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
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
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
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.