How do taxes work for remote workers? Its complicated

But if you spent a significant amount of time working remotely in a state other than your home state, then it’s probably best to consult an accountant or tax professional to get advice. There are also a number of states that don’t impose a tax liability if you specifically work in a neighboring state. One thing you need to know — before you panic — is you can’t be taxed double on your income just because you did your job from two states. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”).

You can earn a competitive hourly wage with overtime during peak hours. Verify your employer’s decision is consistent with its written policy and procedure. If you are still uncertain, reach out to your HR department for clarification. While it is the employer’s responsibility to apply tax law correctly, any missteps it makes will ultimately impact you financially. So be sure to verify, validate and follow up on any action taken to ensure the proper result.

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Whether you work for a small mom-and-pop or a large, multistate company, being a remote worker can add an extra layer of difficulty to your income tax filing. For now, though, remote employees — and tax professionals — are going to have to navigate labyrinthine state tax laws one by one. To avoid this, it’s important to notify your job where you’re living so it can withhold tax from the correct state. It’s also important to consult a tax professional, since the tax situation — as well as what it takes to be a resident of that particular state — varies drastically by state and is far from intuitive. According to WFH Research1, in August 2023, 13% of full-time employees were fully remote, and 30% worked a hybrid schedule.

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A whopping 51% of Americans worked remotely at one time or another between April 2020 and April 2021. This onslaught of new remote workers will lead to many people tackling how do taxes work for remote jobs income taxes for remote work for the first time. For example, suppose your employee works for your Utah-based organization but lives and works from home in Oregon.

• There’s a chance that the taxation of remote workers could change at some point, given the growth of the nation’s mobile workforce.
• Some are reevaluating the rules to see if they can recoup lost revenue.
• « Because an employer can get penalized by a state for not withholding when they should have, the employer has an incentive to put policies in place to know where their employees are working, » Bannasch said.
• Extensive record-keeping, receipt management may very well be worth the time and effort.

In most cases, the remote employee would not have to pay taxes to their employer’s state. For example, let’s say you work remotely from your home in New York for a company located in California. When you receive your W-2, you see that there’s no reference to CA withholding. You’d report all of your income earned from your remote work (and any other earnings) on a New York resident state tax return. However, some states don’t require organizations to report taxable employee benefits they offer to their remote workers, which is why you must check state tax laws for each remote worker you hire. As a result, businesses are no longer confined to one country or region; they have the opportunity to expand their reach and tap into new markets.