If You Work Remotely Where Do You Pay Taxes?

You work from home…but where do you pay taxes?

In our post “Living in One State, Working in Another“, we explained how to file state taxes if you work in one state but live in another.

However, with all the (exciting) advances in technology, more and more individuals are trading in their commutes to the office to instead work remotely from home.

If you work remotely and the company you work for is in a different state than you live in, then your tax situation will differ from someone who physically travels to another state for work.

We understand that you may have no idea how to file your state taxes. We’re here to help!

File taxes to one or two states?

Depending on your specific tax situation, you may need to file two state tax returns; a resident return and a non-resident return.

As a refresher:

  • resident-state: the state where you live. Your resident state taxes ALL of your income, regardless of what state it’s earned in.

  • non-resident-state: a state you did not live in over the past year. Different states have different non-resident tax laws on who is required to pay non-resident taxes.

Although certain states have varying non-resident tax laws, generally, if you live in one state and work in another remotely (so you don’t physically travel to another state for work), then you would only file and pay taxes to your resident state.

That means, if you’re working remotely you’ll only have to file a resident tax return to the state you live in.

However, if your W-2 form (that form you receive at the end of the year or beginning of January) lists a state other than your resident state, then you’ll need to also file a non-resident tax return to the state listed. In other words, you’ll file two state tax returns; a resident return to the state you live in and a non-resident return to the state listed on your W-2 (the state your company is located in).

Report ALL earnings on your Resident Tax Return!

The most important thing to keep in mind if you work remotely is that you’ll need to report your income earned (no matter what state it’s from) on a resident state tax return (unless of course, you live in a income tax-free state).

For example, let’s say you work remotely from your home in New York for a company located in California. When you receive your W-2, you see that there’s no reference to CA withholding. In this case, you would not have to file or owe CA state income tax. You’d report all of your income earned from your remote work (and any other earnings) on a New York resident state tax return.

Here’s another example- If you’re working remotely from your New York home for a company in California and receive a W-2 form with two states listed, both NY & CA, then you’ll also need to file a CA non-resident tax return. On this non-resident return, you’ll report only the information  listed on that W-2 form.

If you end up being double-taxed, your resident state entoitles you to a credit for the taxes paid to the non-resident state. This should be a dollar-for-dollar reduction.

Who Doesn’t Need to File a State Return (income tax-free states)

You’re off the hook from filing a resident tax return if you live in one of the following income tax-free states;

  1. Alaska
  2. Florida
  3. Nevada
  4. New Hampshire
  5. South Dakota
  6. Tennessee
  7. Texas
  8. Washington
  9. Wyoming

So, if you work remotely from your home in Florida, you won’t need to file a resident tax return. In fact, you probably won’t need to file any state tax returns, unless your W-2 form indicates another state’s tax withholding.

Let us do the state calculations for you.

We know that state taxes are a lot to wrap your head around. Rather than trying to figure out what you owe, we’ll do all your federal and state calculations for you at once. You’ll simply enter the information listed on your W-2 form(s).

Calculating state taxes can be a headache- avoid all tax headaches with RapidTax!

If you work remotely for your employer, file your taxes with RapidTax to avoid a headache.

407 Replies to “If You Work Remotely Where Do You Pay Taxes?”

  1. I just graduated last year and got a job in CA. While i was in school, i work remotely for a Hawaii company as an independent contractor. I received 1099 from them and a W-2 from my current job. I’m planning to file California State Tax, do i have to file a Hawaii State Tax and any other local tax form? Thanks!

  2. Hi,
    We have two new employees who currently live in Georgia and our admin office is in Illinois. The majority of the time they are not in the admin office, but they do have offices in the admin building. One person is setup as a virtual employee and just had Georgia taxes withheld. The other person is not setup as a virtual employee nad had Illinois taxes withheld. The question is how should these two people be taxed?

  3. I have a company in Florida, but I have a worker who lives in Colorado and works from their home in Colorado. Since Florida does not have State withholding tax, do I need to withhold Colorado State withholding tax from my employee’s check who works from home in Colorado?
    Thanks

  4. Hi,
    I live Massachusetts and I had a contracting job in Indiana. I am living in Indiana in a hotel paid by the employer. I rent a place in Massachusetts. Do I have to pay taxes in Massachusetts and Indiana or just Indiana?

  5. I work for CA company, however they use me as their contractor for NJ company. I am working in NJ 2-3 days a week and 2-3 days from my MA home. I live in MA and file taxes as MA resident.
    I got W2 with MA part only. I am completely confused. Should I file taxes in all 3 states, in NJ and MA or in MA only?

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