Marvin said in an email that the regulations clarify that people working remotely for a Massachusetts company due to a pandemic-related emergency order “will continue to pay Massachusetts state income taxes.” Patrick Marvin, spokesman for the Massachusetts Executive Office of Administration and Finance, said that state’s regulation was imposed to “ensure clarity with tax collections in Massachusetts” and argued that not much had changed for residents of other states working for Massachusetts businesses. These situations complicate tax filings, and depending on whether a credit is offered by the home state, raise the specter of workers being taxed twice. Now, the home states of people who used to commute out of state but now work at home may claim that tax revenue for themselves. Prior to the pandemic-induced stampede to work from home, Walczak said, people living in one state and working in another would pay taxes on the income earned in the state where they worked, and then get a credit on their home-state tax form. “Certainly, we won’t be as remote as we are in the pandemic, but this has been a fairly successful trial run for remote work.” “The nature of work is changing,” said Jared Walczak, vice president of state projects at the Tax Foundation, a think tank that touts lower, more broadly based taxes. Those deals mean taxpayers owe only the income tax of the state in which they live, not the state where they work. Meanwhile, many people who are working at home full-time instead of crossing states lines may owe income taxes to their home state for the first time.Ī few areas - the District of Columbia, Maryland and Virginia, notably - have reciprocity agreements that simplify things for taxpayers. With an influx of workers fleeing to summer homes or otherwise working remotely from Maine, the state’s tax department is considering how to deal with the resulting income tax confusion, the Portland Press-Herald reported. That prospect could lead tax departments in more states to examine the feasibility of taxing remote workers. Only six other states - Arkansas, Connecticut, Delaware, Nebraska, New York and Pennsylvania - have permanent rules that predate the pandemic.īut now millions of additional people are working remotely, and business experts predict that many of them will continue to do so after the pandemic ebbs. The Massachusetts tax regulation is temporary - it will last until the end of 2020 or 90 days after the state of emergency expires. Sullivan objects, noting, “I’m not using the roads, I’m not taking up space” in Massachusetts, and “I have no representation there.” To avoid losing revenue, Massachusetts set a regulation that allows it to continue to levy its income tax on employees of Massachusetts-based companies who live out of state, even though they are no longer coming into the office to work. Then the pandemic hit, forcing Sullivan and millions of other Americans to work from home five days a week. She loves her job, but commuting out of state was a financial hit, since New Hampshire doesn’t have an income tax. Read Stateline coverage of the latest state action on coronavirus.įor five years, educational technology specialist Loree Sullivan commuted from her home in Salem, New Hampshire, to her job at a private school in Andover, Massachusetts, driving about half an hour each way.īecause she was working in Massachusetts, she had to pay that state’s income tax for every day she worked there.
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