NY income

So while there are lots of examples like the post above, NY is a more complicated issue

Mike
senex
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Re: State Income Tax Responsibility When Working Remote

Post by senex »

New York has a telecommuting law. They treat your telecommuting income as if it were earned in NY state, unless you have been formally re-assigned to an office outside NY.

If your company has only NY offices, then you will likely owe NY state tax on all your wages.

https://www.tax.ny.gov/pit/file/nonresi ... ecommuting
Topic Author
TargetingFI
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Re: State Income Tax Responsibility When Working Remote

Post by TargetingFI »

Yes, makes sense. Thanks for sharing!
sport
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Re: State Income Tax Responsibility When Working Remote

Post by sport »

senex wrote: Mon Oct 25, 2021 2:09 pm New York has a telecommuting law. They treat your telecommuting income as if it were earned in NY state, unless you have been formally re-assigned to an office outside NY.

If your company has only NY offices, then you will likely owe NY state tax on all your wages.

https://www.tax.ny.gov/pit/file/nonresi ... ecommuting
This does not affect me in any way. However, I wonder if this has been tested in the courts? It seems strange that a state can tax your income when you have no presence in that state.
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mhc
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Re: State Income Tax Responsibility When Working Remote

Post by mhc »

Is your company officially moving you or are you doing this on your own without your company's knowledge?

What does your payroll department say?
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Topic Author
TargetingFI
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Re: State Income Tax Responsibility When Working Remote

Post by TargetingFI »

Thanks, this is very helpful--although not what I wanted to hear. :)
Topic Author
TargetingFI
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Re: State Income Tax Responsibility When Working Remote

Post by TargetingFI »

mhc wrote: Mon Oct 25, 2021 2:17 pm Is your company officially moving you or are you doing this on your own without your company's knowledge?

What does your payroll department say?
I'll be doing this on my own. I haven't informed my company yet but am pretty sure they'll sign off on the move.
shuchong
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Re: State Income Tax Responsibility When Working Remote

Post by shuchong »

I believe that if you were previously paying New York City (not state) income tax, if you're no longer an NYC resident, you won't have to continue paying. So that's something, at least.

https://www.tax.ny.gov/pit/file/nyc_yon ... idents.htm

Edited to add that NY is pretty strict about this as well: below are the residency definitions. The upshot is that if you are renting or own a place in NYC, it's very hard to not be an NYC resident, even if you haven't been to NYC in a long time.

https://www.tax.ny.gov/pit/file/pit_def ... m#domicile
exodusNH
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Re: State Income Tax Responsibility When Working Remote

Post by exodusNH »

sport wrote: Mon Oct 25, 2021 2:14 pm
senex wrote: Mon Oct 25, 2021 2:09 pm New York has a telecommuting law. They treat your telecommuting income as if it were earned in NY state, unless you have been formally re-assigned to an office outside NY.

If your company has only NY offices, then you will likely owe NY state tax on all your wages.

https://www.tax.ny.gov/pit/file/nonresi ... ecommuting
This does not affect me in any way. However, I wonder if this has been tested in the courts? It seems strange that a state can tax your income when you have no presence in that state.
MA did this to NH residents. Prior to COVID work-from-home (WFH), MA would rebate you the number of days that you worked out of state. With so many employers having everyone WFH, if you weren't WFH before, you weren't eligible to for rebates now that you were. NH tried to sue MA, but was rejected by the US Supreme Court.

I do not know how this impacts people who are newly-hired with the understanding that they'd be fully remote vs WFH options.
hotscot
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Re: State Income Tax Responsibility When Working Remote

Post by hotscot »

In CA it's almost impossible to 'leave' for tax purposes.
hachiko
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Re: State Income Tax Responsibility When Working Remote

Post by hachiko »

VoiceOfReason wrote: Mon Oct 25, 2021 2:01 pm Ultimately where you pay taxes has nothing to do with your employer, it's between you and the IRS/state.
Not completely true. Where a company's employees are located can affect a lot of things from taxes (income, sales, property) to insurance to legal liability. Also, if your company doesn't have any employees in a state, the company isn't going to be happy that they now have to setup accounts and file/pay in another state just for you.

Moving from NY - you are going to have to consider the convenience of the employer rule as fabdog noted.

I disagree with the broad sweeping statements that it's difficult to change domicile away from NY or CA, or any other state. For the vast majority of people, it's actually pretty simple. It becomes difficult for the uber-wealthy because they generally have strong ties in many states and often still spend a significant amount of time in the state that they are leaving after their change of domicile.
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Trader Joe
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Re: State Income Tax Responsibility When Working Remote

Post by Trader Joe »

TargetingFI wrote: Mon Oct 25, 2021 12:59 pm I'm going to be moving from NY to Florida in 2022 and will remain with my company--working remotely. My understanding is once I gain Florida residency, I'll no longer be responsible for paying NYS and NYC income tax and my company's payroll department should stop withholding these taxes. However, in speaking with tax accountants, the messages I'm getting are unclear and, in some cases, conflicting.

Also, folks that have made a similar move have communicated different experiences. For example, some are saying that, yes, as soon as they've moved, their company stopped withholding state/city income tax. I heard someone else say that since their company doesn't have a Florida-based office, they are required to continue paying NY income tax.

If you have insight on this, it would be great if you could share. Thanks
You are correct. Notify payroll of your change in residency and you will be all set.
hachiko
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Re: State Income Tax Responsibility When Working Remote

Post by hachiko »

exodusNH wrote: Mon Oct 25, 2021 3:08 pm
sport wrote: Mon Oct 25, 2021 2:14 pm
senex wrote: Mon Oct 25, 2021 2:09 pm New York has a telecommuting law. They treat your telecommuting income as if it were earned in NY state, unless you have been formally re-assigned to an office outside NY.

If your company has only NY offices, then you will likely owe NY state tax on all your wages.

https://www.tax.ny.gov/pit/file/nonresi ... ecommuting
This does not affect me in any way. However, I wonder if this has been tested in the courts? It seems strange that a state can tax your income when you have no presence in that state.
MA did this to NH residents. Prior to COVID work-from-home (WFH), MA would rebate you the number of days that you worked out of state. With so many employers having everyone WFH, if you weren't WFH before, you weren't eligible to for rebates now that you were. NH tried to sue MA, but was rejected by the US Supreme Court.

I do not know how this impacts people who are newly-hired with the understanding that they'd be fully remote vs WFH options.
Just to clarify for others, the Supreme Court refused to take the case; it did not uphold the law. This was after the Court asked the U.S. Solicitor General to weigh in, and the position of the Solicitor General was that the case should not be taken up. It's not a decision that is precedential.

For NY, the convenience rule generally (though, not how the Department was applying it to COVID-19 specifically) was upheld as Constitutional by the NY Court of Appeals (twice) and the US Supreme Court also refused to hear both cases.
Made money. Lost money. Learned to stop counting.
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