OT: MGoTax Question For Remote Work
So long story short, I got a great job offer today and am inclined to accept it. The pay increase is ok, but the company itself is a great step up in what I will be doing. However, the company is based in New York City (Brooklyn).
My current job is in PA, where I currently live, so I only pay PA's taxes.
Can someone help explain to me what I am looking at in taxation if I take this job. Will I be potentially taxed twice?
Any help/guidance/online calculators would be nice!
Cuomo, De Blasio.
As a liberal (on most things), I still got a good chuckle outta this one
Not a tax attorney, but I can say that many states are looking at trying to recapture the lost tax revenue that exited when workers relocated during the pandemic (ie. went remote outside the state). So while there may not be anything on the books yet that will allow states like Ohio, New York, Minnesota, and California to demand those tax dollars, they are likely coming. Do your due diligence to determine how much more to ask for in the event that those tax laws are pushed through and you are forced to file in both states.
the best case scenario may be to accept the remote job in NYC and then move to state that has no income tax (like Florida). Then at least you’ll only be responsible for one state’s taxes instead of two.
Best of luck!
Very good point --- I think this is definitely possible in the next few years. It's always nice to have a higher salary than a lower salary, but this would make it even more so.
but then, you have to live in florida
So, why is it a problem living in the Sunshine State where there are no income taxes?
It is a place many Michiganders retire to.
Are you afraid of Florida man?
We all should be afraid of Florida Man
https://nypost.com/2021/02/02/man-with-florida-tattoo-on-head-calls-911-for-ride-home/
We should be very afraid of them, that is him on the right and his little brother....
I am not afraid. There are dip-sh*ts everywhere.
It's more a question of the concentration of said dipshits.
Have you ever heard of a debilitating medical condition known as CSA (chronic swamp ass)?
And all the Floridians will hate you for "New Yorking their Florida" while simultaneously demanding authentic NY bagels and pizza...as they are all from up north originally anyway.
I think you are referring to the "damn Yankees" that relocate to Florida. They are looked down on by the Flo Grown.
I am not going to misquote the laws, but NY state and NYC specifically have a long history with people living and working out of state/city for state/city companies, CT and NJ residents in particular. All of the number of days working at home vs. in the city rules are old hat for taxpayers and preparers of those returns. There shouldn't be a need for legislators to revisit those laws right now.
Easiest way to find out: Just don't file in NYC and you will know the answer when you receive a certified letter.
Depends on the state. My office is in MO and I live in KS. Tax time, I have to fill out 2 states and KS would see that I paid MO taxes. Pandemic hit and KS passed a law saying they want that tax money now instead of at the end of year tax time so I now how to allocate my time to the state of KS each day in our HR system (Workday) so the money goes directly to KS. I believe NY is a we want your money regardless state but i'm not sure.
I would ask. I work for a company based out of North Carolina and live in Florida. There was a 6 week period when I started (April 2020) where the entire company got a Hazard pay type thing due to covid, and everyone had to pay taxes on it from the state of NC(we have people working all over the country). It was the only thing I had to pay state taxes on since the rest of my income was from Florida.
The person hiring you should be able to answer that question, so don't be afraid to ask.
My guess is that you will be on the hook to pay NYS (and maybe NYC) income tax. As a consultant, I spent about 40 days in NYC one year and had to file in NY. I had to pay both the NYS and NYC taxes, as I apparently met both thresholds.
My company actually sent me a W-2 with both my home and NY states reflected.
I'm sure this company is well-versed on the tax reciprocity issues.
For more:
According to this, you must pay both NY and PA taxes, while taking a credit on your PA taxes for taxes paid to NY - because NY doesn't offer reciprocity to PA.
I'd also talk to an accountant about this, as I'm just a guy on the internet who is not an accountant.
NYC taxes generally only apply to residents of NYC, even if you live outside NYC but work in NYC you don't have to pay the extra tax. You either overpaid or there is an exception of some sort that applied.
I would not expect the OP to pay NYC tax even if they had to pay NYS tax. I also think if the employer is on top of things, if they are hired as permanently remote, they should only have to pay PA taxes. Their office would not be based in NY, but rather in PA. This depends on proper payroll processing.
There needs to be some kind of "username checks out" top ten award for this.
I had a similar situation. Company located in TN, but my office was in MI. I lived in MI. Later, I moved to KY but still worked for the MI office. The year I did both, I split the state taxes among the states due to their reciprocity (KY / MI). TN never saw a dime despite my checks all coming from TN because the "location" of my office was either in MI or in KY. Most states determine the location based on where the work is performed, not the location of the company itself, in addition to the location of residence.
I live in TN and TN doesn’t see a dime from me either.
No income tax state.
Yup you pay taxes where you do your work. If you were hired to work remote and never step foot in NY, you should not pay any NYS taxes. If you do go into the office, even periodically, you would be liable for NYS income tax for the amount of time you spent in NYS
NYC only has a resident tax, so will not impact you. I work in NYC (in the before times at least) and live in NYS. Stopped paying NYC taxes when I moved out of the city
Not a tax expert, but I do know many states will not tax you for work taxed by another state. In other words, PA may have some sort of deduction/credit for work subject to NY taxes on your state income taxes.
Also, as others have said, don’t be afraid to ask your recruiter about this. Many NYC employers in particular are very well-versed in this/offer their employees accounting services for taxes, etc.
"Not a tax expert, but I do know many states will not tax you for work taxed by another state"
Obviously you've never dealt with the California Franchise Tax Board. They're notorious for doing things like that. They're ruthless
Just to be clear... you will not get doubled up on taxes. But you may have to pay NYS + NYC taxes which would then be credited to you on your PA tax return.
