Filing nonresident tax return for remote work

Forum|Forum|5 years ago
February 23, 2021
1 reply
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During 2020, I worked remotely temporarily in another state (which has income tax) during the past year as my company was WFH. The remote work I did was for about a month, after which I returned to my resident state. My W2 only has withholding for my resident state (for which I am still a full time resident).

I understand that my time worked in the other state means that I have income earned in that state. Is the correct process for me to manually allocate my wages to the nonresident state based on the number of days I worked there and file as a non-resident to pay the taxes I owe? Since my W2 only shows my resident state, would I run into any issues here?

I don't believe my employer will issue a corrected W2, or if that is necessary but wanted to understand if I needed to take any other steps. My employer can provide a statement on company letter head stating that I did work remote in another state during that time, but I don't believe this can be attached in an e-file anyway and I am not even sure if it is required.

Multiple States

TomD8

Alumni - Champ

@TaxBuddy2021 asked:

<<"I understand that my time worked in the other state means that I have income earned in that state. Is the correct process for me to manually allocate my wages to the nonresident state based on the number of days I worked there and file as a non-resident to pay the taxes I owe?">>

That is exactly the correct procedure. Be sure to complete the non-resident tax return first, so that your home state (which can tax ALL your income) will credit you for the taxes paid to the non-resident state, on the income that is taxed by both.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

TaxBuddy2021Author

Level 2

Thanks for the quick reply, @TomD8! Quick follow up - is that all that is needed here?

I understand the W2 just shows the withholding that was done over the year, not necessarily where taxes are actually owed, but would I get any questions from state tax authorities based on doing this manual entry when the non resident state isn't on the W2?

For instance, would my resident state ask why I am claiming a credit for non-resident tax paid in another state when my W2 doesn't show the non-resident state anywhere?

Just want to make sure I get any materials I need to do this correctly. Thanks for the guidance.

TomD8

Alumni - Champ

It's true that there will be a discrepancy between your state tax returns and your W-2. Some taxpayers in your situation print and mail their tax returns, along with a note of explanation. Others wait to see if their return is questioned. As you might guess, your situation is quite common in these days of Covid and working from home.

When you do both returns in TT and e-file them, I believe your resident state will get a copy of the other state's return. That might be sufficient.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.