Does New York tax a nonresident's wages for days worked from home in another state?

Where the rule sits in the allocation fraction

A nonresident employee who works both within and without New York allocates wages by a fraction: days worked in New York over total days worked everywhere, with weekends, holidays, sick days, vacation, and other nonworking days excluded from both ends (20 NYCRR 132.18(a)). The library's article on how New York counts workdays when allocating a nonresident's wages covers the fraction itself; this article addresses the input that most often decides it, the day worked at home outside New York.

Under the same subdivision, a day worked at an out-of-state home because the employee prefers it, or because the employer permits it, goes into the numerator as a New York day (20 NYCRR 132.18(a)). For an employee whose only out-of-state workdays are home days, the entire salary can be allocated to New York.

The Court of Appeals described the rule's origin in Matter of Zelinsky v. Tax Appeals Tribunal, 1 NY3d 85 (2003), cert. denied 541 US 1009 (2004): the test "was originally adopted to prevent abuses arising from commuters who spent an hour working at home every Saturday and Sunday." The taxpayer, a Connecticut resident who taught at a New York law school three days a week and worked at home on the others, lost his Commerce Clause and Due Process challenges to the allocation of his full salary to New York; the court attributed the resulting double taxation to Connecticut's refusal to credit the New York tax. Two years later, in Matter of Huckaby v. New York State Division of Tax Appeals, 4 NY3d 427 (2005), the court upheld, under due process and equal protection, the allocation of all of a Tennessee resident's wages to New York although he worked about a quarter of his days there; three judges dissented, reasoning that the anti-abuse rationale did not fit an employee who worked in Tennessee "because that is where he lives."

The bona fide employer office test

The Department's operative statement of when a home office stops being a convenience is TSB-M-06(5)I, effective for tax years beginning on or after January 1, 2006. It addresses a nonresident or part-year resident "whose assigned or primary work location is in New York State" and who also works at a home office outside the state. If the home office is a bona fide employer office, any normal workday spent there is treated as a day worked outside New York (TSB-M-06(5)I).

A home office qualifies if it meets either the primary factor alone, or at least four of the six secondary factors and at least three of the ten other factors (TSB-M-06(5)I).

The primary factor is that the home office contains or is near specialized facilities that the duties require and the employer's place of business cannot provide. In the memorandum's examples, a test track unavailable at the employer's New York offices but near the employee's home meets the factor; scientific equipment set up at home that could be set up at the New York office does not.

The six secondary factors are: (1) the home office is a requirement or condition of employment; (2) the employer has a bona fide business purpose for an office in the locale of the home; (3) the employee performs some core duties there, which reading business publications alone does not satisfy; (4) the employee regularly and continuously meets clients, patients, or customers there; (5) the employer provides no designated office space or regular work accommodations at any of its regular places of business; and (6) the employer reimburses substantially all (80 percent or more) of the home office expenses, or pays fair rental value and substantially all supply and equipment costs (TSB-M-06(5)I).

The ten other factors are more formal: a separate business phone line and listing; the home address on letterhead or business cards; space used exclusively for the employer's business; inventory or samples kept there; business records stored there; a business sign; employer advertising of the location; business insurance on it; a claimed federal home office deduction; and the employee not being an officer (TSB-M-06(5)I).

The memorandum also defines the day in dispute. A normal workday is any day on which the taxpayer performed the usual duties of the job. A day at home spent answering occasional calls or emails, reading professional journals, or being available if needed is not a normal workday; it is a nonworking day that drops out of the fraction entirely (TSB-M-06(5)I).

Two cautions follow. The memorandum states the Department's audit position, but the binding rule is the necessity clause in 20 NYCRR 132.18(a). And the factor test is demanding in practice. In Matter of Snyder, DTA No. 831118 (ALJ June 25, 2026), an employee who moved to Florida in 2021 and worked entirely from home offices against an assigned New York office met some factors (core duties at home, designated workspace, not an officer) but not the primary factor or enough of the rest: no employer business purpose for a Florida office, no client meetings at home, a stipend unrelated to actual expenses, and business cards carrying the New York address. The allocation of her wages to New York was sustained. An administrative law judge's determination is not precedent (Tax Law section 2010(5)), and no Tax Appeals Tribunal decision applying the TSB-M-06(5)I factors to 2020 or later remote work was located on the Division of Tax Appeals' site as of this writing.