As others have implied, there is a lot of state-level activity on the subject right now, as COVID and remote work has upended things. So whatever the answer is today may evolve over time and the safest thing to assume is that you'll get stuck paying the highest tax rate among the options.
Yes, the only people who get the pleasure of double/triple taxation are small business owners.
Having worked remotely with HDQ in NY and living in MI myself, I can say the answer is not great. NY is one of a few states that has had a law on the books (I think there are 6 others currently) where if you work not in the state but from home "for convenience", then they get your income tax. The state you live in would also get your income tax. The problem is, not all "live in" states will give you full credit for what you have to pay in NY. PA likely has reciprocity, MI of course did not. Due to this I ended up paying a total state income tax rate above both MI and NY for a year because neither would completely count the other. Yeah, NY wants to make sure they get theirs.
My company had a Cincinnati office, so I requested to be based out of there to clear it up. Now just paying MI taxes because OH doesn't have that BS law.
CPA here. It's really going to depend on how your employer reports you. I've seen some employers not want to get tangled up in multi-state tax issues who just would report your wages as NYC/NYS wages and withhold accordingly. However, some employers are more advanced and will file payroll tax returns in multiple states and can easily accommodate remote workers.
I moved from MI to AZ last year and my employer (a large corporation that has many out of state employees) formally changed my place of residence to AZ, so they quit withholding MI tax and now withhold only AZ taxes. I filed my 2020 taxes already with split residency so we’ll see if I have problems but I’m proceeding as an AZ resident
You should have filled out a non-resident MI return as well on account of your time spent in the state for the year.
I did file returns in both states in 2020
This whole thread is interesting and relevant to me. Since around the time the pandemic started I've been WFH and hanging out in rural Michigan near family.
My Chicago-based employer doesn't strike me as financially advanced and has reported all my wages as Illinois ones.
I informally consulted a "tax" person and was informally (nothing in writing or anything) advised that I could probably just key off the W2, pay Illinois taxes, and be done with it. I'd be interested to hear the opinion of those in the know.
If you are an Illinois resident MI will not make you pay state income taxes on wages earned in MI (reciprocity) so you are probably safe there (it's been a while since my tax prep days so things may have changed).
I worked in tax software for a long time, and what you say about employers and how they report your income is spot on, especially for that area (NJ, CT, NY). We had to account for all kinds of situations where the W2 information that wasn't necessarily correct. We would make the users enter clarifying information so that we could get the returns accurate.
Generally I’d think you are only taxed in the jurisdiction where you are resident and/or physically working. That could obviously be bifurcated if you spend time in NY periodically.
Your employer may automatically withhold for NY State or City tax. You may be able to file for a refund on the basis that you are not a resident and did not actually work there.
Can't have NYC taxes withheld unless you have an NYC home address.
I'm an AARP Tax-Aide volunteer, so I mainly do "old people taxes" (retired folks) as I call them, although we do taxes for anyone that shows up at our site, regardless of age.
If you are an employee, not a contractor, as I understand the tax law, in general, you pay state taxes in the state that has your domicile. In other words, if I live in Illinois, but I'm a remote employee for a company headquartered in Indiana, I pay Illinois state taxes. [This is my son's tax situation] Some states have different rules, so you do need to check for your state, I've seen PA used as an example in tax training materials I receive every year.
Here's a CNBC link with the skinny:
Been a remote worker (in Colorado) for a company (based in the Bay) since about 2017. Always only paid Colorado taxes.
NY and CA don't have the same tax rules so at point of payment, OP may be paying NYS taxes.
I went through this in 2020.
My Firm makes one track by state where the billable hours go. Since a client was in California (Sunnyvale) and I worked 40 hours a week for them for 6 months, CA took a cut of my pay. At the same time, my home state, CO, still took a cut of my pay.
I got double fist fucked. Woooooooooo!
It's really best to ask your new company how this would play out.
My employer provides the guidance below:
New York State Wages Reported on Form W-2:
Under New York state wage reporting guidelines, Company is required to report all your federal wages (as shown in Box 1 of your W-2) as New York state wages in Box 16. This is required even if an allocable portion of your wages may have been earned in other states or jurisdictions, and may not be taxable in New York.
Taxable New York State Wages
If you were a non-resident of New York State for any part of 2020, you will need to allocate your total 2020 wages based on time spent working in New York. You should review your personal records or the Company's Time system to determine how many workdays you had spent in New York. Please consult your personal tax advisor to determine the proper amount of allocable wages for New York State individual income tax purposes
We moved most everyone's work address to be their home address during the pandemic EXCEPT for NY employees. So everyone that was originally out of our NYC office paid NYS taxes (not NYC - those are resident taxes only) and could then allocated their wages and taxes to other states come tax season. We had employees living in PA like you during this time and wages were reported to both states, but NYS overrode the PA taxes so $0 went to PA and everything went to NY.
Are you W-2 or 1099?
You'll have to pay NY City taxes and PA state taxes. However, you will not be taxed twice as you'll be able to offset any taxes paid to NY from your PA taxes.
NYC taxes are resident taxes so OP shouldn't have to pay that since he's not living there.
100% right here. The only way you pay NYC taxes is if you live in the 5 boroughs.
Short answer, you get taxed based on where you do the job. Job is in NY but you're performing the work in PA, you pay PA taxes. Your new job will be or should be set up with PA to pay employer taxes there since that is where you live.
While this is generally true, New York is an exception as others have noted. New York needs all the tax revenue they can get and is aggressive about it. So you have to look closely into their laws and regulations.
You never explained what your residence will be after accepting the job.
