One of the biggest downsides to working from home this past year will be seen in 2021’s tax season - remote workers can face state tax issues when working in a different state than where their employers are located.
The first step to figuring out your taxes this year is to determine whether you’re a remote worker or not.
“Telecommuting” or “telework” and “working remotely” are often used interchangeably—but, telecommuting means that you work from home and also perform some work in-person at your workplace. If you’re a teleworker, you are within the same geographic location as the company and won’t face double tax issues unless you live and work on the border of two states and cross state lines.
On the other hand, “working remotely” means you are miles away from your workplace and therefore not in the same location as the company. Remote work can be both part-time or full-time.
Now that that’s settled, you should know that filing your taxes as a remote employee isn’t necessarily harder than for traditional work arrangements - it’s just that the resources to help remote workers file taxes are much more scarce. This short article is meant to guide you in the right direction. But feel free to reach out to the professionals at Landmark Tax to get comprehensive help in filing your taxes.
In the United States, you typically file two types of taxes: state and federal. At the federal level, you would pay taxes based on where you physically work, not where your employer operates.
State taxes are a bit more complicated. If you lived and worked remotely in Washington, for example, you can work for a company that is based in California without having to pay California state taxes. However, if you physically traveled to Washington from another state to work from there, you may have to file a nonresident state tax return. Also, not all states require you to file state income taxes, including Texas, New Hampshire, Alaska, Florida, South Dakota, and a few others.
Working remotely for U.S.-based companies from outside the U.S is another story. There are numerous international tax laws as every country has its own unique tax code. In most cases, you only owe taxes in the country where you live and work.
It’s a little confusing, but that’s where talking and hashing it out with tax professionals can help. Visit Landmark Tax to get answers to your tax questions and receive all the aid you need to file your taxes correctly (and on time)!