2020 State Allocation of Nonresident W-2 wages

[Uncle Sam]

One thing we need to all be careful of next year is the allocation of W-2 income from a nonresident state employer.
Since many of us have clients who must work from home now and work at a non-resident state - we should be concerned that next year the W-2 reflects only the wages actually earned in that state during the non-resident period.
I have 2 unrelated clients who live in NY but work for NJ high schools. Since they've been forced (due to school closings) work via face-time/computer/skype etc, and have done it in their home and not at place of employment. They should not be taxed on the earnings for those days in the nonresident state.
Consequently, NY has a formula that requires a separate schedule be attached to the NY nonresident return where an allocation must be made to determine actual days worked in the state vs out of the state.
These are issues that will effect us all next year.
What I'm going to suggest to my clients right now - is that they question the employer of this determination now - so as not to create problems next year. Whether the employers are willing to cooperate is another story.

[dtlee]

Last I read, both New York and New Jersey have telecommuting laws that would treat some days worked from home as a telecommuter as days worked within the state. Are these laws suspended due to the current crisis or is there some caveat within them that excludes days worked from home during a disaster?

[dtlee]

Answering myself perhaps....

It appears that most of these laws have some rule that says the if the taxpayer performs services at the out-of-state residence (outside of the working state) where they could not have been performed at the employer’s office (i.e., the telecommuting state), they are deemed performed in the home rather than in the state where the job is.

Obviously if the business shuts down or they are told to have employees work remotely if possible, this seems justification for not working at the office. Would that fly?

[Lion]

NY considers work for a NY employer as NY-sourced work. They allow "days out" for days the employer requires the employee to be out-of-state, such as calling on a client out of NY or training out of NY. I don't know if they will be less aggressive about their definition during this pandemic. I also don't know NJ's regulations.

[Uncle Sam]

What I'm trying to suggest here is that the normal working conditions have been pre-empted by the health safety.
I've got one client who is a NJ resident who works for a NYC employer. Now, since he's FORCED to work at home and can't come to the office, whether his earnings for these days where he has to work from home will STILL be taxed by NY because the services couldn't have been performed in NYC due to the work environment.
I'm sure that this is only one circumstance of many that need to get considered next tax season.

[Lion]

NY has not said yet. They just got around to postponing the due date for individual returns yesterday.

[dtlee]

NY has not said yet. They just got around to postponing the due date for individual returns yesterday.

And New Jersey is still lollygagging in that respect.

Are we having fun yet?

[Uncle Sam]

I certainly don't want to get involved in the Form 2210 penalty structure next year - we'll all have fun.