Form IT-2104.1: NY Nonresidence and Allocation Percentage

Form IT-2104.1 is the certificate a nonresident employee gives a New York employer so payroll withholds state tax on only the portion of wages actually earned inside New York. Without it on file, your employer generally has to withhold as though every dollar you earn is New York-source income, which can tie up thousands of dollars until you file your annual return.¹

Who Should File It

Two conditions have to be true. You are not a resident of New York State, and you perform services for your employer both inside and outside New York.¹ If you live in New Jersey, Connecticut, Pennsylvania, or anywhere else outside the state and split your work between a New York office and somewhere else, this is the form that tells payroll how to divide your withholding.

The form is different from the standard IT-2104 that New York residents use to claim withholding allowances. IT-2104 governs your entire paycheck. IT-2104.1 carves out just the New York slice.

First, Confirm You Actually Qualify as a Nonresident

New York can treat you as a resident for income tax purposes even when you are domiciled elsewhere. If you maintain a permanent place of abode in New York and spend 184 or more days in the state during the tax year, you are a “statutory resident” taxed on all of your income, not just New York-source wages.² A permanent place of abode is any structure suitable for year-round living that you maintain, whether you own it, rent it, or have it kept available for you. Any part of a day in New York counts as a full day.³

Filing IT-2104.1 in that situation would be incorrect. If you keep a weeknight apartment in the city and your day count is anywhere near 184, track it carefully before you certify nonresidence.

How to Complete the Form

The current form is a single page available at tax.ny.gov.

Your Information and Your Employer’s

At the top, enter your full legal name, Social Security number, and home address outside New York, then your employer’s legal name and business address.¹ The out-of-state address matters. It establishes on the face of the form that you are claiming nonresident status.

The Three Parts

The form is divided into three parts, one for each jurisdiction that could tax you:

Part 1, New York State. You certify you are not a resident and enter the percentage of your services you expect to perform inside the state during the calendar year. Your employer uses that percentage to withhold state tax on only that share of your wages.¹
Part 2, New York City. You certify you are not a resident of the city, which imposes its own income tax on residents.
Part 3, Yonkers. You certify you are not a resident of Yonkers, which levies a separate local income tax.

If you don’t live in NYC or Yonkers, you generally just check the nonresidence boxes in Parts 2 and 3 without entering a separate percentage there.

Calculating Your Allocation Percentage

The percentage in Part 1 is your best estimate of the share of your total work that will happen inside New York during the calendar year. The form lets you calculate it using days, miles, time, or any similar reasonable measure.¹ Most people use a day count: New York workdays divided by total workdays.

Only actual working days go into that fraction. Exclude Saturdays, Sundays, holidays, vacation, sick days, and other leave whether paid or unpaid.⁴ So if you expect 250 working days in the year and 100 of them in New York, your allocation is 40%, and your employer withholds state tax on 40% of your gross wages.

One useful carve-out: days when you enter New York only to board or get off a plane or train do not count as days worked in the state.⁴ Flying out of JFK after a workday spent in New Jersey doesn’t add a New York day.

The Convenience of the Employer Rule Can Change Your Percentage

This is where most nonresidents miscalculate. If your primary or assigned office is in New York, any day you work remotely from home counts as a New York day for tax purposes unless the work was performed outside the state out of necessity rather than personal convenience.⁵

Necessity means the duties themselves cannot be performed at the employer’s New York office. Visiting a client site elsewhere qualifies. Working at a specialized facility that doesn’t exist at your employer’s office qualifies. Working from home in Connecticut because you prefer it, or because your employer allows it, does not.

There is a narrow exception if your home office qualifies as a “bona fide employer office,” in which case normal workdays there count as days outside New York. Qualifying requires meeting either a single primary factor (specialized facilities your job requires) or a combination of at least four secondary and three additional factors, including things like the home office being a condition of employment and your employer reimbursing 80% or more of home office expenses.⁵ The bar is high, and most casual remote arrangements don’t clear it.

The practical effect on your form is this. If your office assignment is in New York and you commute in two days a week but work from home the other three, your allocation percentage on IT-2104.1 is likely closer to 100% than to 40%. Understating it doesn’t just create a year-end tax bill. It can trigger a $500 penalty for furnishing false information that reduces withholding.¹

Signing, Submitting, and Updating

Sign and give the completed form to your employer’s payroll or human resources department. Do not mail it to the New York State Department of Taxation and Finance. It’s meant for your employer’s files, and payroll uses it to adjust withholding going forward.

You sign under a certification that the information is accurate. The $500 penalty for false information that decreases withholding applies “in addition to any criminal penalty provided by law,” though it can be waived if your total tax liability for the year turns out to be zero after credits.⁶

The form does not have to be refiled every year. You are, however, required to notify your employer within 10 days if you become a resident of New York State, New York City, or Yonkers, or if the percentage of services you perform inside New York changes substantially.¹ A job restructuring, a project that shifts your work in or out of the state, or a move all call for an updated form. Reviewing your allocation each January is a sensible habit even when nothing has obviously changed.

The Form Doesn’t Replace Your Annual Return

IT-2104.1 governs withholding during the year. It doesn’t relieve you of filing a New York return. Nonresidents with New York source income must file Form IT-203, the Nonresident and Part-Year Resident Income Tax Return, if their New York adjusted gross income exceeds the state’s standard deduction, and IT-203 is also how you claim a refund of any overwithheld New York tax.⁷

On IT-203, you reconcile your actual allocation against the estimate you gave your employer. If your real split of New York versus out-of-state workdays came out differently, the return sorts out whether you owe more tax or are due a refund. Keeping a dated log of where you physically worked each day makes both the return and any audit response far easier.

Coordinating with Your Home State

New York does not have reciprocity agreements with neighboring states that would automatically prevent both states from taxing the same wages.³ Relief typically comes from your home state, which generally offers a resident credit for income taxes paid to another state. You pay New York first on the New York-sourced portion of your wages, then claim the credit at home. Getting the IT-2104.1 percentage right keeps your New York withholding proportional to the income actually earned there, which keeps both returns cleaner at filing time.

1
New York State Department of Taxation and Finance. Form IT-2104.1: New York State, City of New York, and City of Yonkers Certificate of Nonresidence and Allocation of Withholding Tax
2
New York State Department of Taxation and Finance. Permanent Place of Abode
3
New York State Department of Taxation and Finance. Frequently Asked Questions About Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax
4
New York Codes, Rules and Regulations. Earnings of Nonresident Employees and Officers
5
New York State Department of Taxation and Finance. TSB-M-06(5)I: New York Tax Treatment of Nonresidents and Part-Year Residents Application of the Convenience of the Employer Test to Telecommuters and Others
6
New York State Senate. New York Tax Law Section 685 – Additions to Tax, Civil Penalties
7
New York State Department of Taxation and Finance. Filing Information for New York State Nonresidents