Telecommuting May Have Just Become A Lot More Expensive

from the uh-oh dept

Just as it looked like people were finally getting to be okay with telecommuting, the Supreme Court makes the whole process more expensive. Earlier this year we wrote about a programmer who was telecommuting from Tennessee to work for a company based in New York. He paid New York taxes on the portion of his income based on the time that he actually spent in New York, but the state decided that he needed to pay New York state taxes on his entire salary, saying that New York gave him the opportunity for the job, and basically, he owed them for it. While he lucked out because Tennessee has no income tax to add on top of that, telecommuters in other states wouldn't be so lucky -- and might have to pay state taxes in multiple states on their entire salaries. The original telecommuter appealed all the way up to the Supreme Court, but the Court has decided not to hear the case -- meaning states are now free to start taxing out-of-state telecommuters on their entire salaries.
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  1. identicon
    Roger, 31 Oct 2005 @ 2:17pm

    Non-resident state tax

    Generally, if you live in a state with an income tax and you are liable to another state for taxes on income earned tin that nonresident state, you will get a credit on the home state tax liability.

    Example: I live in NJ but work in NY. I pay tax to NY on my NY-sourced income (though not on my wife's NJ-sourced income or our interest/dividends, etc). On our NJ resident income tax, we get a credit for most of the taxes paid to NY against our NJ tax.

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