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NY state works the same way too. If you work remotely you're still required to pay NYS income tax on your wages, even though basically no payroll company knows to check for this scenario unless you bug them about it. The technical term for this is the "convenience of the employer" rule, and in the specific case of NYS you are liable for taxes on nonresident income unless your work specifically requires you to be out of state[0] or you work from an employer-run office in another state. Remote employees like me get to pay quarterly estimated tax and then claim refunds from my resident state, which is a pain in the ass. Aside from New York, Pennsylvania, Arkansas, Delaware, and Nebraska have the same rule. If you work for a company headquartered in any of those states you probably should be paying nonresident income taxes there just in case. My personal opinion is that "convenience of the employer" should only apply to people who regularly travel to and from the state for work, but last time I looked this up, some guy in Connecticut sued NYS and lost over that exact issue. For the record, the tax credit isn't part of the agreement, it's a constitutional mandate. SCOTUS prohibits two states taxing the same income, they have to divide it up, so every state has a "taxes paid to another state" credit. Though, funnily enough, that credit is taxable, ASK ME HOW I KNOW. If you wanna see some real double-tax bullshit, wait until you hear about how Americans have to pay both American and Japanese income tax if they live and work in Tokyo... [0] i.e. it's not at the convenience of the employer |