/

Accounting Professionals

/

Remote Work: What Does This Mean for Taxes?

1 Min Read

Remote Work: What Does This Mean for Taxes?

By

on

Remote work: something that many call the way of the future, but what implications come with it? According to Accounting Today, 4% of employees residing in New York, Philadelphia, Portland, St. Louis, and Washington DC all live and work in different states.

While 4% may not seem to be that much, recognize that it actually breaks down to tens of thousands of people. With COVID pushing people more remotely, likely increasing that 4% figure stated above on a national scale, what might that do for their tax situations?

Accountants who work in state and local taxes, otherwise known as “SALT,” typically ensure their clients or businesses fulfill their respective obligations and are not overpaying taxes. Tax planning strategies are often created to reduce their client’s or businesses’ tax burden to the absolute minimum. But when employees suddenly empty their offices and set up offices at home, as they have due to COVID-19 concerns, a wrench can be thrown into that tax planning.

From here, businesses seem to have two options:

  1. They can evaluate everything at tax time, potentially taking on penalties and overpaying tax.
  2. They can take stock of their remote employee headcount and try to be proactive to minimize their tax burden.
In an earlier blog post, we touched on how many employers with remote workers in other states may now find themselves in an income tax nexus.
Nexus is a connection between a taxing jurisdiction, such as a state, and an entity. When a business has nexus with a state or city, it’s typically required to register with the tax authority and pay the applicable corporate, employment, excise, and sales taxes.
When an employer that is based in State A allows (or requires) an employee to work remotely from State B, whether regularly or temporarily, the employer must evaluate how this new arrangement affects its tax responsibilities.
Read More: Income Tax Nexus During COVID-19

Overall, the best way to handle this new world we are living in is to be proactive. I know all of this is a lot to think about to avoid being shocked in the future, but unfortunately, with the future still uncertain, it’s best to take decisive action now.

With the states desperate to make up for 2020 income shortfalls, your business may face unanticipated tax-related expenses this year. With correct planning, the effects of these and any other issues arising from COVID-19 on your business can be minimized.

Legal Disclaimer

Tickmark, Inc. and its affiliates do not provide legal, tax or accounting advice. The information provided on this website does not, and is not intended to, constitute legal, tax or accounting advice or recommendations. All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice. You should consult your own legal, tax or accounting advisors before engaging in any transaction. The content on this website is provided “as is;” no representations are made that the content is error-free.

We recommend a Pro file your taxes. Click here to file today.Leave your books to professionals. Click to connect with a Pro.
Was this post helpful?
Yes, thanks!
Not really
Thank you for your feedback
Oops! Something went wrong while submitting the form.
Did you know business owners can spend over 100 hours filing taxes?
Yes
No
Is this article answering your questions?
Yes
No
Do you do your own bookkeeping?
Yes
No
Are you filing your own taxes?
Yes
No
How is your work-life balance?
Good
Bad
Is your firm falling behind during the busy season?
Yes
No

published

June 30, 2020

in

Beau Scheper

Beau Scheper

Read

by this author

Share this article
>