How should state tax be calculated for my out-of-state daughter who stayed with us and WFH for just over a month in 2020?

[seshadri1]

Our daughter graduated last year and got a job in NC in June 2020.  Her employer permitted employees to work from home later in the year and she came and stayed with us in PA from Thanksgiving to the end of the year while maintaining her apartment in North Carolina, and having a NC drivers license, etc.  The employer withheld state tax for the entire period based on NC rates.  How should she report the income for the last 5 weeks of the year? If she needs to pay PA income taxes,  is she eligible to get a deduct that on the NC return?

Thanks

[ErnieS0 · Accepted solution]

Your daughter should file a full-year North Carolina income tax return. She does not have to file a Pennsylvania return.

Pennsylvania says, "[If] an employee is working from home temporarily due to the COVID-19 pandemic, the department does not consider that as a change to the sourcing of the employee’s compensation." In other words, your daughter's income remains NC-based and is not considered to be from PA sources.

Related resource:

• Telework During the COVID-19 Pandemic