I work remotely for a company in another state, from whom I received a 1099-MISC. Do I pay taxes to that state or just to the state I'm living in?

[howardc10]

I was very happy with the clarity and forcefulness of your response, except when I read almost every other response which totally contradicted yours.  It seems to depend on the telework rules in the state where the company pays you from, according to them.  What's the deal here please?

[ne1919]

My work location was in NJ until COVID and I have been working from home in NYC for 2 years. Searching the internet it seems there was an agreement for last year to pay taxes to both states until Sep. My company on the W2 kept deducting NJ taxes and doing so even this year. I asked them to fix it but it’s going in circles. I guess I’ll have to pay NJ until my company fixes their records. 

[RaifH]

Can you clarify your exact situation? Different states have different rules. Also, many of these responses are over a year old. Many states are lifting temporary tax laws that were in place while a state of emergency was in effect for that particular state, meaning that your income can be treated differently for the first part of the year than for the second part of the year. 

If you were a NY resident working for a NJ employer for 2021, then you would report income as @ErnieS0 instructed above if you never physically worked in NJ.

@howardc10

@ne1919 As long as you are not physically working in NJ and with the temporary pandemic rules no longer in place, they should no longer be withholding NJ income tax. Hopefully, before you have to file next year's taxes, they will realize the error of their ways. You can request a complete refund of NJ taxes withheld next year, but NJ may require an explanation from the employer of why they were withheld in the first place. 

[maglib]

@howardc10  For 2021 employers should have withheld based on where the employer was located until 10/1/2021 then Nexus went back into effect.  https://www.state.nj.us/treasury/taxation/covid19.shtml    This was agreed to with the state of NY and NJ.

You need to be careful.  The rules changed during Covid.  You are posting on a old thread.  There has been a lot of changes and uncertainties and only recently were decisions finalized.

End of Temporary Suspension of Employer Withholding Rules for Teleworking Employees
The temporary relief period with regard to employer withholding tax for teleworking employees will end on October 1, 2021. As of that date, employers
should cease sourcing income in accordance with the employer’s jurisdiction. As required under the long-standing pre-pandemic rules, beginning on and after October 1, 2021, employers should resume sourcing income based on where the service or employment is performed and withhold New Jersey Gross
Income Tax from such wages.
For information on proper wage withholding, see https://www.state.nj.us/treasury/taxation/pdf/current/njwt.pdf

This came for the State of NJ website dated 3/9/ 2022

Hope this was helpful.  

[ne1919]

Thank you. I will read the file in the link you shared. If still confused maybe I should consult an accountant. For 2021 I will just file based on the W2 I received from my company. I don’t want to get involved in between my employer and NJ tax agency. 

Thanks for the advice and sharing the link. 

Nabil

[hdickens]

Additionally, if your employer incorrectly withholds state income tax from the state that they are located in, as well as the state that you reside in- then you may want to file a nonresident return in order to claim any state withholding taken out for your employers state and a resident return for the state where you live.  Then, you should contact your employer and update your state information and forms to reflect your current resident address for your state withholding information. 

 @hdickens 

[maglib]

@hdickens  actually if your employer errs, then your employer should correct the situation and not require your to file a tax return.  All employer errors need to be corrected at the employer level. 

If the employer discovers the error after the calendar year of the wage payment closes, the employer provides the employee and the Social Security Administration (SSA) a corrected Form W-2 (Form W-2c, Corrected Wage and Tax Statement) reflecting additional FICA earnings for the prior year and FICA tax withholding as if the employer had made it correctly (Regs. Secs. 31.6051-2(c)(a)–(c) and 31.6051-1(c)(1)).

There is not reason to make the employee tax situation and withholdings and itemized deductions more complicated over an employer mistake.