Does NV employer have to withhold MA tax?

I hope that means congratulations are in order.

The legal issue is whether the company has sufficient contacts with MA, and is MA has jurisdiction over the company, to compel it to withhold taxes. Normally those tests are met when the company has an employee working in the state. So my guess is that they can do so.

In this case it's bootstrapping to say that because you are located in the state, they can require withholding from your wages. But I suspect the requirement for withholding would be upheld anyway.

___ Stu

In this situation, I suppose a really good employee would pay quarterly estimated to the state, and fill out paperwork so the company would have to withhold zero state taxes.

In fact, when I asked the CFO about state withholding, she told me that they expect me to pay quarterly estimated taxes. She didn't say anything about paperwork -- she'd didn't want me to send her an M-4 form (the Mass equivalent to the federal W-4).

But the recent question about penalties for underwithholding reminded me of something: I believe MA is like the IRS in that they only count withholding when checking whether you meet the safe harbor requirement, estimated taxes don't count. If I'm wrong, let me know.

do you mean safe harbor from the taxpayer's perspective? Quarterly estimates work.

As far as I can see in the statutes and regulations, having an employee in the state meets the definition of doing business in MA. For sure, the company owes SUI to the state. According to the statutes, the penalty for not filing and not answering a 30 day letter can be 100% of taxes that should have been remitted by the employer on behalf of the employee. The employer is most probably required to register with the MA DOR.

It is possible that there is an exception for a small out of state employer but I have not researched that and I am not an expert on MA business law.

Barry also asked about business deductions because he works out of his home. The answer is yes, unreimbursed employee business expenses are deductible on Schedule A subject to the 2% limitation. This would include business use of the home if he is able to meet the regular and exclusive tests plus the use is for the convenience of the employer (he appears to pass the convenience test). He also would appear to pass the regular use test. It is not clear to me that he can pass the exclusive use test. Given the size of the condo he does not have an exclusive room used for business. The question is whether he has a separately identified space in the condo that is used exclusively for business. If he does, he could then allocate the common costs (rent or mortgage interest, utilities, etc.) and take depreciation on that exclusive business space. Please note, that as he owns this property, upon selling it, any gain attributable to depreciation allowed or allowable can not be excluded from income under the sale of your main home rules. This means the gain on depreciation can not be excluded even if he never actually deducts the depreciation.

I doubt it. I once ran a tiny company with one employee in NY (me) and one in CA. We had to file all the CA withholding and SUI stuff. Assuming the employer has a competent payroll service, they should know what needs to be filed and file it all on behalf of the employer. If the employer is not paying the Mass. SUI, it's probably in violation of the law, and is likely to be caught if they note that there aren't SUI payments to match the employee's W-2.

Regards, John Levine, snipped-for-privacy@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail.

"John Levine" wrote

In addition to the payroll, nexus attaches for sales and use tax as well as entity income tax, possibly property tax on business assets in state and a business license at the local level. And they will get you. If not now when it's cheap, later when it's expensive.