This video training is a follow up to the training “CRITICAL TAX WARNING and NEW State Tax LAWS | What They DON’T TELL YOU about Remote Work“.
Remote workers and employers can avoid nasty IRS tax surprises when working remotely. In this training video, Dr. Nitin Chhoda covers:
1. The Concept of Tax Nexus – Implications for you and your Employer
2. State-specific variations & cross border implications of Remote work taxation
3. Winners and Losers of Remote work Taxation
Generally, an individual pays taxes based on where they work or earn income. The pandemic has resulted in more remote work, which comes with potential state-tax obligations for workers and employers. This is a complex matter and an accountant should be consulted about questions specific to your situation.
The term nexus is used in tax law to describe a situation in which a business has a “nexus” or tax presence in a particular state or states. A nexus is basically a connection between a taxing jurisdiction, like a state, and an entity like a business that must collect or pay the tax.
Tax presence or nexus, as it’s known in accounting circles, is at the heart of determining how states levy companies and workers.
If you are a remote worker, we recommend you get an accountant and play it safe. Avoid interest and penalties.
Dr. Nitin Chhoda explores some potential state income tax scenarios and possible implications for remote workers in several states, including
For remote workers, this could mean that some are subject to tax withholding in the state where they’re working remotely, as well as potential non-resident income tax return filings.
Some states like Texas and Florida don’t have an income tax, but more than two dozen others – including New York and California, which are aggressive with tax collections – are prepared to levy taxes on these remote workers for 2020, unless something changes.
New York, which has been hardest hit by the pandemic and depends on high earners for a large percentage of income-tax revenue, isn’t likely to join the non-enforcers. In early May, Gov. Andrew Cuomo said that unless the state gets more federal money, even out-of-state health workers who came to help fight the pandemic will be liable for New York taxes on their pay.
New York also taxes remote employees who live and work in another state if their job is tied to a New York office.