I Received Nonresident Income From New York Sources: Filing IT-203

If you live outside New York but earned money from New York sources, you generally owe New York income tax on that money and must file Form IT-203, the Nonresident and Part-Year Resident Income Tax Return, whenever your New York adjusted gross income exceeds the standard deduction for your filing status. For most single filers that threshold is $8,000 for the 2025 tax year; for married couples filing jointly it is $16,050.¹ The return is due April 15, 2026.²

You should also file if New York taxes were withheld from your pay and you want a refund, or if you qualify for a refundable New York credit.¹ The full 2025 standard deduction schedule:

Single, not a dependent: $8,000
Single, can be claimed as a dependent: $3,100
Married filing jointly: $16,050
Married filing separately: $8,000
Head of household: $11,200

An extension pushes back the filing date but not the payment date. Any tax owed is still due April 15.²

What Counts as New York-Source Income

Under Tax Law Section 631, New York-source income for a nonresident falls into two buckets: income tied to real or tangible property in the state, and income from a business or profession carried on there.³ In practice that pulls in several familiar categories.

Wages for Work Done in New York

New York taxes wages for work physically performed in the state, no matter where you live or where your employer is headquartered. Salaries, bonuses, commissions, and tips all count. A handful of days at a client site or in meetings in New York can trigger a filing obligation if the resulting pay crosses your standard deduction.⁴

When you split work between New York and another location, you allocate pay with a day-counting formula on Form IT-203-B: New York working days divided by total working days, multiplied by total compensation. Weekends, holidays, sick days, and vacation days are excluded from both the numerator and denominator.¹

Self-Employment and Business Income

Freelancers, independent contractors, and sole proprietors owe New York tax on income from services performed in the state or business conducted there. A consultant flying in for client meetings, a photographer shooting in Manhattan, a rideshare driver picking up fares in the city are all earning New York-source income.³

Rental Income and Real Estate Gains

Rent from New York property is taxable whether the lease is long-term or short-term.³ Capital gains from selling New York real estate are too, and they carry a separate upfront payment requirement explained below.

Section 631 also reaches gains on selling an interest in an entity (partnership, LLC, S corporation, or closely held C corporation) when New York real property makes up 50% or more of that entity’s assets. The taxable portion equals the total gain times the fraction of the entity’s assets that are New York real property.³

Pass-Through Income

Partnerships, S corporations, and trusts operating in New York do not pay state income tax at the entity level. Income flows through to partners, shareholders, and beneficiaries, who report their share on their own returns. If you own a piece of a New York-based LLC earning rental or business income, your share is New York-source income.³

Lottery Winnings

New York State lottery prizes above $5,000 are New York-source income for nonresidents and are taxed. Prizes of $5,000 or less are not.⁵

The Remote Work Trap: Convenience of the Employer

This rule produces more surprise tax bills than any other issue on this list. If you work from home in another state for a New York-based employer, New York can still tax your pay unless your remote arrangement exists because the employer needs you to work outside the state, not because you prefer to. Days worked remotely count as New York workdays unless the out-of-state work was a necessity of the employer’s business.⁶

The burden sits on you. If your employer has a New York office you could use but choose not to, New York treats your pay as earned in the state. Keeping a dedicated office at the employer’s New York location that stays available to you weakens any argument that the remote work is employer-driven.

Watch the 184-Day Line

Spending a lot of time in New York can quietly flip you from nonresident to statutory resident. If you maintain a permanent place of abode in New York for substantially all of the tax year and spend 184 or more days in the state, New York taxes your entire income from all sources, not just what you earned there.⁴

A permanent place of abode does not have to be a home you own. An apartment kept year-round, a relative’s home with a standing room for you, or any dwelling maintained and available for your use can qualify. The day count includes any day you spend any time at all in New York, not just full workdays. If you are near that line, track your days.

Form IT-203 and Estimated Payments

Form IT-203 is the nonresident return. You report your full federal income in one column and your New York-source portion in another, and the tax is calculated as if you were a resident, then prorated to the New York share.¹

If you expect to owe $300 or more in New York tax after withholding and credits, you generally need to make quarterly estimated payments using Form IT-2105.⁷ This usually hits self-employed nonresidents and people receiving pass-through income, since nobody is withholding on their behalf.

