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Sep 6, 2023 · The convenience of the employer rule allows some states to impose income tax on employees working remotely in other states for companies located within their borders. Unless employees live and work in a state with no income tax, they may be taxed twice.
Jan 3, 2024 · The convenience of the employer rule applies to certain taxpayers who work from home. It means you're taxed as if you work in your employer's state even if you don't. You may need to file both a resident and a nonresident return, unless you live in a reciprocal state or a state without income tax.
- Reciprocal Tax Agreements
- Convenience of The Employer Rule
- Impact of The Convenience Rule on The Out-Of-State Credit
- How Wipfli Can Help
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When states have reciprocity arrangementswith one another, you only need to pay taxes on the related wage income to your state of residence. You don’t need to follow the usual rule of sourcing your wage income and paying taxes to the nonresident state where you work. Note that reciprocity only applies to wage income. It doesn’t apply to any other t...
The convenience of the employer rule, or convenience rule, sources wages to the location of a nonresident employee’s assigned office. The rule applies even if the underlying work was physically performed at a home office in another state. But there are exceptions if the employee is working from home because of an employer requirement rather than fo...
The convenience rule presents challenges because it produces a very different sourcing outcome than the general rule. It can also result in individuals paying state income tax on more than 100% of their wage income, due to the lost out-of-state credits on their resident state tax returns. For example, New Jersey and Connecticut previously applied t...
As more employers adopt a telework mindset, both businesses and individuals will need to be more aware of the convenience rule and its implications. For more on how your business can manage the taxconsiderations of a remote workforce, watch our on-demand webcast: Answering your biggest tax questions around remote workers. Wipfli is here to provide ...
Learn how the convenience of the employer rule sources wage income to the location of a nonresident employee's assigned office, even if they work from home. Find out how this rule affects your state tax returns and credits in different states.
Nov 22, 2023 · Learn how New Jersey applies a convenience of the employer test for nonresident income sourcing for employees who work from home in other states. Find out the affected states, the retroactive date, the waiver policy, and the tax credit option.
A nonresident professor challenged the taxation of his wages from his NYS employer for work-from-home days during the pandemic. The ALJ applied the state's convenience of the employer rule and found the taxpayer had a virtual presence in NYS.
Learn how the convenience rule affects nonresident income sourcing and resident credit for taxes paid to other states. Find out how the COVID-19 pandemic impacts the application of the rule to telecommuting days.
New Jersey enacts a convenience of the employer rule for nonresident employees who work primarily for a New Jersey employer, effective January 1, 2023. The law also provides a refundable tax credit, grants to businesses, and a longer period of limitations for readjustment of tax of another state.
