Yes, there is an impact to the source income you report to Philadelphia and Pennsylvania.
From the date of hire in January 2021 to June 30, 2021, the income source would be Pennsylvania. When determining the taxability of income for telecommuters, the Pennsylvania Department of Revenue looks to the employment agreement between the employee and their company. If Covid-19 did not force the office to close, your wife would have worked in Pennsylvania. Per the State, if an employee is working from home due to the COVID-19 pandemic, they do not consider that as a change to the sourcing of the employee’s compensation.
However, per the State of Pennsylvania, as of July 1, 2021, a non-resident employee who is required to telework full-time from home in another state should treat his compensation as non-Pennsylvania source income even if his employer is located in Pennsylvania.
Therefore, you have to calculate sourced income reportable on your Pennsylvania return from the date of hire through June 30, 2021, and from July 1, 2021 through the day of transfer. The income between July 1, 2021 until the date of transfer, would be reportable to the state from which she telecommuted.
For more information, please see Telework Guidance.
@wsneifert
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
