‘New York’s law is wrong.’ New Jersey remote workers appeal New York income tax rules

New Jersey is now offering an incentive for residents who successfully win their own legal challenge against New York.

Karina Gerry

Apr 26, 2024, 12:49 AM

Updated 30 days ago

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As New Jersey commuters brace for New York City congestion pricing to go into effect on June 15, residents who work from home in New Jersey are already shelling out money to New York.
“I personally want the money to go to New Jersey," says tax attorney Open Weaver Banks. "And I know New York’s law is wrong.”
Banks works from home for a business based in New York. Thanks to the “convenience of employer rule” she and other New Jersey residents must pay New York income tax, even if they only go into the office once a year.
“If you’re assigned to the New York office and you’re working outside New York remotely so you’re working from home in New Jersey, New York will treat you as if you’re working in New York," explained Jason Rosenberg, a state and local tax accountant. "So, they will tax you on all of your income at that point.”
This convenience of employer law is not new, but since 2020 the amount of people working from home or hybrid has increased.
“New York’s been super, super, super aggressive with the convenience of employer rule and as we know it affects a lot of New Jersey residents," Rosenberg said.
New Jersey is now offering an incentive for residents who successfully win their own legal challenge against New York. Since the law passed in July 2023, telecommuters in New Jersey who win their appeals against New York and receive a refund for their income tax do not have to pay the full amount back to New Jersey.
“Not only do I think that the New York law is wrong, especially the way it was applied in 2020, but also New Jersey got extremely creative and said, ‘We’re going to incentivize our residents to go get their refunds and then we won’t make you pay it all back to New Jersey,’ you only have to pay half of it back," Banks explained.
Banks and other tax attorneys are arguing that those who were forced to work from home during the pandemic at no fault of their own shouldn’t fall under the “convenience of employer rule.”
“So, to me, those are the perfect situations, those are my facts for challenging the convenience rule and making New York pay what I already paid in back to me," Banks said.
To qualify for the New Jersey, rebate a taxpayer must be a New Jersey resident, pay income tax or wage tax to New York state, apply and be denied a refund, file an appeal and win, and receive a refund from New York.
It’s important to note winning an appeal is not easy. Since the state enacted the new law back in July only one person has taken advantage of the rebate.


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