Can I Work a Remote Job in Another State?
With the changes in working environments from the pandemic, many have had a taste of working remotely or even from home and might wonder if they could continue working in that way if they move to another state. While it might be possible to work remotely in another state, there are some important considerations that both the employee and employer will need to discuss including taxes.
Tax Implications for Working a Job in Another State
Unfortunately it’s not as simple as determining whether an employee can do the work remotely. A business that employs a worker out of state needs to be registered in that state and because of the paperwork, fees and taxes associated, the business might simply pass on hiring workers in a different state. Jobs like medical professionals, lawyers and teachers require in-state certification or licenses, so if an employer wants to hire someone out of state, they are limited to employees who are licensed in that state.
All but nine states impose income tax and each sets its own parameters for determining who owes tax. There are rules governing taxation of people working remotely for in and out-of-state employers, and rules that trigger income tax for non-residents after they work in-state for more than a minimum amount of time or earn a minimum amount of money. Regardless of where your employer is based your taxes will always need to be filed in the state where you reside. Several states have also implemented “COVID-19 Rules” regarding tax implications for remote workers.
If your employer is based in Connecticut, Delaware, Nebraska, New York, and Pennsylvania that have what’s called a “convenience rule,” those states have the right to impose an income tax on wages you earned while working for an employer based in that state, even if you choose to perform your job remotely meaning you could owe taxes in both states. The only exception is if your employer directs you to work out of state for its convenience. When you live in one state but work in another, the resident state typically provides a credit for taxes paid to the non-resident state in order to avoid double taxation.
Does a Remote Job Mean I Can Work Anywhere?
Depending on the type of job and whether or not your employer is willing to take on the additional responsibilities of having an out of state employee, you might be able to work remotely from somewhere else. Each state has different labor laws relating to minimum wage, employee benefits, job hours and time off, so the company needs to understand and follow the rules for every state where they have an employee. Similarly states have varying requirements for licensing and certification for some types of employees.
Although work and meetings can be done via online technology, some employers still expect staff to, at least occasionally, come into the office for face-to-face meetings or team building events. If the team is spread over different states this can be difficult. Most companies also have set “core hours” during which they expect employees to be active. This can get tricky if you have to clock in at 5 am PST, a less desirable time for an 8 am EST shift which can cause workers to be less productive.
In addition to tax ramifications, companies pay employees based on the cost of labor, not the cost of living, meaning you could be paid less for doing the exact same job depending on where you live. If you choose to move to a city that’s a lower-cost-of-labor market, check with HR to see if the decrease would be implemented; if you planned to save money by moving to a new location, the move may not actually change your overall cost of living.
There are many companies that welcome remote workers and already have systems in place to provide this opportunity. There are hundreds of remote jobs available today, so be sure to utilize our job search here.