WFH and taxes

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pancake19
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WFH and taxes

Post by pancake19 » Thu May 21, 2020 8:33 pm

Just realized this, I work in NYC but live in NJ. However given the pandemic, I have now been working from home, i.e. in NJ, for the past 3 months and likely for the rest of the year.

Does this mean I shouldn't be paying NY payroll taxes but rather just the NJ one? I haven't seen much information on this...

Do I need to do something or track this somehow?

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grabiner
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Re: WFH and taxes

Post by grabiner » Thu May 21, 2020 9:22 pm

You need to check the tax laws of the state where you normally work. NY normally considers that if you work from home when your regular workplace is in NY, your income has a source in NY and you pay NY tax; however, there are exceptions. (In contrast, if your regular workplace is in NY and you work a day in your employer's NJ office, that income would have a source in NJ and would be taxed by NJ.)
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Exhilarate
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Re: WFH and taxes

Post by Exhilarate » Thu May 21, 2020 10:38 pm

I'm in the same predicament as OP: NJ resident WFH-ing for months, with a NYC office location.

Found the following which seem to indicate the current NY state payroll withholding can continue without penalty from NJ.
https://www.state.nj.us/treasury/taxati ... roll.shtml
https://taxnews.ey.com/news/2020-0797-n ... gger-nexus

I believe NJ tax rates are a bit lower than NY, so ideally I'd like to pro-rate the taxes to NJ for the WFH period. For now, not making any changes.

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Clever_Username
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Re: WFH and taxes

Post by Clever_Username » Thu May 21, 2020 11:58 pm

Even for those of us in one state, I wonder if deducting the home office will be more of a reality in 2020. I haven't ever taken that deduction in the past, but when this began, I did set aside part of my house to be primarily for work-related matters. I wonder if a lot more people will claim the home office deduction in 2020 than in 2019.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

MrJedi
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Re: WFH and taxes

Post by MrJedi » Fri May 22, 2020 5:38 am

Clever_Username wrote:
Thu May 21, 2020 11:58 pm
Even for those of us in one state, I wonder if deducting the home office will be more of a reality in 2020. I haven't ever taken that deduction in the past, but when this began, I did set aside part of my house to be primarily for work-related matters. I wonder if a lot more people will claim the home office deduction in 2020 than in 2019.
There is no more home office deduction, at least for a W2 type employee.

fabdog
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Re: WFH and taxes

Post by fabdog » Fri May 22, 2020 7:20 am

see page 4 of Pub 587... second question in the flowchart... are you using the home office as an employee... no deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

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mighty72
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Re: WFH and taxes

Post by mighty72 » Fri May 22, 2020 9:42 am

OP, based on my experience from many years ago, your employer has to classify you as a wfh employee and change your employment address for you to avoid NY taxes. Please discuss with your payroll department

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Clever_Username
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Re: WFH and taxes

Post by Clever_Username » Fri May 22, 2020 10:40 am

MrJedi wrote:
Fri May 22, 2020 5:38 am
Clever_Username wrote:
Thu May 21, 2020 11:58 pm
Even for those of us in one state, I wonder if deducting the home office will be more of a reality in 2020. I haven't ever taken that deduction in the past, but when this began, I did set aside part of my house to be primarily for work-related matters. I wonder if a lot more people will claim the home office deduction in 2020 than in 2019.
There is no more home office deduction, at least for a W2 type employee.
Well, that solves that question. Thanks!
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

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rob
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Re: WFH and taxes

Post by rob » Fri May 22, 2020 10:52 am

With the vast shortfall in revenue all states will suffer... you can bet this is going to be a topic of conversation next year tax time..... I regularly have to do many state tax returns because employer counts days traveling to other states and withholds to the relevant states based on that. It's a real mess....
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grabiner
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Re: WFH and taxes

Post by grabiner » Fri May 22, 2020 12:45 pm

rob wrote:
Fri May 22, 2020 10:52 am
With the vast shortfall in revenue all states will suffer... you can bet this is going to be a topic of conversation next year tax time..... I regularly have to do many state tax returns because employer counts days traveling to other states and withholds to the relevant states based on that. It's a real mess....
Even if the employer doesn't withhold (because it has no nexus in the state, or because it doesn't bother to comply), you many still have to pay tax to the state where you worked. Some states have "de minimis" rules, so that nonresidents don't have to pay state tax if they earned less than X dollars and worked less than Y days in the state, but in many states, you must file a tax form if you earned one dollar in that state.
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TomatoTomahto
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Re: WFH and taxes

Post by TomatoTomahto » Fri May 22, 2020 12:53 pm

rob wrote:
Fri May 22, 2020 10:52 am
With the vast shortfall in revenue all states will suffer... you can bet this is going to be a topic of conversation next year tax time..... I regularly have to do many state tax returns because employer counts days traveling to other states and withholds to the relevant states based on that. It's a real mess....
A while ago, DW left her employer early in the year. She only went to one office for one day, in NJ, during that time. Her employer’s W2 showed 4 states in addition to NJ, 4 of which she hadn’t been to in more than a year. Our CPA, after a number of phone calls to HR and accounting, said to quit while we were ahead and let it go. 😁
Okay, I get it; I won't be political or controversial. The Earth is flat.

seawolf21
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Re: WFH and taxes

Post by seawolf21 » Fri May 22, 2020 1:08 pm

Need to work it out with your employer as they are the ones reporting W2 income attributable to NYC.

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