Move To Europe And Pay Low Or Zero Tax In These 4 Countries

That employee’s not going to want to take the job if it’s going to mean 8 percent of income tax on their compensation. Knowing the ins and outs of the tax code and how it applies to remote workers can be daunting. A whopping 51% of Americans worked remotely at one time or another between April 2020 and April 2021.

If working remotely from another state means double taxation, a remote work benefit is not much of a benefit. Accordingly, companies that prioritize remote work may either shift some of their functions out of state (providing an out-of-state office to which to assign out-of-state workers) or even move their operations outright. If your job is in California but you’re living full-time and working remotely in Texas, for example, you wouldn’t have to pay taxes on your wages, since Texas doesn’t have income tax. If your job is in New York, a convenience rule state, but you lived and worked in Texas, you would have to pay New York income tax. If your job is in New York but you lived and worked in Virginia, it’s possible you’d have to pay income tax in both states.

Raising Filing and Withholding Thresholds for Nonresidents

However, the teleworker could receive a transit subsidy benefit, assuming they meet agency guidelines. Assuming that a remote employee’s local travel area is 50 miles from their residence/official duty station, a remote employee who lives more than 50 miles from the agency worksite must be reimbursed for their travel costs to the agency worksite. However, GSA does not have authority to ensure that the non-remote employee receives a commensurate reimbursement. Agencies determine reimbursement policies that work best for their agency.

taxing remote workers

Through such reforms, policymakers can take the pro-taxpayer intentions behind the ill-considered deduction and turn them into reality. Most states offer a tax credit that counts against what you owe to the nonresident jurisdiction where you worked and owe taxes. However, the credit may not fully eliminate the amount paid to the second state if its tax rate is higher than where you live. “If you spent a significant how do taxes work for remote jobs time working out of another state in the last year, you very likely will have an income tax liability there,” said Jared Walczak, vice president of state projects for the Tax Foundation. These taxes can include income, gross receipts, sales, and local business taxes, which can affect not only a company’s tax compliance but also financial statement reporting, registrations, data gathering, and documentation.


Another example is the likely impact on personal property and sales and use taxes as the purchase and ownership of tangible property shifts from its traditional location to the decentralized world of remote office and remote workers. Maybe more remote workers with employers based in Ohio or New York will dispute their tax bills during the pandemic or beyond. That’s an understandable reaction, given the lack of coordination among governments as the nature of employment changes. Until governments work together, plenty more potential tax conflicts could arise, especially if the remote work trend is here to stay. During the COVID-19 pandemic and Ohio’s stay-at-home order, Ohio did for its cities what Massachusetts did for itself with neighboring states. Ohio allowed employers to withhold municipal income tax irrespective of where their employees performed their work.

Remote Workers – potential changes to the UN model tax treaty – KPMG Newsroom

Remote Workers – potential changes to the UN model tax treaty.

Posted: Mon, 16 Oct 2023 10:24:18 GMT [source]