Working from home sounds great but it has its pitfalls like if you are staying in one state but are employed by an employer based in another then you end up paying double taxes. However, the good news is that you can try and not be a part of it if your home state possesses reciprocal tax agreement with a neighboring state, which demonstrates that your income would only be taxed by one of the two.
Such agreements are available in Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Montana, New Jersey, North Dakota, Ohio, Pennsylvania, Virginia, West Virginia, Wisconsin as well as the District of Columbia.
Or missing a corresponding agreement those who are home employed can be permitted to divide their income tax burden. The shell out tax on money earned from home to their resident state and they pay tax to their employer’s state for the days spent at the office.
However, you being risked double taxation if you live in one state but work for a company based in New York, New Jersey, Delaware, Pennsylvania or Nebraska. These five states appeal supposed benefit vs. essential test. If they decide that working from home is a matter of benefit for you rather than it being essential for your employer, you will be indebted to taxes of those states on the pay you earn during your work from home days said Cosimo Zavaglia, an associate at the law firm Morgan Lewis.
Simon Morgan was born and raised in Ottawa. Simon has worked as a freelance journalist for nearly a decade and written for The Ottawa Sun, the Vancouver Sun and the Star. As a journalist for Island Daily Tribune, Simon mostly covers community events and human interest stories.