Over the past several years, the taxation of non-residents who work in New York and the withholding obligations of their employers have become extraordinarily complicated, resulting in much confusion as well as significant administrative burdens.
Under the Tax Law, non-resident individuals are taxable by New York on income from New York sources, including income from real or personal property located in New York, income from businesses conducted in New York, and compensation for work performed in New York.1 Compensation income can include not only wages but also bonuses, consulting payments, and income from stock options. With respect to non-resident individuals who work both inside and outside New York, the regulations provide for a methodology of allocating the income which is based primarily on the percentage of days worked in New York to days worked everywhere.2 Under the statute and regulations, there is no minimum amount of time spent by a non-resident individual working in New York that triggers the obligation to pay tax on allocable New York source income.
