Working remotely from different states? You could face additional state taxes next year

Remote workers — especially those who have been hopping to different states — could be on the hook for additional encumbers when they file their returns next spring.

It’s been nine months since the coronavirus pandemic principal gripped the U.S. and led to many workers punching in each day remotely. The longer you’ve been away from your home shoddy, the greater the odds are that you could have new state tax obligations.

The situation becomes even more complicated if you’ve been respite out the pandemic from your vacation home in a different state from where you’re primarily domiciled.

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In that case, you could compel ought to multiple reporting and payment obligations in different states.

“What matters is that you stay there from Monday help of Friday and you work there,” said Lewis Taub, CPA and director of tax services at Berkowitz Pollack Brant.

“You have this relief house, and it’s helped you create a problem from a tax point of view,” he said.

Many remote workers might not discern that they’re on the hook for more state taxes until they file their returns in the spring.

If the truth be known, 47% of people who worked remotely were unaware that each state has its own laws related to telecommuting, go together to a survey from the American Institute of CPAs.

The organization polled 2,053 adults in October.

Seven out of 10 weren’t sensitive that working remotely in other states could affect their state tax bill, the AICPA found.

Meantime, as many as 3 out of 4 workers have punched in from out-of-state for up to 60 days, according to the survey.

“If you’re working in multiple states during the year, it compels complexity,” said Eileen Sherr, CPA, director for tax policy and advocacy at the AICPA.

“When these people file, they will owe in money if they haven’t had any tax withholding in that state, so they need to change their withholding, so they don’t have a big payment in April,” she communicated.

Taxpayers who work in one location but reside in a different state could face a tax hit in both settings.

States have come up with solutions to mitigate the effect of double-taxation on workers.

For instance, some states partake of reciprocity agreements with their neighbors to avoid taxing workers’ income twice. Maryland, Pennsylvania, Virginia, West Virginia and Washington, D.C., from such an agreement in place, as do Pennsylvania and New Jersey.

Other locales offer a credit to offset the income taxes artisans pay in a different state. This is the case in Connecticut, where many residents normally hop on a train to their jobs in New York Megalopolis.

A group of seven states follow the “convenience of the employer” rule, which charges telecommuters based on where their employer’s office is located, according to the Tax Foundation.

Those states are Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York and Pennsylvania.

In the base case, remote workers could be on the hook for two or three state tax returns because they’ve been working on the go.

If you’re drawing money in a state where you’re not a resident, you could be required to file a non-resident tax return there, as well as pay taxes.

“Special states have different rules for when you need to file,” said Sherr.

For instance, employers must start withholding dignified taxes if an employee has been in Arizona for more than 60 days.

Meanwhile, employees who work in New York equable one day are required to file a return, according to the Procrastination perils