![]() Under the "convenience of the employer" test, if an employer requires the employee to work in another state (employer's convenience), then taxes and withholding are based on the location where the work is performed. This often affects people who telecommute for a company that is in a different state, which is happening more since remote work increased because of the pandemic. That test that can result in your wages being taxed by the state where your employer is located instead of by the state where you live, even if you never set foot in the state where the employer is based. Convenience of the Employer TestĪ handful of states apply a "convenience of the employer" test. where your personal and professional links are found.Īdditionally, some states also have a "183-day rule." The 183 day rule basically says if you are in the state for more than 183 days, you could be deemed a "statutory resident." (That would make you liable for taxes as a resident in that state).In the meantime, if you have questions about withholding requirements for employees who live out of state, please contact us. We will keep you informed of further developments. In addition, the employer of such an employee is not obligated to withhold Massachusetts income tax for the employee to the extent that the employer is required to withhold income tax for the employee in the state where the employee’s job is based. The trend of companies adopting permanent remote or hybrid work arrangements post-pandemic, combined with the increasing aggressiveness of states in finding tax revenue where they can, promise to keep this issue front and center for a while.Ī resident employee suddenly working remotely in Massachusetts due to another state’s Covid-19 state of emergency, who continues to incur an income tax liability in that other state because of that state’s sourcing rule, is eligible for a credit for taxes paid to that other state under Massachusetts law. Other states have adopted or are adopting similar sourcing rules due to their own declared states of emergency. Tax professionals and government officials in many states are closely watching the MA-NH dispute. The Supreme Court declined to review the case but the issue will not likely disappear. New Hampshire also argued that the policy violates the commerce clause and the due process clause of the U.S. New Hampshire argued that this policy, which state officials say impacts approximately 100,000 residents, is unconstitutional and may have harmful effects on the state if it were to continue permanently. Supreme Court challenging the constitutionality of the Massachusetts emergency policy. In October 2020, the State of New Hampshire petitioned the U.S. This emergency regulation stated that employees who originally worked in Massachusetts pre-pandemic and are now working remotely in another state are required to continue paying income tax in Massachusetts. In 2020, the Commonwealth of Massachusetts enacted a temporary “convenience of the employer” policy. Supreme Court has refused to hear a lawsuit filed by New Hampshire. The impact of this issue has been particularly controversial in Massachusetts and New Hampshire, and the battle is likely to continue since the U.S. Those employees who commuted across state lines pre-pandemic now must figure out which state they owe taxes to. For many remote workers, this has created tax implications, particularly for employees who normally would work in an office in one state but now work remotely from home in another state. The Covid-19 pandemic has forced millions of Americans to work remotely in the past 16 months.
0 Comments
Leave a Reply. |