Tax Implications for Remote Workers

December 15, 2021

Nearly two years into the Covid-19 pandemic, working from home has become the new “normal” for many people, and it has largely been a boon for employers and employees alike. 

We understand the challenges of remote working and how that can create complications when filing your taxes, particularly for long-distance telecommuters who work in one state for a company based in another state. 

If you’re a remote worker, this primer will help you understand how that status may affect your 2021 tax filing.

Your State of Residence Has the Right to Tax Your Wages

Regardless of whether you’re working in a different state, the state where you live gets to tax your wages. In addition, the state where you’re temporarily living and working can also tax your income, although many states offered a reprieve in 2020 as Americans adjusted to post-pandemic life. 

However, states are not expected to offer those same compliance breaks for 2021 returns, so it’s important to be aware of your individual tax obligations and plan in advance.

Taxation Rules Vary From State to State

States have different rules for out-of-state remote workers, including when you need to report any income earned there. That doesn’t necessarily mean you’ll pay more taxes overall, though, because most (but not all) states offer a tax credit to avoid double taxation. 

If you’re a remote worker, we’d be happy to help you understand your tax liability, along with resources and strategies to helping you establish your state of residency and provide tips that can help you establish your residency by year-end. 

Feel free to contact us today with any questions you may have. We’d love to help you!

Stay safe & healthy,

The CJBS Team