The underpayment penalty applies if your withholding and estimated payments do not cover at least 90% of the current year’s tax, or 100% of the prior year’s tax (110% if your New York adjusted gross income exceeds $150,000). The penalty rate is the federal short-term rate plus 5.5 percentage points, with a 7.5% floor.⁸

Avoiding Double Taxation

Most states with an income tax give their own residents a credit for taxes paid to another state on the same income. The credit goes on your home-state return, not your New York return. You pay New York the full tax on your New York-source income, then claim the credit at home for what you paid, usually limited to the amount your home state would have charged on that income.

The math depends on which rate is higher. If your home state’s rate is higher than New York’s, the credit wipes out the New York tax dollar-for-dollar and you pay only the difference at home. If New York’s rate is higher, the credit covers what your home state would have charged and you effectively pay the New York rate on that income. You do not pay both states’ full rates on the same dollars.

If you live in a state with no income tax, like Florida or Texas, there is no home-state credit to claim, and you owe New York the full amount with no offset.

Selling New York Real Estate: Pay at Closing

When a nonresident sells real property in New York, estimated income tax on the gain must be computed on Form IT-2663 and paid when the deed is recorded. The tax is calculated at the highest personal income tax rate, which is 10.90% for the 2026 tax year.⁹ The recording officer will not accept the deed without the completed form and payment. Exceptions include sales qualifying for the federal principal-residence exclusion under IRC Section 121 and transfers in foreclosure.¹⁰ Whatever you pay through IT-2663 is credited against your final liability on Form IT-203.

New York City and Yonkers

Nonresidents are not subject to the New York City personal income tax.⁴ Self-employed nonresidents working in the city may owe the Unincorporated Business Tax, which applies to sole proprietors, partnerships, and other unincorporated businesses at 4% on net business income from New York City activity.¹¹

Yonkers is the one locality that taxes nonresident employees directly. The Yonkers nonresident earnings tax is 0.50% of wages earned in the city.¹² Employers should withhold it, but if yours does not, you report it on Form Y-203.

What Happens If You Skip the Return

The penalties are steep enough that waiting rarely helps. Under Tax Law Section 685, the failure-to-file penalty is 5% of the unpaid tax for the first month and 5% for each additional month or partial month, capped at 25%. If you file but do not pay, the failure-to-pay penalty is 0.5% per month, also capped at 25%.¹³

Interest runs on top. For the first quarter of 2026, the underpayment interest rate on personal income tax is 9.5%, adjusted quarterly and compounded.¹⁴ A deficiency the state determines was due to fraud carries a penalty of two times the deficiency, replacing the standard failure-to-file and negligence penalties,¹³ and criminal tax fraud under Section 1806 is a Class B felony.¹⁵

One detail trips up non-filers: the usual three-year window for New York to assess additional tax does not apply when no return was ever filed. With no return, there is no statute of limitations, and the state can pursue the tax years or decades later. The Department of Taxation and Finance cross-references federal records to catch nonresidents who omitted a required return.

1
New York State Department of Taxation and Finance. Instructions for Form IT-203 Nonresident and Part-Year Resident Income Tax Return
2
Tax.NY.gov. Filing Due Dates
3
New York State Senate. New York Tax Law 631 – New York Source Income of a Nonresident Individual
4
New York State Department of Taxation and Finance. Frequently Asked Questions About Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax
5
New York State Tax Department. Publication 140-W – FAQs: New York State Lottery Winners
6
New York State Department of Taxation and Finance. New York Tax Treatment of Nonresidents and Part-Year Residents – Application of the Convenience of the Employer Rule
7
Tax.NY.gov. Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals
8
Tax.NY.gov. Interest and Penalties
9
Tax.NY.gov. Form IT-2663 Nonresident Real Property Estimated Income Tax Payment
10
Tax.NY.gov. Instructions for Form IT-2663 Nonresident Real Property Estimated Income Tax Payment
11
NYC.gov. Business Unincorporated Business Tax UBT
12
New York State Tax Department. NYS-50-T-Y Yonkers Withholding Tax Tables and Methods
13
New York State Senate. New York Tax Law 685 – Additions to Tax and Civil Penalties
14
Tax.NY.gov. Interest Rates: 1/01/2026 – 3/31/2026
15
New York State Senate. New York Tax Law 1806 – Criminal Tax Fraud in the First Degree