I live in Texas but work remotely for a New York company β why does NY still tax me?
Because New York has the "convenience of the employer" rule: if your New York employer lets you work remotely from Texas for your own convenience (rather than the employer's necessity), New York treats your workdays as if you performed them in New York. Your entire salary becomes New York-source income, and you must file a New York nonresident return (Form IT-203) β even though you never set foot in the state.
How the rule works
Normally, wages are sourced to the state where the work is physically performed. New York carves out an exception in Tax Law Β§601(e) and regulation 20 NYCRR Β§132.18, explained in the Tax Department memo TSB-M-06(5)I:
- Wages are normally allocated by the ratio of days worked in New York to total workdays.
- But any days worked outside New York must be for the employer's necessity, not the employee's convenience. Duties that by their nature cannot be performed at the employer's New York place of business qualify; choosing to live in Texas does not.
- The result: a remote employee working 100% from Texas for a New York employer owes New York tax on 100% of the wages.
| Situation | NY-source income |
|---|---|
| You live in TX, work 100% remotely for a NY employer, remote by your choice | 100% of wages taxable by NY |
| You occasionally visit the NY office | Those visit days are NY days (no change β already 100%) |
| Your employer requires you to work from Texas (e.g., you cover Texas clients and the job cannot be done from NY) | The TX days can be allocated out of NY β but "necessity" is a high bar |
| Your employer establishes a bona fide office at your location | Wages for work there escape the rule β requires the employer to have acted to establish it, which almost never happens with home offices |
The bona fide employer office test exists in the regulations (primary factor, secondary factors, other factors), but Tax Department guidance is explicit: unless the employer specifically acted to establish an office at your location, you keep owing New York tax. A home office you set up yourself does not qualify.
The double-tax problem β and its limits
Texas has no individual income tax, so there is no Texas credit to offset the New York tax β the New York tax simply stands. If you lived in a state with an income tax (say Colorado), that state would generally give you a credit for the taxes paid to New York, but the credit is capped at the home state's own tax on that income, and the math rarely wipes the New York bill out cleanly.
Frequently asked questions
My employer withholds New York tax from my paycheck. Can I just stop filing?
No. Withholding doesn't file your return. You still owe the IT-203 nonresident return each year you earn New York-source wages. If no tax were owed (e.g., wages below the standard deduction), you'd still need the return to claim any withheld refund.
Does this apply to contractors too?
The convenience rule applies to employees. Independent contractors are generally taxed where they perform the work, but the classification is contested often β misclassification is its own audit risk.
What if my company moves its office out of New York?
Then the analysis changes: the wages follow the employer's actual location and where the work is required to be done. But a New York employer with a New York office keeps the rule in play for its remote workers.
Sources
- https://beancount.io/zh/blog/2026/05/03/multi-state-taxation-remote-workers-convenience-rule-reciprocity-double-taxation-guide
- NY Tax Law Β§601(e); 20 NYCRR Β§132.18
- NY Tax Department TSB-M-06(5)I (tax.ny.gov)