Teleworking from all over the country/world

If you are a resident/citizen of the US, you have to file a US tax return. The permanent resident status expires one year after you're out of the country, and there's a form to extend it to two years.

Since you intend to return to your residence in the US, you are still a resident of the state. So a state tax return is due as well.

If you're a resident of CA and are away on a work related contracted that's at least 546 days (excluding temporary trips back to CA) and you make less than 200k, then you will be considered a non-resident of CA.

You may have to pay tax to the foreign country as well just because you were residing there when you made the money. However, I don't know much about the other country laws. It could very well be that if you're in the country only 2 weeks then you won't be taxed at all. What countries are you looking at?

In any case, if you were taxed, then you can use the foreign earned income exclusion and the foreign tax credit to eliminate or reduce the double taxation.

All the countries I know require a non-trivial visa before non-citizens can work there. When I was on sabbatical in the UK last year with no visa, the border people were OK with my writing a book for a US publisher as not working in the UK. My suggestion would be that you find out what the visa rules are for the places you want to stay and make sure you comply with the rules for being a non-working temporary visitor.

R's, John

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Great suggestion, John. I do have a question though - and I must admit that I am a tax pro with 30 years in the business; I do have a few clients who live and work overseas so I'm familiar with the Foreign Earned Income Exclusion Rules, but I don't have ANY clients who telecommute from foreign soils, SO

Does telecommuting from outside the US INTO a U. S. based computer for a U. S. based company count as "work" while on foreign soil?

I can see the argument that "you were here when you did the work" but the work is being done for a U. S. company remotely, NOT for a U. S. company located in the foreign country, so I could make the argument that it wasn't WORK in the foreign country - I may not win, but I could make the argument.

In my mind, tired though it is today, I'm likening this to my being on vacation in California or NY (two of the toughest states for source income reporting I know of) - or Cancun or Istanbul for that matter - and having to make a few calls, maybe even log into my office computer and take care of something. I would NOT consider this "working" in that jurisdiction, though is no question that I actually "DID" something.

Thanks for the input, Gene E. Utterback, EA, RFC, ABA

"Gene E. Utterback, EA, RFC, ABA" wrote

Didn't New York win a court battle a few years back on income earned by a Tennessee resident who tele-commuted with the New York based office?

Yes. From around November/2005:

In a case called Matter of Huckaby, a New York state appellate court ruled in a 4-3 vote opinion earlier this year that a telecommuter who works for a New York company but who lives and performs most of his work in Tennessee still must pay New York state taxes on 100 percent of his income. The court so ruled even though this particular employee spends no more than a quarter of his working time in New York for his employer.

See

The New York case was decided by the Court of Appeals, which is the high court in New York (they name their courts upside down there -- the trial court is the Supreme Court, the appellate level is the Appellate Division of the Supreme Court, and the high court is the Court of Appeals. Go figure ). Huckaby v. NY State DTA, 796 NYS2d

The same thing happened back in the 1970's in a case involving a New Jersey resident named Speno. The NY Court of Appeals upheld the rule, and the US Supreme Court denied certiorari.

H.R. 2600, a bill introduced in the 111th Congress, would prevent states from enforcing such rules. The bill was referred to the House Judiciary subcommittee on commercial and administrative law last June and has not been seen or heard from since. I'll be pleasantly surprised if it goes anywhere.

If Homer works for a NY employer, he will be subject to NY tax on 100% of his earnings from this job if he spends any time at his employer's NY office. As long as he never sets foot in NY to do any work for this employer, though, he'll be safe from NY tax on his earnings. This is clear from the language of the NY regulation and also from dicta in the Court of Appeal decision.

A few other states apply similar rules. Examples are New Jersey, Pennsylvania, and Delaware.

Otherwise, if Homer works in any US state that imposes a comprehensive individual income tax (i.e., any state other than Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, or Tennessee), he has income from a source in that state and is subject to its individual income tax as a nonresident. Some states have de minimis rules, but many do not. Also, if the employer has nexus in any state where the telecommuter is working, the employer is required to withhold that state's income tax from his salary when he is working there, unless the time or amount is below a de minimis rule set by the state.

Whether the employer gets taxable nexus from the mere presence of an employee telecommuting from a location in the state is a serious issue that is not yet clear. Probably the short-term presence of a traveling telecommuter would not create a problem, but you never know.

Katie in San Diego