I am considering permanently tele-working, and moving to a different state from where my paycheck comes from. Are there any tax- consequences of this ? I assume I only owe state tax for the state I reside in? Or does the state of the employer mean I owe some taxes there?
Generally true except for New York. If the company you work for is in New York, then you owe NY tax as well as tax to your own state, although there will be a tax credit for tax paid to another state.
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Maybe other states have the rule, or maybe the NY rule got struck down
The following article in the NY Times explains the reasoning behind the NY case; the fact that the apellate court upheld it; the USSC refused to hear it; and that GA & DE appear to also follow the rule.
rule.http://www.nytimes.com/2008/02/20/business/businessspecial2/20tax.html So which states, from those that do have an income tax, do not tax telecommuters? In particular, does CA?
Another question. What if the company is in NY but registered in DE (so the corporation is a DE corporation, and is doing business in NY as a foreign corporation), but has no offices in any other state. Then does a telecommuter, living in say TX, have to pay NY tax?
And what if the company is in NY, registered in NY, has an office somewhere in TX. Then does a telecommuter, living in say TX, have to pay NY tax?
And same question as above, except company is registered in DE.
It's also worth noting that if the employee never sets foot in the employer's NY office, NY can't lay a glove on him. That's in the NY regulation, and has also been noted by the NY Court of Appeals in its decisions on the issue.
It's interesting that I can't find anything like the NY rule in either New Jersey or Pennsylvania. Both states tax nonresidents on income from personal services performed within the state and make no mention in statutes, regulations, publications or instructions of extending the definition of source income to include any services performed outside the state -- at least nothing that I can find. Delaware has language somewhat similar to New York's (Del. Code Ann. 30 Sec. 1124(b) (1)(ii)). Nebraska applies the same rule to source income from personal services that applies for purposes of assigning an individual to a state for unemployment insurance purposes -- which is an "all or nothing" rule. It's also the same as the UDITPA rule for assigning salaries to the numerator of the payroll factor in the apportionment formula.
I disagree with the NY Times article with respect to Georgia. GA law specifically provides that if a nonresident has income from employment carried on within and without the state, only the income derived from carrying on the activity in Georgia is taxable. The amount is determined either by separate accounting if approved by the commissioner, or by applying the allocation and apportionment rules. In either case, compensation for services performed outside Georgia is not taxable to a nonresident. Ga. Code Ann. § 48-7-30(b).
I notice that the author of this article only cites the Journal of Accountancy article for the Pennsylvania and New Jersey rules. I actually found it in PA; it's in their Personal Income Tax Guide, Chapter 7. There are also several rulings applying the rule, including Pennsylvania Personal Income Tax Ruling No. PIT-03-031,
09/16/2003. However, the rule does not appear in the statute or the regulations in Pennsylvania; it seems to be purely an administrative position of the Department of Revenue.
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