April 15, 2021

Coronavirus has caused millions of Americans to move from working in the office to working at home. Meaning, if you worked your office job in one state and resided in another state, but now work and reside in the same state, you may need to file your taxes differently from prior years.

Previously, individual’s income taxes were assessed based on the state where they lived. Commuters who came from neighboring states were typically covered by agreements that allowed them to avoid double taxations. However, with so many people telecommuting and moving further and further away, they may be at risk for having to pay extra taxes.

Six states are known to have something called the convenience rule. This rule allows companies located in their jurisdictions to issue an income tax on their employees even if they no longer reside in the state where they once commuted to work.

While there are some states that have agreements that help provide tax relief to individuals, telecommuters who moved elsewhere during the pandemic, may be hit with additional income taxes from the state where their company is based.

There are many states that have rules in place to prevent individuals from being hit with double taxation if they do have to commute out of state for work. States like Vermont, Connecticut and Virginia provide tax credits up to a certain limit to their residents who work in bordering states.

Because of the pandemic, telecommuting has become far more prevalent and could eventually change the way both businesses and employees are taxed in the future. Many companies may eventually make the shift from having a physical work location to a virtual one meaning that many taxpayers may be able to work from the comfort of their own homes.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.