Consider hiring a tax professional to help you determine your filing and payment obligations.Tips for Employees Working from Home in a Different State This is all the more reason to discuss any remote work arrangements with your employer and seek approval. The company might need to register with the new state and may incur obligations for workers’ compensation, unemployment insurance, state income taxes, franchise taxes, sales taxes and more. Your employer also can be affected by your decision to work from another state, particularly if it’s a state where the company doesn’t already have operations or employees. Remote Work from Another State Also Affects Employers In addition, nine states don’t tax earned income at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Supreme Court to review the matter, and other states have filed briefs requesting a review.Īnd finally, according to the AICPA, at least 13 states and the District of Columbia have decided that temporary remote work in their state due to the pandemic will not create an income tax obligation: Alabama, Georgia, Iowa, Indiana, Massachusetts, Maryland, Minnesota, Mississippi, North Dakota, New Jersey, Pennsylvania, Rhode Island, South Carolina and the District of Columbia. For its part, New Hampshire says that Massachusetts is taxing its residents for work performed within its borders. For example, Massachusetts is taxing New Hampshire residents who formerly worked there but are now telecommuting from their homes in New Hampshire. Other states tax remote workers based not on their location but the location of their employer’s office. When there’s an agreement in place, workers usually file and pay taxes only in their home state. These are most common in metro areas where employees work in one state but live in another contiguous state. Some states have tax agreements with other states. It Gets Even More Complicated for Remote Workers If you told your employer about your plan, they should have withheld tax for your temporary work state, but even if they didn’t, that doesn’t remove the obligation. Right now, 43 states will credit any taxes you paid to a different state while working there. Most of the time, you won’t be paying double tax. Even if no taxes are due in your temporary work location, you might still be required to file a return. So if you live in Illinois but decided to work temporarily from Arizona, you might need to file your typical Illinois resident tax return and also an Arizona nonresident form. Why? In general, your wages are taxed where you earn them-but your home state can tax all of your income from wages or other sources. You might need to file multiple tax returns, and in some cases, you might owe taxes in more than one state. If any of these scenarios sound familiar, you’ll need to assess your tax situation in each of the states where you worked during 2020. Even staying with relatives, crashing on a friend’s Murphy bed or taking an Airbnb in another state for a few months could trigger a tax burden, if that was your work location. You don’t need to own property or rent an apartment in another state to incur a tax obligation.
0 Comments
Leave a Reply. |