Paul L. Caron

Saturday, March 13, 2021

NY Times: The Tax Headaches Of Working Remotely

New York Times, The Tax Headaches of Working Remotely:

Last year, Ariele Doolittle, a tax lawyer, got a call from a client who lived and worked in New York but was considering working remotely from California temporarily after his offices were shuttered in the pandemic.

Not a good idea, Ms. Doolittle told him.

California, she said, would tax his income because he was physically working there. And New York would probably tax his earnings as well. Plus, when he filed his New York resident tax return, the state probably wouldn’t give him a credit for the taxes he paid to California.

He could be double taxed. “He ended up going to Florida,” she said, since that state doesn’t have a state income tax.

Such are the complex tax considerations for millions of people who have been telecommuting during the pandemic and working in a different state from their usual workplace.

Workers may have to file more than one state tax return, and in certain situations they could end up owing taxes in both states. The details depend on your home state and what state you worked in during 2020. ...

Fifteen states have said they won’t tax people who moved in temporarily during the pandemic, the C.P.A. institute says.

But a handful of states take a different, more aggressive approach. They use special rules to tax remote workers based on the location of their employer’s office — even if the employee doesn’t physically work at that location, according to the Tax Foundation.

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