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Fully Remote Employee - Out of State Employer

I live year-round in Missouri and have done so for several years as a resident of that state. However, I work as a fully remote, full-time employee of a university near Denver, Colorado, and that is my primary source of income (W2). 

 

Do I need to file a state tax return for Colorado, as well as Missouri?

 

(This seems like a simple question, but I keep finding confusing information on the subject, especially when scanning the "Non-Resident Information" section of Colorado's tax website!)

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3 Replies
ErnieS0
Expert Alumni

Fully Remote Employee - Out of State Employer

No you do not have to file a Colorado income tax return for remote work performed in Missouri for a Colorado company.

 

Colorado says: Wages and unemployment compensation are Colorado-source income if the employee was physically present in Colorado when performing the work.

 

See Income Tax Topics: Part-Year Residents & Nonresidents

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Fully Remote Employee - Out of State Employer

Appreciate that reply, and it confirms what my gut has been telling me.

 

Still not sure, though, why TurboTax itself is encouraging me to do a nonresident tax return for Colorado: "Based on your federal return, you still may need to prepare a return for Colorado."

 

Why would that ^ be the case? Why doesn't it just ask me if I was physically present in Colorado when performing my work and remove the (stressful!) lack of clarity? 

Fully Remote Employee - Out of State Employer

I think I might've found the issue... so, near the start of the "My Info" section, it asks, "Did either of you make money in any other states?"

 

I answered that "Yes" initially since all of my income comes from an employer in CO, but I should've answered, "No," since I never physically worked in that state.

 

I think that some additional explanatory language should be added to that section, to help guide the huge wave of remote, out-of-state employees that now exist in the country. (CO's own tax website is similarly confusing on the subject.)

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