topic Re: Payroll tax in State tax filing

Payroll tax

bcostagl — Tue, 24 Feb 2026 07:17:58 GMT

Is there a cheat sheet of some sort from a payroll perspective on where to tax someone? example: Lives in VA works for business in NJ.

For SIT and SUI

Re: Payroll tax

rjs — Tue, 26 Sep 2023 21:09:46 GMT

If you are talking about an employee who gets a W-2, not a contractor, there is no simple "cheat sheet" that will cover all cases. As a general rule, it doesn't matter where the employee lives or where the business is located. What matters is where the employee works. For the specific states that you mentioned, if he works in Virginia you have to withhold Virginia income tax and any other applicable Virginia taxes, such as SUI or SDI. This will hold true in most cases, but a few states have special rules for telecommuters, and a few states have reciprocal agreements with neighboring states for employees who live in one state and work in the other.

A payroll service, or a local accountant or tax professional who does payroll work, should be able to help you with specific cases.

Re: Payroll tax

Opus 17 — Tue, 26 Sep 2023 23:01:32 GMT

In general, a W-2 employee pays income tax in the state where they actually physically live and perform the work, even if the business is headquartered someplace else. (The state of their domicile, or permanent residence.) If an employee lives in state A and works temporarily in state B, they file a non-resident return in state B that reports their state B income, and a resident return in state A that reports all their world-wide income. State A will usually give a credit for taxes paid in state B to reduce the impact of double-taxation.

Sometimes, an employee who lives and works long enough in state B will be deemed a statutory resident, even though they are not a domiciliary resident. That makes things more complicated.

A few states have a "convenience of the employer" rule, meaning that some times, an employee who lives and works in state A for an employer located in state C can be required to pay state C income tax.

https://smartasset.com/taxes/convenience-of-the-employer-rule

I don't know what you mean by cheat sheet, you pay state income tax based on the laws of the state or states where your permanent residence is located, and the state where you lived and performed the work, if they are different.

I have no idea what state laws are regarding the business' requirement to pay state unemployment tax, when the business is located in state C but the employee lives and works in state A or B. You would have to check the laws of those states.