My husband works for a network storage company and many of the employees are hardware engineers. These jobs involve a lot of time at a computer. A lot. Which makes the jobs pretty amenable to telecommuting, if not full time at least a few days per week. One employee who lives over the border in the next state does exactly that. Telecommuting allows him get a full days work without a two+ hour commute. This saves resources without hindering productivity. But it got me to thinking of the tax implications. He lives in one state and works in another. Therefore he needs to pay taxes in both states. But is the percentage modified depending on how many days per week he works from home? Does the company need to pay taxes to the state in which he lives?
I’m not sure how that works for the employee but for some employers the situation can be less than beneficial. Forbes recently wrote an article about a company in Maryland who has one telecommuter living/working in New Jersey. New Jersey legislature has stated that one employee in the state of Maryland is sufficient to claim that the company does business there. Now New Jersey is requiring the Maryland firm to file corporate taxes with the state.
It’s quite a disappointment. That law will only hurt efforts to increase telecommuting in the future.
Filed under: defintions, taxes, telecommuting, telecommuting facts, work from home
