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. Less than half (46 percent) are aware that the number of days they worked out of the state where their physical workplace is located may impact the amount of state taxes owed.Įach state has its own tax rules and each treats temporary workers differently.Forty-seven percent are not aware that each state has their own tax laws related to remote working.More than half of Americans who have worked remotely during the pandemic (55 percent) are not aware of possible tax consequences from not changing their state tax withholding to reflect their remote work location.
#Working remotely from another state professional
Few employees gave any thought to tax considerations and many saw no need to tell their employer about their plans.Īccording to a recent survey by the Association of International Certified Professional Accountants (AICPA): While traveling to another country became all but impossible, taking off for another state seemed simple enough. By the end of 2020, it was two out of three! With an open-ended break from the office, some opted to work remotely from a different state-often one that was warmer, cheaper or closer to family.
#Working remotely from another state full
At the beginning of the Covid pandemic, just five percent of American white collar workers worked remotely full time.
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