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  • Non-resident taxes New York

    Good afternoon. I had a question regarding non-resident state taxes that I was hoping someone would be able to clear up for me.

    I currently reside in New Jersey. I drive about 30 miles to work each day in a small satellite office in New Jersey. However, my employer's main office is located in New York. For the past 5 years my employer has taken out NJ state taxes from my paycheck. However, I've recently been told that they will be switching over to NY. From now on, I'll have NY taxes taken out of my check INSTEAD of New Jersey. (Note that I'll still be working int he same NJ office.)

    I wouldn't mind, except the NY taxes turn out to be significantly higher (almost twice as much according to an online paycheck calculator). How does this work come the end of the year. Can I file as a non-resident and get some of this money back?

    Thanks!

  • #2
    They're wrong. They do business (have an office) in NJ, they're required to withhold.
    http://www.state.nj.us/treasury/taxation/njit30.shtml
    Last edited by Pattymd; 04-29-2010, 01:05 PM.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      They are probably wrong. The problem is that states do not have to play nice with each other and sometimes they do not. NYS has this dippy "for the convenience of the employer" rule, made infamous in several fairly recent court decisions. The arguably worse of several bad decision was Huckaby where an employee who always lived in TN and who worked at least 75% in TN was deemed by NY courts to be 100% subject to NY taxes. The argument was that since the employer supposedly could have had the employee move full time to NY and choose not to, that someway made the employee fully subject to NY taxes. (???) Back when NY and the two CT senators where having a shooting war in Congress, it was this rule and a different case (Zelinksy) that was at issue.

      So, I am saying that this is maybe more complicated then it looks at first glance. This is a really strange rule on NY's part, although I have heard that UT has a similar rule.

      UI is even worse, for whatever it is worth. NY-UI has in past claimed that employees that have never worked, lived in or even visited NY are subject to NY-SUTA because they received "direction" from NY. Another really strange law.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

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      • #4
        Hm, seems like this might be more complex for NY. Well, let's assume they're in the right - or wrong - doesn't matter - they're probably not going to change their mind.

        What does this mean for me?

        A) Will I need to pay any NJ state taxes too?
        B) Will NJ refund me the difference since the NY taxes are higher? About $700 per year.

        Basically, I don't care what my employer does. They can break any law they want - so long as my paycheck stays the same

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        • #5
          I am not a personal income tax expert, certainly not with NJ/NY. I am used to looking at this from the payroll side of things only, and I have NOT talked to your company, so I do not know what their rationale is.

          What I can say is that if they are invoking NY's "for the convenience of the employer" rule, that NYS considers your wages to be 100% taxable in NY, which should not normally be true. I have no idea what-so-ever what NJ thinks about this. And I am guessing about your employer's reason.

          My advice for whatever it is worth is to first politely talk to your employer and ask them WHY they are doing this. Take notes. Then talk to some professional who is expert on doing NY/NJ personal income taxes.
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)

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          • #6
            I do know, because I had to research this for an employee a couple of months ago and talked to the NY Dept of Taxation, that once NY wages are reported on your W-2, it is the employee's responsibility to file a non-resident return and allocate the wage that belong to NY to NY. If you never go there, that would be zero.

            Here is what is concerning me, however. You still have your liability in NJ and if the employer is not going to withhold, there MAY be quarterly estimated tax payments required so you don't get penalized for late payments there.

            If that "convenience of the employer" in NY is valid, I honestly don't know how NJ would see that.

            Just for curiosity's sake, I'd be interested in knowing what the company's logic is for this change (other than they just don't want to be bothered). I would also note than both NY and NJ have combined quarterly returns (for both income tax and unemployment wages), so I would wonder if they would be reporting your wages for UI purposes to NY also. Could complicate a UI claim if it comes to that.
            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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            • #7
              Thank you for everyone's input. This is definitely confusing. The rationale they're using (or at least the one they're telling me) is that it's just a hassle to file their taxes in both NY and NJ - especially since the NJ office consists of only 2 employees.

              once NY wages are reported on your W-2, it is the employee's responsibility to file a non-resident return and allocate the wage that belong to NY to NY. If you never go there, that would be zero
              I do travel to NY about once or twice a week, though not to an office - but to visit clients.

              So how would this work. NY would take the taxes out of my paycheck. I'd file a non-resident tax return and "allocate" 0%. So I'd get that money back? Would I then have to file a NJ tax return and allocate the NY taxes to that?

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              • #8
                It being a "hassle" would not, in my experience, fly with NJ. NJ wants their money and they are legally entitled to it.

                I'd give the NJ Dept. of Taxation a call and ask how they see this. Has the change gone into effect yet?
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                • #9
                  Yes, the change has gone into effect. Regardless as to how NJ sees it, I highly doubt that my employer will change their mind. Having said that, I'm only concerned with how this will effect me - both immediately (smaller paycheck) and long-term (when taxes are due at the end of the year). Any advice on those 2 areas?

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                  • #10
                    See my response in post #6.
                    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                    • #11
                      there MAY be quarterly estimated tax payments required so you don't get penalized for late payments there.
                      Late payments. That's what I'm concerned about too. I spoke with a few friends over the weekend. They brought up the same point. That even if NY state offers me a 100% refund (which, how likely is that in reality), and at the end of the year I turn that over to NJ, won't they hit me with late fees for basically keeping this revenue from them all year? This is messy.

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                      • #12
                        I worked at a location on the border of 2 states. (GA and SC). We had large numbers of employees who worked in one state and lived in the other.

                        Generally what happened was that employees received a refund from the state they didnt live in and paid taxes to the state they lived in. There was reciprocity between the 2 states so there werent issues about late payments.

                        I'd be asking a couple of questions of a local accountatnt. This is one of those things that happens all the time and I'm sure people there know how things work.
                        I find that the harder I work, the more luck I seem to have.
                        Thomas Jefferson

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                        • #13
                          New York and New Jersey reciprocity for withholding doesn't apply here, since the OP both works and lives in NJ and the employer will not be withholding any NJ tax at all. The OP WILL get his money back from NY with a nonresident tax return showing no NY wages, but in the meantime, he will probably have to make estimated tax payments to NJ.
                          I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                          • #14
                            To play Devil's Advocate, if the W2 shows NY wages, and it probably will, getting back NY taxes could prove to be difficult.
                            "Reality is that which, when you stop believing in it, doesn't go away".
                            Philip K. **** (1928-1982)

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                            • #15
                              getting back NY taxes could prove to be difficult
                              Definately concerned with this. I can't see any state being willing to cough up 100%. Is this realistic?
                              there MAY be quarterly estimated tax payments required so you don't get penalized for late payments there.
                              Looking at NJ's FAQ right now. They have info pertaining to NJ/PA, but NJ/NY. However, one of the things they mention in their NJ/PA blurb states:
                              "In addition, if New Jersey income tax was not withheld, you must pay the amount due to New Jersey and may be required to make estimated tax payments."
                              Great.

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