Living in Florida, Hybrid with a company in Virginia

[rtonkinson]

I am looking at an employment situation with a company based in Virginia.  It would be hybrid, with approximately ten business days per month working in Virginia and the rest remote.  Will I owe Virginia State income tax on some or all of the earnings?  If I were to do this as a contract employee through my LLC, so that the payments would be 1099 and not salaries and wages, would that make a difference?

[rjs]

You will have to pay Virginia tax on the income that you earn for the days that you work in Virginia. You will have to file a Virginia nonresident tax return.

There are a few states that tax remote workers, but Virginia is not one of them. So you would not have to pay Virginia tax for the days that you work remotely.

You didn't say what state you would be working in when you are working remotely. I assume it would be Florida, in which case you would not have to pay any state tax on the income you earn for the days that you work remotely. If any other states are involved, post details.

If your LLC is a single-member LLC that has not elected to be treated as an S corp or C corp, then as far as state income tax is concerned it doesn't matter whether you work as an employee or an independent contractor. But, of course, if you are a contractor you would have to pay federal self-employment tax on all of the income, no matter what state you worked in.

[rtonkinson]

Yes, I am living in Florida.   My llc is a single member LLC.  So, if the company paid the llc, then I would still have to pay tax on the payments paid to the llc based on the days I worked in Virginia, is that correct?  Just wanting to make sure I had a clear understanding.  Getting nit picky, what constitutes a day I work in Virginia?  If I put in a full eight hours on the ground in Virginia on a given day, that would count.  But, what if I arrive on an evening flight, and check email after I land?  If I leave Virginia on a morning flight and only check email before I leave, do I need to count that day?  What about mid-day arrivals and departures?  Do those count as half days?  Thank you so much for your help!

[rjs · Accepted solution]

"Yes, I am living in Florida."

The question is what state you would be working in, not what state you live in. They're not necessarily the same. But I assume you mean that when you're not in Virginia you would be working remotely in Florida.

"So, if the company paid the llc, then I would still have to pay tax on the payments paid to the llc based on the days I worked in Virginia, is that correct?"

Yes, that's correct.

"Getting nit picky, what constitutes a day I work in Virginia?"

I don't think the Virginia Department of Taxation is going to be so nitpicky about it. I would consider any day that you show up in the office in Virginia to be a day worked in Virginia, even if you're not there the whole day. But checking email on a day that you are not otherwise in the office wouldn't count. However, if you're a W-2 employee, your employer is going to have to keep track of the days that your work in Virginia. You pretty much have to go along with their count, though you should keep your own count to check them.

You want to make sure the employer gets this right. The state wages on your W-2 should show only the amount for the days you worked in Virginia. If the W-2 shows all of your pay as Virginia wages you are going to have a problem. Talk to them about how they are going to handle this before you start the job. If they have not had this type of arrangement before, they might be unsure about how to handle it in their payroll system.

If you are a contractor your 1099-NEC will just show the total payments for the year. You will make the allocation on your Virginia nonresident tax return. In that case, you have to have your own record of how many days you worked in each state, to back up what you put on your tax return.

[rjs]

If you are an employee, check your pay stubs to make sure they are recording the state wages (and state withholding) correctly, especially the first pay stub. It would be enormously more difficult to get it corrected if you don't tell them it's wrong until after you get your W-2.

[rtonkinson]

Thank you for the very thorough and helpful answer. I appreciate the time you took to respond!