As the 2024 American tax season approaches, remote workers in five states, including New York, maybe double-taxed owing to a little-known provision.
Americans warned they may be double-taxed (Photo: Google)
Unraveling the Complexities for Remote Workers in Five States
This caution outlines state income tax complexities that may surprise remote workers.
Employees of companies in Connecticut, Delaware, Nebraska, New York, and Pennsylvania may be subject to state income tax in both their employer’s state and their home state. When these states tax employees based on the employer’s location, regardless of their work location, it becomes complicated.
New York was used to describe the problem by Tax Foundation vice president of state programs Jared Walczak. If an employee works for a New York-based corporation and is not allocated to a non-New York office, they may owe New York income taxes on all their profits. If the person works remotely in another state, the state may not credit New York taxes.
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Navigating American Tax Season Challenges: Reciprocity Agreements, Credits, and Expert Guidance for Remote Workers
30 reciprocal agreements in 16 states and DC may cancel double taxes, but not all states have them. Without reciprocity agreements, certain jurisdictions may grant tax credits for employer-paid taxes, requiring people to submit tax returns in both states. Such individuals pay taxes in the state with a higher income tax rate.
As American tax season approaches, remote workers for businesses in the stated states must be mindful of these possible problems. Before filing, consult a tax expert to understand the complexity and comply with state laws.
The tale emphasizes the need to know state tax regulations, particularly for distant workers facing double taxes. The warning comes as American tax season begins on January 29, reminding people to take precautions, seek expert advice, and understand their remote work tax consequences to prevent unforeseen financial difficulties.
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