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.

  • who is "Our NY accountant"? Is that the accountant for your family or of the company that employees you? – mhoran_psprep Oct 19 '14 at 22:31
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    I'm working remotely, and I pay taxes only to the state I actually live in -- but my employer has offices in this state, which may or may not make a difference in how the money is actually being routed. I'd suggest asking your employer's HR department; it's part of their job to know this sort of thing. – keshlam Oct 20 '14 at 1:35
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    @keshlam HR will never answer this kind of questions. They're in no position to provide tax advice or decide whether the employee has residency exposure or not. – littleadv Oct 20 '14 at 6:15
  • In my experience, HR often has a goodly amount of clue about what's likely to be needed. They will certainly say "consult an expert", but they may be willing to say "Probably" or "Probably not". – keshlam Oct 20 '14 at 12:36
  • Are you a W2 or 1099 employee? – EkoostikMartin Oct 20 '14 at 18:47

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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    +1 - but you missed one point - "Fire that 'NY accountant' ". – JTP - Apologise to Monica Oct 20 '14 at 9:22
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    @Joe I wouldn't say that, I don't know why that accountant says what he says. We don't have the full picture, and I wouldn't be surprised if the OP omitted exactly the detail that would change the situation drastically... – littleadv Oct 20 '14 at 10:19
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    @littleadv the Barker case is probably why the accountant said this. See nytimes.com/2003/07/03/nyregion/… – Michael Pryor Oct 20 '14 at 17:32
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    @MichaelPryor in the link you gave Baker is the reported and the case is exactly the opposite - NY refused to recognize the telecommuter as eligible for NY benefits (and hence couldn't require NY taxes). – littleadv Oct 21 '14 at 2:06
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    @littleadv true. Here's another link that mentions some other situations (each unique) but showing NYS aggressive stance on remote workers nytimes.com/2008/02/20/business/businessspecial2/… – Michael Pryor Oct 22 '14 at 13:15

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).

  • The situation described in the article doesn't apply to the OP. He's in Florida, he's not telecommuting once or twice a week - he's a remote employer. – littleadv Oct 21 '14 at 2:11
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    Even if you never set foot in New York State and live somewhere totally different, depending on the convenience of employer test they can still tax your income from New York sources. It's not just for people that work from home occasionally. If NYS determines the "remote" aspect of your job is not Bona fide, they can consider it NYS income. – Michael Pryor Oct 21 '14 at 9:18
  • And no-one took them to SCOTUS on that? Hard to believe. – littleadv Oct 22 '14 at 2:08
  • @littleadv en.wikipedia.org/wiki/Edward_Zelinsky "Edward Zelinsky is a tax scholar on the subject of United States tax law... In 2003, he challenged the State of New York on its so-called 'convenience of the employer' doctrine which enabled New York to engage in what Zelinsky and others have alleged is unconstitutional double taxation of telecommuters. The case, Zelinsky v. Tax Appeals Tribunal, was denied certiorari by the U.S. Supreme Court after the New York Court of Appeals decided against Zelinsky." – Belden Sep 19 '16 at 21:32

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: http://www.journalofaccountancy.com/issues/2009/jun/20091371.html

Similar text can also be found here: http://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.

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