After months of not addressing the nonresident withholding requirements for COVID-19 telecommuting, New York recently broke its silence by posting a Frequently Asked Question page to its website. The FAQ indicates that for nonresidents whose primary office is in New York State, any days telecommuting during the pandemic are considered days worked in the state unless the employer has established a bona fide employer office at the telecommuting office. Without a bona fide employer office outside the state, nonresident employees will continue to owe New York income tax on wages earned while telecommuting.
In order to be considered a bona fide employer office, the telecommuting employee’s home office must meet either the primary factor or at least four secondary factors and three of the other factors.
- The home office contains or is near specialized facilities.
- The home office is a requirement or condition of employment.
- The employer has a bona fide business purpose for the employee’s home-office location.
- The employee performs some of the core duties of his or her employment at the home office.
- The employee meets or deals with clients, patients, or customers on a regular and continuous basis at the home office.
- The employer does not provide the employee with designated office space or other regular work accommodations at one of its regular places of business.
- Employer reimbursement of expenses for the home office.
- The employer maintains a separate telephone line and listing for the home office.
- The employee’s home office address and phone number are listed on the business letterhead and/or business cards of the employer.
- The employee uses a specific area of the home exclusively to conduct the business of the employer that is separate from the living area. The home office will not meet this factor if the area is used for both business and personal purposes.
- The employer’s business is selling products at wholesale or retail and the employee keeps an inventory of the products or product samples in the home office for use in the employer’s business.
- Business records of the employer are stored at the employee’s home office.
- The home office location has a sign indicating a place of business of the employer.
- Advertising for the employer shows the employee’s home office as one of the employer’s places of business.
- The home office is covered by a business insurance policy or by a business rider to the employee’s homeowner insurance policy.
- The employee is entitled to and actually claims a deduction for home office expenses for federal income tax purposes.
- The employee is not an officer of the company.
Please feel free to contact your WG advisor if you have any questions or concerns regarding how your tax situation may be affected by COVID-19.