I work from home for a company located in another state. Do I need to pay taxes for that state?

Forum|Forum|7 years ago
June 1, 2019
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TurboTax Self Employed Online

Employee

Are you self-employed (Form 1099-MISC or cash income) or are you an employee (W-2)? Are state income taxes being withheld from your income for your resident state and/or the other state?

Hal_Al

Employee

What are your two states? Some states are more aggressive in taxing telecommuters, See <a rel="nofollow" target="_blank" href="http://www.journalofaccountancy.com/issues/2009/jun/20091371.htm">http://www.journalofaccountancy.com/issues/2009/jun/20091371.htm</a>

How often do you travel to the other state. See <a rel="nofollow" target="_blank" href="http://money.cnn.com/2013/06/28/pf/taxes/business-traveler-tax-threat/">http://money.cnn.com/2013/06/28/pf/taxes/business-traveler-tax-threat/</a>
Some states have reciprocal rules which would keep you from paying tax to the company location state. see <a rel="nofollow" target="_blank" href="https://www.thebalance.com/state-with-reciprocal-agreements-3193329">https://www.thebalance.com/state-with-reciprocal-agreements-3193329</a>

B

bwa

Employee

Do I need to pay taxes for that state?

The general rule for telecommuting is that you file a return only in the state that you are physically present in when you perform services. However, some states have a much harsher rule. Those states are DE, NY, NJ, NE and PA. They may also include OR. These states tax wages in their state as if performed in the state if the telecommuter is working in another state merely for their convenience instead of necessity. NY has been particularly aggressive about this. A discussion on the issue centering on NY from the Journal of Accountancy is here.

If you telecommute to a job in one of those states and don't meet an exception (similar to NY's in the article) they would expect you to file a non-resident return reporting and paying tax on your income from that state, and filing a resident return in your own state reporting all of your income and claiming a credit for tax paid the other state. In such a situation, you would want tax withheld from wages for the state where you telecommute to.

If you telecommute to a job in another state where you never have a working presence (or to one of those states and meet an exception) you would file a return only in your resident state.

C

Cavagren

Employee

I was advised that if I work from home in Las Vegas for a company in NY, I should not have to pay Ny federal taxes, now Im confused

S

shilohsan1932

I live NJ but work in NY. Since March and because of the virus i have only been working at home in NJ. Shouldn't my company be taking out NJ taxes instead of NY taxes? They told me no because it is a NY law. Who is correct?

T

TomD8

Employee

@shilohsan1932

New York's general rule is that if you're a non-resident of NY working remotely for a NY employer, your income is taxable by NY if you're working remotely by your own choice, rather than because your employer requires it. This is known as the "convenience of the employer" rule. To turn it around, if you're a non-resident of NY working outside NY because your employer requires it, your income is not taxable by NY.

According to this very recent article by a New York law firm, the issue of how Covid will affect "convenience of the employer" rules is still uncertain:

https://www.hodgsonruss.com/blogs-Noonans-Notes-Blog,state-guidance-related-to-covid-19-telecommuting

**Answers are correct to the best of my ability but do not constitute tax or legal advice.