topic Remote work Massachusetts/Illinois in State tax filing

Remote work Massachusetts/Illinois

PeterTax2022 — Sun, 13 Feb 2022 18:14:05 GMT

Hello - I am a permanent Massachusetts resident. I am about to take a job with an Illinois based company. I will remain a permanent Masachusetts resident and work fully remote from home in Massachusetts for my new employer based in Illinois. Which state would I have to pay income taxes to and would I have to pay taxes to both states? I understand Massachusetts has a "convience of the employer" rule but I don't know if that would apply to me.

Thank you for any insight as I may have to back out of my new job for financial reasons if I'm forced to pay double state taxes.

Re: Remote work Massachusetts/Illinois

RaifH — Sun, 13 Feb 2022 18:36:47 GMT

Since your resident state is Massachusetts, you will always be responsible for paying state taxes there, no matter where your job is located. Massachusetts does not have a formal "convenience of the employer" rule, but they essentially imposed one during the pandemic which expired September 13, 2021. The state's laws you have to worry about in this case is Illinois, and whether you are subject to their taxation.

Illinois has not stated that telecommuting non-residents are subject to tax because their employer is in Illinois. As long as you have not spent more than 30 days in Illinois, then you are not subject to their state tax.

However, the state does require that if you are requiring a refund of taxes withheld in error, you attach a letter of explanation from your employer. You will also want to notify your employer to change your state withholding.

If they were to withhold Illinois state taxes, you would get that entire amount refunded to you. However, you would have a large tax liability to Massachusetts since your employer would not have withheld any of their taxes.

Even if the laws were to change, while you would be taxed on the same income by both Illinois and Massachusetts, you get a credit on your resident state taxes for taxes paid to another state on that income. It's a little convoluted, but in practice, you are not being double-taxed.

Re: Remote work Massachusetts/Illinois

PeterTax2022 — Sun, 13 Feb 2022 18:41:04 GMT

Thanks very much for the clarification! This has reduced my stress significantly!