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New York-Based Employees Who Work Remotely Out-of-State Are Subject to New York Income Tax

Updated: Oct 20, 2021

By William L. Bricker, Jr., Rachel Trickett and Maria Pigna

Taxpayers frequently anticipate that telecommuting from outside of New York will allow them to avoid New York State income taxes. New York City telecommuting taxpayers similarly may anticipate avoiding New York City income taxes. This note explains why such taxpayers may be disappointed to learn that their wages are still subject to New York tax.[1]

The Basics

New York State taxes New York residents on worldwide income and nonresidents only on New York source income. There are three key considerations in determining whether a person is a New York tax resident.

1. Domicile. A person generally is domiciled at the place of their permanent home, i.e., where a person intends to return after being away (perhaps after an absence necessitated by the COVID-19 pandemic).

2. Permanent Place of Abode. A permanent place of abode is a residence (house or apartment) maintained in New York that is suitable for year-round use.

3. Time Spent in New York. Any part of a day spent in New York is a New York day.

New York Tax Residency

Applying the three factors, a person is considered a New York tax resident if he or she either:

- is domiciled in New York, or

- maintains a permanent place of abode in New York and spends 183 days or more in New York.

Persons who are domiciled in New York, however, are not considered residents if they meet all three of the following conditions:

1. They did not maintain a permanent place of abode in New York at any time during the year,

2. They maintained a permanent place of abode outside of New York during the entire year, and

3. They spent 30 days or less in New York during the tax year.[2]

Thus, a person who has a house or apartment in New York and has lived in New York for an extended period, but who was in New York only for the months of January and February in 2020 due to the COVID-19 pandemic generally will nevertheless be considered a New York tax resident in 2020.

A person who is not a New York resident is considered a nonresident.


As discussed above, a person who is considered a New York resident is taxable by New York on all income from worldwide sources. If a person is not a New York resident, however, he or she is subject to New York income tax only on income that is sourced in New York. The source of compensation income generally is where a person works; thus, a nonresident employee’s compensation from working for a New York employer in an office in New York generally is taxed by New York.

If a nonresident employee of a New York employer telecommutes from his or her home outside of New York, days spent telecommuting are generally considered days worked in New York if the nonresident’s principal office is in New York. Since 2006, New York has taken the position that a “convenience of the employer test” applies in determining whether telecommuting days are non-New York days.[3] It is extremely difficult to satisfy this test because an employee must show that he or she was assigned by the employer to a primary work location at an established or other bona fide place of business of the employer outside of New York.[4] Thus, if an employee chooses to work at home (i.e., for his or her own convenience and not for the convenience of the employer), days worked outside of New York are treated as if the employee were physically located in New York.

Despite the fact that New York-based employees have been required or encouraged by government officials to telecommute due to COVID-19, the New York State Department of Taxation and Finance recently asserted that there is no exception to the “convenience of the employer” test for COVID-19. [5]

Massachusetts has taken a similar position by adopting a regulation requiring nonresidents who typically work in Massachusetts but telecommute from outside the state due to the COVID-19 pandemic to pay tax on their wages. New Hampshire recently asked the U.S. Supreme Court to prohibit Massachusetts from imposing its state income tax on residents of New Hampshire who are now working remotely for Massachusetts employers.[6] It is possible that states surrounding New York could seek to join the lawsuit, challenging the New York rule on similar constitutional grounds.

From time to time, federal legislation has been introduced in both the House and Senate [7] to provide that workers can be subject to income tax only in the state where they reside, no matter where their work is located. That legislation has not progressed and seems currently to have no moment.

Tax Impact of Telecommuting on Employers

While beyond the scope of this note, telecommuting can have a significant impact on employers as well as on employees. Depending on where a telecommuter is situated, an employer could be considered to have an office in the state, which can raise a plethora of issues including the employer being required to qualify to do business, file a state tax return,[8] pay taxes in the state and comply with the obligations of an employer in the state, including withholding and paying employment taxes.


[1] New York City applies similar rules to those discussed in the text with respect to residents and nonresidents of New York City.

[2] New York Tax Law § 605(b). The New York City rules are the same with the substitution of “City” for “State.” New York is assertive in applying these rules. See State of New York Department of Taxation and Finance, Nonresident Audit Guidelines (2014).

[3] New York’s position has been affirmed twice by New York’s highest court. Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (2003) (New York law professor resident in Connecticut was taxable on 100% of his earnings even though he spent 50% of his time working in Connecticut); Huckaby v. N.Y. State Div. of Tax Appeals, 4 N.Y.3d. 427 (2005) (Tennessee resident computer programmer who worked primarily from his Tennessee home for a New York employer was subject to New York income tax on all of his compensation). The United States Supreme Court refused to hear either case. In 2018, the Supreme Court made clear that a state can tax a company (or person) without any physical presence in a state. South Dakota v. Wayfair, 138 S. Ct. 2080 (2018).

[4] TSB-M-06(5) (May15, 2006). Six states have adopted the convenience of the employer rule: Arkansas, Connecticut, Delaware, Nebraska, New York, and Pennsylvania. In addition, Massachusetts recently adopted a temporary income sourcing rule with the same effect in response to pandemic-era telework.

[5] State of New York Department of Taxation and Finance, Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax, (Oct. 19, 2020).

[6] New Hampshire’s Motion for Leave to File Bill of Complaint can be found at

[7] Perhaps not surprisingly, South Dakota Senator John Thune is the sponsor of the Senate bill (Mobile Workforce State Income Tax Simplification Act of 2020). South Dakota was the directly and adversely impacted by the Supreme Court’s decision in Wayfair.

[8] According to a recent survey conducted by Bloomberg, in a majority of states, the presence of even one telecommuter requires an employer to file a state income tax return in the telecommuter’s state. Majority Of States Say A Single Employee Telecommuting Subjects A Company To Corporate Income Tax, Per Bloomberg Tax & Accounting Survey, (July 14, 2020).


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