Tax Warning: Double-Tax for Remote Workers in 5 States due to Little-Known Rule

Unexpected challenges may lead to double-tax for remote workers as filing season approaches next week.

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Double-Tax for Remote Workers: Little-Known Rule May Impact Remote Workers in 5 States

Connecticut, Delaware, Nebraska, New York, and Pennsylvania workers may be affected by a little-known rule. The employer’s location determines taxation in these five states, even if remote workers live and work elsewhere.

The Tax Foundation’s Jared Walczak explained the case using New York. New York taxes all earned income for New York-based employees who aren’t allocated to a non-New York office. The state where you work and live may not give a New York tax credit.

Most impacted workers receive a tax credit that eliminates the double tax for remote workers. 16 states and DC have reciprocal agreements to eliminate double taxes for remote workers. Workers must check taxfoundation.org for state agreements.

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How Double-Tax Remote Workers Can Seek Relief and Savings in 2024

Some states give tax rebates for employer-paid taxes without reciprocity agreements. However, submitting tax returns in both jurisdictions and paying taxes to the higher-income-tax state is mandatory.

As the 2024 tax season begins on January 29, remote workers in Connecticut, Delaware, Nebraska, New York, and Pennsylvania should consult a tax professional before filing to avoid multiple taxes.

The IRS Free File program is offered for anyone who wants to start their taxes early. Californians can investigate tax rebates, and all taxpayers should know about the new IRS tax bands. Double-tax remote workers are crucial during tax season.

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