[gamblor956]

Employees don't realize that taxes are the reason companies generally don't allow for remote positions. It's not just payroll taxes at stake.

In a nutshell, having an employee in a tax jurisdiction creates a taxable nexus for the company, meaning that they can be subject to income taxes, commercial taxes, sales taxes/VAT, etc., in that jurisdiction. (And note: this has been part of domestic and international tax law for decades.)

For example: Company C in CA has an employee, E, who moves to NY to work remotely. Company C is now subject to NY income taxes, and must now collect NY sales tax if they have any sales to NY customers (though note: in the US many states now require sales tax collection even in the absence of physical presence, so C may already have been obligated to collect NY sales tax). If E is a programmer, the NY income tax exposure is probably very low, but if E is in sales, they could be looking at significant NY tax liabilities based on how they may be required to apportion (aka allocate) their income between CA and NY.

[cgb223]

So in the example if E is in NY, does C have to pay NY income tax on _all_ employees or just employee E?

If E is a salesperson is it complicated because they’re bringing contracts to C in NY or because they might work on Commission?

[boring_twenties]

Does it work the other way around, too? E.g., if live in New Hampshire and work remotely for a New York company, do I have to pay the NY income tax?

[ghaff]

As I understand it, no--assuming you are not in the office over some threshold (which I don't know). If you commute from NH to Massachusetts you do need to pay MA income tax. And, oh, if you live in MA and commute to NH, you also have to pay MA income tax. I've definitely seen people who live in NH and used to commute to MA switching to being fully remote in the current situation.

[Dracophoenix]

Funny you bring that up. There's on ongoing case[1] involving New Hampshire and Massachusetts about that exact scenario that's likely to end up debated by the Supreme Court. In essence, does a state have, absent special status like 503(c), the right to apply income tax on activities/services for rendered in different state? If so, that implies that any and every money-making activity done in any part of world may be taxable even if one person in Massachusetts pays for it. This would apply whether the activity is part of an individual sale[2], employment, or contract work as would it apply, mutatis mutantis, for every other state.

[1]https://www.scotusblog.com/case-files/cases/new-hampshire-v-... [2]Which is already subject to sales tax after the reversal of the Quill Corp vs. North Dakota decision in South Dakota vs. Wayfair

[ghaff]

I'm not sure I understand how that even works with larger companies. I live in MA but if I lived in NH, I'd only be working for my company in MA in the sense that it's the closest office. Company HQ is in NC and I work a lot with people all over the world. I haven't read all the background but surely MA doesn't say someone owes MA income tax because they could theoretically commute 2 hours to an office there.

ADDED: So I guess (although it's not super-clear) that it's a matter of being officially assigned to an office and maybe going in semi-regularly. Presumably if someone is 100% officially remote at a company with many offices, it wouldn't apply. https://andersen.com/pressroom/telecommuters-beware-of-state...

[Dracophoenix]

>>surely MA doesn't say someone owes MA income tax because they could theoretically come 2 hours to an office there.

The you'd be surprised what certain states would say, do, and compose in their legal briefs to justify extracting as much money as possible.

Also IANAL, so take what I have to say with a grain of salt.

Presumably, there could be some kind of test. If someone lives in NH but is 100% WFH, he may be subject to MA income tax under the following standard:

1) If the company is headquartered or incorporated in MA

2) If the work done is provided (a) to directly benefit operations of aforementioned company that are affiliated with a location in MA or (b) to be sold/provided to third party legal person(s) for which business operations /purchasing/selling would be done in MA. (i.e a business/service nexus)

[hoveringcto]

If you earn money from a "New York Source", you have to pay NY State income tax even if you live in another state.

https://www.tax.ny.gov/pit/file/nonresident-faqs.htm#nystax

[gamblor956]

In some states...yes. Like New York, and especially NYC, which has its own income tax scheme. (See for example https://www.cnbc.com/2020/12/23/new-jersey-latest-state-to-j...)

Otherwise, no. Most places in the U.S., you are treated as earning the income where you are actually physically located (i.e., your home residence).

[smeej]

Can confirm. Have lived in NH for years, working remotely for companies headquartered in other states. Haven't had to pay their state income taxes.