Navigation Bar Telecommuting, Telework and Alternative Officing
Telecommuting Tools
Tools Index
Amazon Book List
Articles for Download
Law Library
Mobile Access
Real Estate
Suburban Sprawl
Financial Issues of Telecommuting FAQ
I telecommute from a different state than where my employer is located. For tax purposes, which state do I work in?

With the usual disclaimer that you should check with a qualified tax professional or accountant for advice on this question, here are some general thoughts:

The issue of "nexus", or the focal point or location of a commercial activity, used to be simple. Today it is becoming more complex, as your question suggests. However, there's actually quite a lot of precedent for your situation, e.g., companies with the main office in one city and sales reps, tech service staff, etc. scattered around the country.

Also, there's precedent in a weird way in professional sports. For example, when the New York Mets (or any other team) play the Philadelphia Phillies, the city of Philadelphia collects a payroll tax on the Mets players for the portion of their annual income derived from games played while in Philadelphia. Whether this is fair or even logical or not is irrelevant; given the opportunity, any taxation agency will reach into your pocket - and the deeper the pocket, the better.

The consensus seems to be that you are an employee of the state where your employer is "domiciled", or based. That's considered to be the primary focal point of activity of the business. But if you ask the tax agency of the state where you live, they would probably claim you as one of their own for tax collections.

To make matters worse, the answer might be different for different purposes. These range from state income tax to local payroll tax to state unemployment insurance to state worker's compensation to .... and on and on.

One approach is to contact the agency in your state that administers these matters (probably the Dept. of Labor or Taxation) and call them - without giving your name and particulars - and ask them the question. If there's a state income tax in your state, get a copy of the current state tax filing booklet and see who is defined as a state taxpayer. Do the same two things for the labor and tax departments of the state where your employer is based. This should help you figure out who can rightfully claim you as a taxpayer.

The good news, if there is any, is that you probably can't be double-taxed. Even if you are, you can probably claim one state's tax payment as a credit on the other's.

Entire contents of this website Copyright © 2007 Gil Gordon Associates