State tax when living in WY and working 100% remotely for a NY company?

Question

If I live in Wyoming but work 100% remotely for a company in New York City, do I have to have withheld or pay NY state income taxes? Note that Wyoming has no income tax.

When I say 100% remote, I mean never stepping foot in New York State, not even for one day a year. I would meet my colleagues in other states, if necessary, or perhaps at conferences.

I'm unsatisfied with similar questions already asked because they all hinge on being physically present in NY for some non-zero amount of time. The Edward Zelinsky case also hinges on this, as best I can tell.

Answer 1

I'm pretty confident that this is consistent across states, you don't have a state income tax obligation from wage income alone unless you physically work/reside in the state.

Specifically from NY's tax website, a company would have to withhold taxes for:

• New York State residents earning wages even when earned outside of the state
• New York State nonresidents being paid wages for services performed within the state
• New York City residents even when services are performed outside New York City

And similarly, a non-resident would have to file a return if:

• You are a nonresident with New York source income and your New York adjusted gross income Federal amount column (Form IT-203, line 31) exceeds your New York standard deduction.
• You want to claim a refund of any New York State, New York City, or Yonkers income taxes withheld from your pay.
• You want to claim any of the refundable or carryover credits available.
• You had a net operating loss for New York State personal income tax purposes for the tax year, without having a similar net operating loss for federal income tax purposes.

Finally, New York source income is a host of things, but for wages it is limited to services performed in New York State.

If your company erroneously withheld NY income tax, you'd file a NY NR return to get that back, but otherwise your wage income alone creates no NY state filing obligation or tax burden.

The Edward Zelinsky case is more quibbling over percentages for people who already have a non-resident filing requirement because they did physically work in the state some of the time.

Answer 2

For the longest time, I worked remotely as a W-2 employee for a NYS company, but never set foot in that state. The company (via ADP) only withheld taxes for my state.

I know that can't be a canonical answer, but it's my experience.

Answer 3

It does seem well established in the instructions for the NYS Form IT-203 and New York State Tax Law 631(b)(1)(B) that income derived from NY State sources such as a "business, trade, profession, or occupation" are taxable to nonresidents working outside of the state for their own convenience.  These documents are less helpful regarding nonresidents that reside & work wholly without the State for the entire year (meaning 0 days per year within NYS), as you've explained. Rather, the rules set forth in 20 NYCRR 132.4(b) seem to indicate that income earned by a nonresident completely outside of NYS should not be counted towards their NYS AGI:

"The New York adjusted gross income of a nonresident individual rendering personal services as an employee includes the compensation for personal services entering into his Federal adjusted gross income, but only if, and to the extent that, his services were rendered within New York State. Compensation for personal services rendered by a nonresident individual wholly without New York State is not included in his New York adjusted gross income, regardless of the fact that payment may be made from a point within New York State or that the employer is a resident individual, partnership or corporation. Where the personal services are performed within and without New York State, the portion of the compensation attributable to the services performed within New York State must be determined in accordance with sections 132.16 through 132.18 of this Part."

This is contrary to what some others have posted where all NYS-sourced income should be taxed when the employee is working remotely for their own convenience. If anyone has more insight into this mater regarding the NYS Codes, Rules, & Regulations segment, it would be great to hear more.

Lastly, it's worth noting that Matter of Kumar (ALJ May 6, 2010) presents an issue where a NJ employee was charged taxes on income said to be related to a NY sales office.  The ALJ ultimately determined that no tax was due, however, because the individual worked 0 days in NYS.  This situation is arguably a bit different than the conditions being discussed, though, as the main office of the employer in this instance was located in Illinois and only the sales office was in NYS.

Answer 4

Yes you do pay New York state taxes, even though you live in Wyoming, work remotely and never set foot in New York. This is because New York is one of the few states that has a telecommuters law.

https://www.biglawinvestor.com/new-york-telecommuting-tax-penalty/

If your employer were in California, then you would not need to pay California state tax, as California only taxes work performed physically in the state.