Paul L. Caron

Monday, June 15, 2020

WSJ: The Long Arm Of State Tax Law Threatens Telecommuters

Wall Street Journal Tax Report, The Long Arm of State Tax Law Threatens Telecommuters:

The new popularity of remote work is putting a spotlight on income taxes that New York and five other states impose on workers living elsewhere.

My last column took a nationwide look at how the states are taxing, or not taxing, remote workers who took refuge there due to the pandemic. This one will focus on a single controversial rule that will likely affect thousands of New Yorkers and others whose offices were closed this year due to the pandemic. The rule’s importance will grow as out-of-state telecommuting becomes more common, especially if more states adopt it.

It’s known as the “convenience” rule. In a nutshell, it says that if a person has a job based in one state but lives and works in another state out of convenience rather than because the employer requires it, then that person owes income tax to the state where the job is based.

Here’s real-life example: Prof. Edward Zelinsky, who teaches tax law at Yeshiva University’s Cardozo Law School in Manhattan, lives in New Haven, Conn. Typically he spends about 50% of his workdays in New York City and the rest in Connecticut.

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