Live in Florida & work remote for a New York company. Do I owe NY state income tax?
I have been down in Florida for the past 3 1/2 years and continue to pay New York state taxes out of the money I earn for a company I work remote for that is in New York. Should I be paying New York state taxes on this income? Or do I not need to pay New York state tax because I live in Florida?
Our NY accountant says I need to continue to pay since company is out of NY, however others say I don't need to pay. Pls advise which is correct. Thank you.
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This question came up again (Living in Florida working remotely - NY employer withholds NYS taxes - Correct or Incorrect?) and the poster on the new version didn't find the existing answers to be adequate, so I'm adding a new answer.
NYS will tax this income if the arrangement is for the convenience of the employee. If the arrangement is necessary to complete the work, then you should have no NYS tax.
New York state taxes all New York-source salary and wage income of nonresident employees when the arrangement is for convenience rather than by necessity (Laws of New York, § 601(e), 20 NYCRR 132.18).
Source: www.journalofaccountancy.com/issues/2009/jun/20091371.html
Similar text can also be found here: www.koscpa.com/newsletter-article/state-tax-consequences-telecommuting/
The NYS tax document governing this situation seems to be TSB-M-06(5)I. I looked at this page from NYS that was mentioned in the answer by @littleadv . That language does at first glance seem to lead to a different answer, but the ruling in the tax memo seems to say that if you're out of state only for your convenience then the services were performed in NYS for NYS tax purpose. From the memo:
However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of- state duties in the service of his employer.
New York State is one of a few states that will go after telecommuter taxes (such that some people may end up paying double tax even if they don't live in NY).
There are a few ways that you can avoid this. If you NEVER come to NY for work, and your employer can stipulate that your position is only available to be filled remotely, you will likely be covered. But there are a myriad of factors relating to this such as whether the employer reimburses you for your home office and whether you keep "business records" at your office.
Provided you can easily document the the factors in TSB-M-06(5)I, you shouldn't have to pay NYS taxes.
(source: I've worked with a NYS tax attorney as an employer to deal with this exact scenario).
If you're not a NY (tax) resident, then as long as you're not physically present in New York - you do not owe NY taxes on compensation for your services. But that is if you're a 1099 contractor/employee. If you're a partner/shareholder in a partnership/LLC/S-Corp registered or conducting business in New York, and that company pays you money - you do owe NY taxes.
See this page of the NY revenue agency for more details.
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