Living in PA - Home office in Alabama

[ccostella1]

My company that was headquartered in PA was bought by a company headquartered in Alabama. Most of our staff has been working remotely in PA since COVID. The office is PA is still open, so the Alabama company has a PA office. All that being said, will I have to file an Alabama NR income tax return? Does the office in PA have any bearing on this, in other words if they close the PA office, does that change the result? I know PA has the convenience of the employer rule. But I found conflicting information that Alabama does or does not.

Thanks!!

[TomD8 · Accepted solution]

It all depends on where you actually (physically) work.  If you work remotely from a PA location for an AL employer, then you're physically working in PA.

If you're a resident of PA and you never physically work within Alabama, then you have no income tax obligation to the State of Alabama.

However, Alabama can tax any income you make from work you physically perform within Alabama.  In that circumstance you would have to file an NR Alabama return, declaring the portion of your income that you earned in Alabama.  If you're a PA resident, ALL your income is taxable by PA, regardless of where you earn it.  You will be able to claim an "other state credit" on your PA tax return for any income tax that you may have to pay AL.  The credit prevents double taxation, which is prohibited by federal law.