The pandemic years: permission is not necessity

The Department has not treated the pandemic as an exception. Its current published guidance answers the question of a nonresident whose primary office is inside New York and who telecommutes from outside the state without qualification: the telecommuting days are "considered days worked in the state" unless the employer has established a bona fide employer office at the telecommuting location, and unless the employer "specifically acted to establish a bona fide employer office" there, New York tax continues to apply to the income earned while telecommuting (Department of Taxation and Finance, Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax, updated October 24, 2025).

The litigated cases have sustained that position. In Matter of Myers, DTA No. 850197 (Tax Appeals Tribunal Oct. 14, 2025), a Pennsylvania resident worked from home for most of 2020 after his employer, an essential business not required to close, voluntarily closed its New York City office. The Tribunal held that permission to work from home and a voluntary closure do not establish employer necessity. In Matter of Zelinsky v. Commissioner of Taxation & Finance, 2026 NY Slip Op 04251 (3d Dept July 2, 2026), the same professor challenged the allocation of his 2019 and 2020 salary, and the Appellate Division confirmed the Tribunal: the executive order directed remote work "to the maximum extent possible," but "it did not require Zelinsky to teach from Connecticut," and the law school obtained no advantage from his Connecticut location. The court rejected the dormant Commerce Clause challenge, repeating the Court of Appeals' statement in Huckaby that "nonresidents do not implicate themselves or their employers in interstate commerce merely by working from home," and rejected the due process challenge. The taxpayers appealed to the Court of Appeals (No. APL-2026-00107), whose preliminary appeal statement list for July 24 to 30, 2026 records a sua sponte examination of whether a substantial constitutional question is involved.

The working rule: the question is not whether the employee could reach the New York office, but whether the employer needed the work done at the out-of-state location. A voluntarily closed office, an order directing remote work, and an employer's indifference to location have each failed that test.

The double tax problem and the reciprocal responses

A home state that taxes residents on all income typically credits another state's tax only on income its own rules source to that state, and its own rules source a home day to itself. When New York taxes that day under the convenience rule and the home state declines the credit, the wages are taxed twice. That was the result in Zelinsky in 2003: Connecticut taxed the portion of the salary attributable to home days and allowed no credit for the New York tax on it (Matter of Zelinsky v. Tax Appeals Tribunal, 1 NY3d 85 (2003)).

Connecticut answered with a reciprocal rule. In determining a nonresident's compensation from Connecticut sources, the nonresident "shall include income from days worked outside this state for such person's convenience if such person's state of domicile uses a similar test" (Conn. Gen. Stat. section 12-711(b)(2)(C)). Because Connecticut's resident credit reaches tax on income its own sourcing rules would assign to the other state, a mirror rule that sources a New York resident's convenience days to Connecticut carries with it the recognition of New York's convenience-rule tax on a Connecticut resident's home days. The Department of Revenue Services' nonresident withholding certificate states the same rule from the employer's side: residents of states with a convenience of the employer test "will be subject to similar rules for work performed for a Connecticut employer" (Form CT-W4NA (rev. 12/22)).

New Jersey followed in 2023. P.L.2023, c.125, approved July 21, 2023, sources to New Jersey a nonresident's compensation for services performed outside New Jersey that the employer did not require, but only where the nonresident's "state of residence imposes an income or wage tax that requires employee compensation to be sourced" to the employer's location; in that case New Jersey "shall impose a similar New Jersey sourcing rule on that income of the nonresident" (N.J.S.A. 54A:5-8(e)). The provision applies to taxable years beginning on or after January 1, 2023 (P.L.2023, c.125, section 8). The same act created a credit, for tax years 2020 through 2023, for a resident who challenges another state's convenience-rule tax on income earned while in New Jersey, wins a final judgment, and receives a refund: the refund reduces New Jersey's credit for taxes paid to the other state, and the new credit offsets 50 percent of the resulting New Jersey tax (C.54A:4-1.1; New Jersey Division of Taxation, Refundable Gross Income Tax Credit for New Jersey Residents Who Successfully Challenge Another State's Imposition of the Convenience of the Employer Rule, updated April 22, 2025).

