Working From Home? It Could Cost You!

Fox Foundation For Parkinson's Research. No user fee is required for submissions filed under this revenue procedure. New York may tax you if you spend days in the state. While you're at it, call your senators and suggest they introduce the bill in the Senate, too. At present the only states which are exceptions to the general rule are Indiana, Kentucky, Maryland, Mississippi and Oklahoma.

The latest action was in March , though, so for now, if you work from home and your employer is based in another state, you'll likely want to consult with a tax advisor to make sure everything.

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These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. Visit performance for information about the performance numbers displayed above. Skip to main content. State of Residence If your state of residence imposes an income tax, you must typically report all income you earned during the year and pay tax at the appropriate rate, regardless of where you earned the money. State of Employment In most cases, if the state in which you earned your income collects income tax, you must file a return.

Reciprocal States If your home state has a reciprocal agreement with the state in which you work, you may be able to file a single return in your home state. Considerations Even if you don't owe any additional tax in the state where you work, it may still be wise to file a return.

About the Author Amanda McMullen is a freelancer who has been writing professionally since Zacks Research is Reported On: Virgin Islands, or American Samoa. For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms "foreign," "abroad," and "overseas" refer to areas outside the United States, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, the U. Virgin Islands, and the Antarctic region.

The term "foreign country" does not include ships and aircraft traveling in or above international waters, nor does it include offshore installations that are located outside the territorial waters of any individual nation. Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual.

Having a "tax home" in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live.

If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. You are not considered to have a tax home in a foreign country for any period during which your abode is in the United States.

For tax years beginning after December 31, , you are not considered to have a tax home in a foreign country for any period during which your abode is in the United States unless you are serving in support of the Armed Forces of the United States in a area designated as a combat zone.

If your abode is in the United States, you will not meet the tax home test and cannot claim the foreign earned income exclusion. The location of your abode is based on where you maintain your family, economic, and personal ties. Your abode is not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Your abode is also not necessarily in the United States while you are temporarily in the United States.

However, these factors can contribute to you having an abode in the United States. It does not mean your principal place of business. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country.

You cannot claim either of the exclusions or the housing deduction. For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Trying to cut back on office space? Have a great candidate who won't take the job unless she can work from home?

Need an employee to be able to focus on a particularly sensitive task? In fact, asked to name a case in which the insanely strict contingencies of the convenience rule were satisfied, the one Goluboff comes up with dates from the late 70s, when a court agreed with an employee that his job required him to work offsite. Testing "specialty items" for a publishing company--like horses, sports cars and firearms. Is your head swirling yet? As a longtime advocate of the "anytime, anywhere" workplace, I had no idea of the financial penalties many telecommuters face.

There is a Way Out of This Mess. All three are Democrats from Connecticut. In essence it says that states may not tax income earned by non-residents when those non-residents aren't physically present in the state.

While it's great that this bill has been introduced, be aware that it isn't the first time such a thing has been tried. A similar bill, the "Telecommuter Tax Fairness Act," has been introduced into every Congress since and gone down to the obscurity of committee every time. If you don't want that to happen to this one, call your representative and tell her or him to support H. While you're at it, call your senators and suggest they introduce the bill in the Senate, too. Finally, take a look at this Letter of Support.

This is a new letter, created in response to the legislation introduced last week, but similar letters have already been signed by groups ranging from the American Legion to the Christopher and Dana Reeve Foundation. If you know of an organization that might want to sign on to the new letter, drop Nicole Goluboff a line and let her know. Robin Hardman is a writer and work-life expert who works with companies to put together the best possible "great place to work" competition entries and creates compelling, easy-to-read benefits, HR, diversity and general-topic employee communications.

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State of Residence

In such a situation, you would want tax withheld from wages for the state where you telecommute to. If you telecommute to a job in another state where you never have a working presence (or to one of those states and meet an exception) you would file a return only in your resident iamedaldu.cfs: 2. Your Tax Home. Your Home State Will Tax You – But Which State is That? by Martin M. Shenkman, CPA, MBA, PFS. For most folks, if you lived in one state, and continue to own a home there, that state will be the one for you. Employees who work at home represent a growing segment of the work force. In many cases, those employees may be eligible for tax deductions that are unavailable to in-office employees. Before you claim these deductions, be sure you meet the criteria set out by the IRS, or you could face additional taxes or penalties.


And then there are states--Connecticut included--that require those same employees to pay state income tax for every penny they earn while physically working in their state, even if the work they. Telecommuting, a work arrangement where employees typically work out of their home, has become increasingly accepted and popular. However, this arrangement may have unexpected state tax consequences when the employer is based in a state other than where the employee lives and works. Similarly, if you live in one of these nine states but work in a state that imposes state income tax, you would only pay nonresident taxes for the state where you work. For instance, if you live in Bristol, Virginia but work in Bristol, Tennessee, you would pay Virginia resident state income taxes.

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