It is known that the economy may suffer while non-essential businesses are required to shut down due to COVID-19, especially states and cities with higher income taxes. Many states are already seeing lower results for the year than initially projected. While some states and specific areas rarely deal with non-resident income taxes, those that rely heavily on them may be severely affected.
The state of New York may see more drastic, detrimental effects than other states. According to an article by Alexis Keenan, non-resident income tax results in approximately 14% of New York State’s total income tax. New York state law requires non-residents working for a New York-based company to pay New York state income taxes when they choose to work from another state due to COVID-19. However, now that some businesses are requiring employees to work from home, their income tax situation may change, resulting in less income tax for the state of New York.
Another circumstance that may be a cause for concern is the healthcare workers that are temporarily living and working in New York to help in COVID-19 treatment areas. These healthcare workers may be used to lower income tax rates in their resident state, but New York Governor Andrew Cuomo states that he cannot afford to waive the higher income tax rate these workers will be subject to in New York. If the temporary healthcare workers volunteering to travel to the critical areas in New York stay for more than 14 days, they will be subject to the New York State Income tax rates and the paperwork that will follow.
While it’s still unclear how non-resident income taxes will be handled, it would be beneficial for states and authorities to release more guidelines regarding income taxes during COVID-19. Symmetry Software is dedicated to providing customers with the most up to date tax information. Sign up for our Monthly Payroll Newsletter or contact us to learn more about how our products can support your payroll system.