The reciprocal rules do not change New York's rule. They change what the home state does about it: where the home state mirrors the rule and credits the New York tax, the home-day wages bear one state's tax rather than two, subject to the limits of the home state's credit.

Three fact patterns, and the withholding that follows

A New Jersey resident assigned to a Manhattan office who works three days a week at home. The employer has done nothing to establish an office at the employee's home. Absent a bona fide employer office, the three home days are New York days, and the wages are allocated to New York in full except for out-of-state travel days at the employer's direction. Home days on which the employee only answered occasional email are nonworking days and drop out. New Jersey taxes its resident on all of the wages, and the employee's relief lies in New Jersey's resident credit for taxes paid to other jurisdictions; New Jersey's own reciprocal rule under N.J.S.A. 54A:5-8(e) governs the opposite case, a New York resident working remotely for a New Jersey employer, and does not reduce the New York tax.

A Florida resident whose employer opened no Florida office. Florida does not impose a personal income tax (Florida Department of Revenue, FAQ: "Do I have to file a personal income tax return in Florida?"), so there is no double tax and no credit to seek. Huckaby is the template: a resident of a state that does not tax wages, working mostly from home for a New York employer, can owe New York tax on the entire salary. The employee's only route out is the necessity clause or the bona fide employer office test, and Snyder shows how a Florida home office that the employer tolerated but did not establish fares under that test.

An employee whose employer later established a bona fide office in the home state. The memorandum turns on facts, not labels, so a memo from human resources calling the home a "remote office" does not by itself satisfy the test. If the employer takes enough of the steps the factors describe to reach the count, such as a business purpose for an office in that locale, no designated New York workspace, reimbursement of 80 percent or more of the home office costs, and the home office on letterhead and business cards, then from the date the factors are met, normal workdays at that office are out-of-state days (TSB-M-06(5)I). Days before that date remain under the convenience rule. The transition date should be documented, because it divides the year's fraction.

Withholding. The allocation reaches payroll through Form IT-2104.1 (12/24), on which the employee estimates the percentage of services performed in New York using "days, miles, time, or similar criteria"; the employer withholds on that basis, keeps the certificate available for inspection, and must be notified within 10 days of a substantial change in the percentage. The form's example of an employee in New York two days of five, performing 40 percent of services there, does not address the convenience rule. A percentage that treats convenience days at home as out-of-state days understates the New York share the regulation produces, and the shortfall surfaces as a balance due on the nonresident return.

What remains unsettled

Four questions remain open as of this writing. First, whether the Court of Appeals hears the second Zelinsky appeal, and if so how it treats pandemic-era remote work under the dormant Commerce Clause. Second, neither the regulation nor TSB-M-06(5)I addresses directly the employee of a New York employer with no assigned New York office at all, for example after the employer gives up its New York space; the memorandum and the Department's current guidance are both framed around a primary office in New York. Third, no Tribunal decision located on the Division of Tax Appeals' site construes the bona fide employer office factors for a post-2020 home office, so the weight of individual factors, and whether anything short of the full count can carry a case, remains a trial-level question. Fourth, relief from double taxation depends on each home state's credit statute, and a resident of a state whose credit does not reach convenience-rule income has no relief from New York's side.

Practice notes

Intake for any nonresident on a New York payroll starts with three facts: the assigned or primary office, the pattern of home days, and the employer's reasons for that pattern in writing. Where a home office is meant to be an out-of-state workplace, the employer, not the employee, has to build it: score the TSB-M-06(5)I factors before the year begins, document the business purpose for an office in that locale, align reimbursement, business cards, and listings with the factors, and record the effective date. Model the home-state credit before assuming double taxation, and update Form IT-2104.1 when the home-day pattern changes. For open years with facts close to the second Zelinsky case, weigh a protective refund claim while the Court of Appeals question is pending. G&G State Tax Group provides New York nonresident wage allocation analysis and convenience of the employer audit and refund representation alongside its state and local tax practice.