With Remote Work Increasing, Be Aware of These Tax Implications for Out-Of-State Workers

Kevin WilsonBlog, Payroll Services, Tax0 Comments

More than 50 million members of the U.S. labor force are currently working remotely full-time, a ten-fold increase from the 5 million employees who worked from home at least half of the time back in March. With this change and employers’ concerns about productivity and company culture comes one more item to consider: taxes.

When remote workers are located in different states than where their employer is located, there are different tax implications for both the employer and the employee. Unfortunately, in the United States there is a patchwork of state rules and regulations that govern teleworkers. 

These regulations vary by state and also by whether an employee is working remotely due to COVID-19 or if the position is permanently remote and each and every state handles this differently. As of now, only six states (Mississippi, New Jersey, Minnesota, North Dakota, Indiana, and Pennsylvania) and the District of Columbia are officially recording coronavirus-related work as regular in-office work for tax filing purposes. It is very important that employers do their due diligence regarding any out-of-state remote workers they may have in their employ. This resource can help you understand which state tax laws may impact your remote workers.

While we don’t know where your workers are performing their tasks, Dominion Payroll can update the appropriate withholdings if you let us know that you have remote employees in a state other than where you are located. To do so, send us an email at customerservice@dominionpayroll.com and we’ll be happy to get you squared away!


Here are some additional resources that might be helpful:

State-by-State Tax Withholding Forms

National Taxpayers Union Foundation: Don’t Let COVID Remote Work Become a Tax Trap

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