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Tax Implications of Remote Work

As the name suggests, the simplified option makes calculating your deduction amount easy. You can deduct $5 per square foot of office space for up to 300 square feet (or $1,500). You may have moved your standing desk into the spare bedroom, but that doesn’t guarantee it’ll qualify for a home office space deduction. Your home workspace’s eligibility for a tax deduction depends on your employment status and how you use the space. Even if you prefer using software and preparing your taxes yourself, CPA and Tax Strategist Chika Obih recommends hiring a tax professional for at least the first year you work in a state different from where you live. That way you’ll at least have a basic understanding of your tax situation that you can follow in the future.

  • That’s a New York specific rule, but certainly that’s one way to manage that.
  • Instead of a uniform federal standard, employers must follow a patchwork of local tax regulations set by states and cities, which can be modified regularly or in response to emergencies like COVID-19.
  • If your job is in New York but you lived and worked in Virginia, it’s possible you’d have to pay income tax in both states.
  • These were more what we call desk audits, meaning it was almost like a computer generated notice issued to a taxpayer immediately after filing.
  • Once you know what they’re looking for, you’ll be able to strategize ways to prove you aren’t a resident.
  • But they established all of these rules that asserted this right to tax someone who was no longer doing work in that state.

In addition to the constitutional issues that we saw come up in Huckaby and Zelinsky, these other administrative cases really made it difficult on the legal issue for taxpayers to win. New York was taking a real broad interpretation of the rules and they were winning. But even pre-COVID-19, the challenge was the inconsistency in the rules because only a handful of states had these rules and the states right immediately how do taxes work for remote jobs around New York, like New Jersey, Connecticut, and Vermont, didn’t have these rules. One of the most important things in properly filing taxes as a remote worker is enlisting the help of a qualified tax professional to assist in filing. Given the ever-changing tax landscape, this may not be the year to rely on free tax software. Here are some tips to assist remote workers in navigating their 2021 taxes.

Benefits of global payroll: what growth companies need to know

Every company’s strategy is custom-built based on their industry, global footprint, talent needs, and company culture. Tax leaders must address questions around skills development and career progression in a mixed workplace environment. The answers, unsatisfyingly, depend on a number of factors, including which states and how long you were there, according to tax experts we spoke with. Ahead of tax season, here’s what to look out for when filing your taxes on remote work.

taxing remote workers

Agencies have the authority to establish the local travel area, as long as no part of the area exceeds 50 miles from where the employee regularly performs his or her duties. The FTR does not address local travel, as the Administrator of General Services’ authority to issue regulations under the FTR relates to TDY travel away from the official duty station (5 U.S.C. § 5707) and relocation (5 U.S.C. § 5738). The committee also considered amending the model treaty with a taxing right to target remote workers, but some members noted the proposed changes would provide little help to developing countries … For other taxpayers, just working a full-time job for a company could count towards being a statutory resident of that company’s state. Mark Klein, chairman of New York City-based law firm Hodgson Russ, told Saunders that “it would be fair for New York to give a break from the convenience rule for 2020. But I don’t think it will, given the history of this issue and the present budget crisis.”

Where can I find information about telework and remote work and how travel and relocation entitlements apply?

Akin to Zelinsky, he argues that Ohio cannot allow a municipality to tax nonresidents for income earned outside that municipality. When your commute to work takes place within the confines of your home, where should you pay income taxes? If you have a telecommuting employee in a different state than your office location or have employees in multiple states, you must withhold income taxes for the state they live and work in. You’ll pay unemployment taxes and report their income to the states where they live, not your state.

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