State and Local Tax (SALT) Implications for Remote Workers: What You Need to Know

Remote working has become a popular mode of employment, particularly after the pandemic. For remote workers, it is essential to note that State and Local Tax Implications for Remote Workers are complex. This could potentially lead to taxation in multiple states. Thus, this requires careful planning from both employees and employers.  

So, how a remote worker is taxed depends upon your state of residency, your employer’s location, and where you physically perform your work. In this blog, let us explore the common State and Local Tax Implications for Remote Workers 

Common State and Local Tax Implications 

Working remotely can change how taxes apply to both employees and employers. Different states have different rules, and in some cases, even cities or counties add their own taxes. This can affect where you file your tax return, whether you might owe taxes in more than one place, and what your employer needs to do for payroll and tax withholding. Here are some of the most common State and Local Tax Implications for Remote Workers in the U.S.: 

Dual Residency and Filing Obligations: 

If you live and work in different states, you may be required to file a resident tax return for the state where you live. You will also be required to file a non-resident tax return for the state where you work. 

Nevertheless, many states offer a tax credit for taxes paid to another state so that you may not be taxed on the same income by two different states. However, navigating the rules for these credits can be a complicated affair. Also, the tax implications can change based on the duration of your work outside your home state. Spending a certain number of days working in another state could create a tax obligation there. 

Some states, like New York, Connecticut, and Pennsylvania, have what are called “convenience of the employer” rules. These rules state that if you work remotely from another state solely for convenience, rather than job requirements, your income may still be taxable by the state where your employer is based. This may cause double taxation if your home state also taxes your income, although tax credits may help reduce the impact. 

Reciprocity Agreements: 

Some states have reciprocal tax arrangements with neighboring states. As part of these agreements, employees who live in one state but work in another pay income tax only to their state of residence. For example, the state of Pennsylvania has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. 

State Tax Nexus for Employers: 

A “nexus” is simply a link between a business and a state that creates a tax duty. If a company hires a permanent remote worker in another state, it can create a tax nexus there, even if the company doesn’t have a physical office. This means the employer may have to handle new payroll and tax withholding responsibilities in that state. 

Local Income Taxes: 

Besides state taxes, many cities, counties, and towns also charge their own income taxes. If you live in one of these areas, you must pay the local tax no matter where your employer is based. For instance, someone working in New York City has to pay city income tax on top of state and federal taxes. 

Key Takeaways for Remote Workers 

If you happen to be a remote worker, then it’s essential to keep your employer informed about where you are working, since they are responsible for handling the correct tax withholding. If you work in more than one state, keep track of how many days you spend working in each place so you know if you meet any state tax requirements. Because the rules can be complicated and vary from state to state, consulting a tax professional is often the best way to make sure you stay compliant with State and Local Tax Implications for Remote Workers. 

How KMK Ventures Can Help

At KMK Ventures, we understand that remote work brings new challenges when it comes to state and local taxes. Rules can vary widely, and both employees and employers can easily miss important details. Our team helps businesses and individuals navigate these complex tax requirements by: 

• Reviewing where employees live and work to identify potential tax obligations. 

• Assisting with multi-state filings to avoid penalties and double taxation. 

• Guiding employers on payroll and withholding responsibilities when remote staff are spread across states. 

• Providing ongoing support to help businesses stay compliant with changing laws. 

By acting as your trusted accounting and tax partner, KMK Ventures makes sure you meet your tax responsibilities without unnecessary stress. 

Conclusion 

Remote work offers flexibility, but it also creates complicated tax situations at the state and local levels. From dual residency rules to “convenience of the employer” policies, remote workers and businesses must be aware of how taxes apply across different states. The good news is that with proper planning and the right guidance, you can stay compliant and avoid costly surprises. Still not clear? That’s where KMK Ventures comes in—combining expert knowledge with practical solutions to help you manage your State and Local Tax Implications for Remote Workers with ease. Contact KMK Ventures to know more!