In general, if you’re working remotely you’ll only have to file and pay income taxes in the state where you live. However, in some cases, you may be required to file tax returns in two different states. This means you’ll be double-taxed, but it doesn’t necessarily mean that you’ll pay twice as much in taxes.

Which states have telecommuter tax?

A group of seven states follow the “convenience of the employer” rule, which taxes telecommuters based on where their employer’s office is located, according to the Tax Foundation. Those states are Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York and Pennsylvania.

Can you be double taxed by states?

Double taxed state income generally occurs when you live in one state while working in another state. Therefore, the income is taxed by both states. To overcome the double taxation, you can usually claim a credit for taxes paid to another state on the resident state tax return.

Do you have to pay taxes when you work out of State?

In some places, workers could owe taxes to their temporary state after just one day of work. Other places would tax only after a 30-day stay. Often, a taxpayer gets a credit from their home state for taxes paid to another, but it doesn’t always make them whole.

When do you have to pay state income tax?

Federal legislation long pending in Congress, called the Mobile Workforce State Income Tax Simplification Act, would establish a uniform 30-day threshold before employees are required to comply with the income taxes of a state other than their state of residence.

How is withholding calculated for federal income tax?

Withholding is the income an employer taxes out of an employee’s paycheck and remits to the federal, state, and/or local government. It is calculated based on the amount of income earned, the taxpayer’s filing status, the number of allowances claimed, and any additional amount of the employee requests.

Do you have to pay income tax in New Hampshire?

This has, of course, raised the hackles of New Hampshire officials, who govern a state without a wage income tax. Someone who lives in Nashua, New Hampshire but commutes to Boston for work has always owed income taxes to Massachusetts, and there is no offset in New Hampshire because the state has no income tax in the first place.