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Question about telecommuting and taxation

By ManiacMan ·
I've never been posed with this situation, so I'm asking some of you guys and gals here who may already know the answer to my question. I'm being presented with a remote admin job that would allow me to work out of my home as an employee of a company on W2. The actual location of the company for which services will be performed is in VA, but the company that would be paying me is located in NC. Would I, being a NY resident, be required to pay any non resident taxes to VA for performing work outside of my home state, even though I'd actually be working out
of my home?

I found the following information regarding a proposed bill to offer telecommuter tax relief to those living outside of NY but performing telecommuter work in NY, but it doesn't address the reverse situation.

http://www.prweb.com/releases/2006/1/prweb335338.htm

I urge you all to support this bill because it's not fair to be double taxed if you're not physically present in the state that work is being performed in. The problem with our tax laws is that they never took technology into account that would allow tech workers to work remotely.

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Last time I had a similar situation

by Tig2 In reply to Question about telecommut ...

I paid taxes in the state in which the work was performed. As you live in NY, you are required to pay taxes to the State of NY and not any other.

I have also moved from one state to another in the middle of a tax year. In that case, I paid taxes on only money earned in each individual state.

As this is W2, the company cutting your check should be taking care of this for you.

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So all I'll be paying are NYS and Fed taxes, not VA taxes?

by ManiacMan In reply to Last time I had a similar ...

That works for me.

Thanks.

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As far as I know, Maniac

by Tig2 In reply to So all I'll be paying are ...

Your income may be earned in NC for work you do in VA but you LIVE in NY and that is the driving force.

I worked for a company that had a client presence in MN, was headquartered in TX and was incorporated in DE. I worked across all 50 states and Canada. But my residency was MN so I paid taxes to MN.

The only variable here is where you pay State tax. Your Fed tax is evaluated the same way no matter where the employer is or where the work is performed.

I'll take a look around and see if I can find you some pertinent links.

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It doesn't make sense to pay taxes

by TonytheTiger In reply to Question about telecommut ...

to any other state but the one you live in. The supposed purpose of state tax is to pay for that state's services that you use, right? So what service is Virginia's government providing to you?

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Good point, but VA would be the source of my income

by ManiacMan In reply to It doesn't make sense to ...

so isn't that source of income taxed according to their taxation laws? I know I still have to pay NYS and Federal taxes, but it's the whole non-resident tax issue that's puzzling me.

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It's no different than physically traveling to the work location...

by ThumbsUp2 In reply to Good point, but VA would ...

Telecommuting is no different than sending you physically to the location to perform the work on an expense account, except that it saves THEM money. You're still taxed on where your work HQ is located. Your employer will be required to withhold VA income taxes, since that's where THEY are HQ'd at and where your office would be located if they were sending you out on an expense account (travel). However, you'll be able to file a non-resident return at the end of the year. When you do file your taxes at the end of the year, you'll have to file a NY state tax return (if they require one) and claim income earned in another state (VA). So, file your VA return first to get your money back from them so that you can, in turn, roll it over to NY on their state tax return.

To compare, people live in the State of Washington and commute to Oregon to work. Oregon taxes are withheld from their paychecks, but at the end of the year, they file a non-resident Oregon tax return to get it all back because their state of residence is Washington. Washington doesn't have an income tax. They work off of sales taxes. Oregon residents who shop in Washington provide proof of residence so they don't have to pay Washington sales tax.

Your best bet is to talk to a tax accountant locally (NY). They can tell you how to fill out your W4 form and what returns will be required at the end of the year.

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Contact a Tax Account

by TheChas In reply to Question about telecommut ...

What you need to do, is work with an accountant that knows tax law. If you go to a tax prep firm, make sure to work with a year round and not a seasonal employee.

Only a tax professional is going to be able to point you to the correct forms and information that you will need for your situation.

Depending on the state to state reciprocal agreements, you may end up paying partial taxes to all 3 states.

Don't forget to have the tax man check into city tax issues to.

Even if you think you have things covered, a tax accountant will be able to help you should the HR department balk at the way you need to fill out state W4 forms.

Chas

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Question about telecommuting and taxation

by joybrz In reply to Question about telecommut ...

According to the New York General Income Tax Information you would pay taxes based on where you live.
Definitions The following definitions are applicable in determining whether or not you
are a New York State resident for income tax purposes.
Domicile In general, your domicile is the place you intend to have as your permanent
home. Your domicile is, in effect, where your permanent home is located.
It is the place you intend to return to after being away (as on vacation
abroad, business assignments, educational leave, or military assignment).
You can have only one domicile. Your New York domicile does not
change until you can demonstrate that you have abandoned your New York
domicile and established a new domicile outside New York State.
http://www.tax.state.ny.us/pdf/publications/income/pub80.pdf
(pg 5)

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