Withholding Taxes: New York

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• All wages paid to New York State (NYS) residents are subject to withholding, even when earned outside of the state. An employee is a NYS resident for income tax purposes if certain criteria are met. NYS personal income tax must also be withheld from wages paid to NYS nonresident employees for services performed in NYS. See Withholding on Residents, Nonresidents and Expatriates.
• To ensure greater accuracy in state withholding, all employees should complete and submit a Form IT-2104, Employee's Withholding Allowance Certificate, to their employer. See Employee's Withholding Allowance Certificate.
• Withholding on supplemental wage payments, such as bonuses, is calculated differently depending on whether the payments are made simultaneously with, or separate from, regular wages. See Supplemental Wages.
• Each year employers must provide copies of federal Form W-2, Wage and Tax Statement, to each employee from whom any amount of NYS income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. A different due date applies to terminated employees. See Form W-2 Reporting Requirements.
• NYS requires employers to keep the same records for state income tax purposes as is required to be kept for federal income tax purposes. Employers are also required to keep all records and information returns available for review by the Department of Taxation and Finance (DOTF). See Recordkeeping Requirements.
• Localities including New York City and Yonkers have requirements pertaining to withholding taxes. See Local Requirements.