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?

[gmelenyk001]

The company I work for is located in Michigan.  However, I am a resident of Kansas, and I do all of my work remotely in Kansas.  Where do I pay my State income taxes? 

[TomD8]

@gmelenyk001  Your home state of Kansas can tax all your income, regardless of where you earn it.  As long as you never physically work in Michigan, your income is not taxable by Michigan.

[maglib]

You risk being double taxed if you live in one state but work for a company based in New York, New Jersey, Delaware, Pennsylvania or Nebraska.  Michigan is NOT one of the states. These 5 states had a convenience vs. necessity test. If they determine that working from home is a matter of convenience for you rather than a necessity for your employer, you will owe taxes to those states on the income you earn during your telecommuting days.  

Most states though do not tax telecommuters.  If you have to be in the Michigan office on certain days though, you may be taxed on that income earned while having a physical presence.  Salary, wages, and other employee compensation for work performed in Michigan is considered taxable.  Many telecommuters must do office visits monthly.  So be careful to ensure you do pay those taxes since your employer location is that state.  

[magriff]

Do you have any more information about this? Where can I find this recent court ruling? I work remotely from Ohio. I Live there and stay there. One company I contracted with was from Georgia, but the remote work was with their California clients. 

One contract is with a California company, but I work remotely with their clients in Oregon. 

Is it different in 2018 from 2019? 

Thanks!

[TomD8]

@magriff -- It's called the Bindley decision, and it's detailed here: https://www.coblentzlaw.com/california-office-of-tax-appeals-gives-precedential-authority-to-bindley...

It seems that CA is going to tax non-resident sole proprietors who receive a 1099-MISC from a California company, even if that person has never set foot in California.

[Bremma]

I live in Nevada and telework for the State of Oregon.  I have been living and working in Nevada all year and have not been back to Oregon at all.  I do all my work remotely.  Will I have to file an Oregon State Tax Return, since I have not physically worked in Oregon?

[BillM223]

Note the 5 states that maglib mentioned above; Oregon is not one of them. Therefore, the general rule of telecommuters pay tax in the state where they live and work, not to the state where the company is, applies.

But do note the comment above that if you travel to Oregon and there is some income that you received due to work that you did while in Oregon, then you will have to file an Oregon return.

Note that for employees, this typically means that you create a ratio of days spent in Oregon divided by total work days and apply that ratio to your annual salary, this is reported in Oregon.

[TomD8]

@Bremma  --  If your employer mistakenly withheld Oregon taxes, you'd have to file an OR non-resident tax return, showing zero OR income, in order to get those taxes refunded.

[Ricciardi117]

The company I work for is located in another state but i live and work in PA but on my W2 i got state taxes deducted for PA and MA. How does that affect my filing?

[KrisD15]

MA does not tax non-resident telecommuters, so you do not need to pay MA tax on that income. 

You can file a non-resident Massachusetts's state return to claim a refund of the tax withheld. 

Remember to NOT allocate that income to Massachusetts when you do your state returns.

[1099erGirl]

That article about CA is horrifying b/c that is my situation. I'm a screenwriter in GA. And in any given year I can write projects for sometimes 8 states worth of clients.  But CA sent me a letter about one 1099 from 2017 and I'm still waiting on their answer. I had to pay the $50 for the extra CA download on the old taxes. And it shows I Owe CA nothing,  but I have the feeling 2019 changed their definitions but Turbo tax hasn't necessarily caught up with that. So even if TT says I owe Zero (which in reality I think that's exactly what should be due!!) When I lived in CA I paid CA my entire state tax bill no matter what state my client was in and CA didn't mind then. So why do they want to collect our money in reverse when we don't live there anymore?? It's insane. And if every state did that, some of us would be filing 8+ state tax returns a year. (Even just selling on amazon or audible, their 2 parent companies are different states. Amazon is WA and Audible for selling audio books is NJ which was on the 'double taxed' list posted above. So for that 1099 from this year worth less than $600 I'm also supposed to file in NJ???) B/c yes they sent one anyway even though it was under $600.

CA sent me a notice in August saying "we got your tax return" and we'll let you know your bill and fees / fines. But do they charge me interest on how long THEY are taking to look at it? (Even if my forms say I owe zero, I have no doubt the broke state will find a way to charge me on income I earned from home in GA)  

And a question... if Double Taxation is illegal... how do they determine how much of the income GA is allowed to tax vs. CA? I can't see GA thinking they are owed nothing for work I did here for  CA client. But it seems like how CA is working they think they're owed everything on that 1099. How is that fair to the state you live in? 

[KrisD15]

Very often income is taxed more than once. 

The premise is that a state can't tax you twice on the same income, but you can be taxed twice, once by the Federal Government and again by the state, or even more than twice if there are multiple states involved. 

Double taxation also occurs when income for a corporation is tax, and then the individual that receives a dividend from that corporation is taxed on that income a second time.  

[TomD8]

@1099erGirl — your home state of GA will give you a credit for taxes you pay to CA on the portion of your income that is taxable by both states - so in that sense you won’t be double-taxed at the state level.

[1099erGirl]

Re; GA vs CA Can you just process that the year it's paid to get that credit? Since it likely will be a bill I pay in 2020 for 2017, I don't have to redo taxes for 2017 as far as GA goes but instead just enter whatever they have me pay as an amount of state taxes paid in another year? 

[TomD8]

@1099erGirl   Good question.  You can certainly enter state taxes paid for a previous year onto your current year federal return, but I can't find any similar provision on the Georgia return or the Georgia tax website.  If you get hit with a CA tax bill for a previous tax year, I'd suggest contacting the GA Dept of Revenue to find out their process for claiming an other-state credit for previous tax years.  https://dor.georgia.gov/help/contact-us