Payroll Withholding taxes when remotely working in Massachusetts but we are an employer in CT

[Employer]

Hello, 

We are an employer in CT and due to Covid most of our employees have been working from home. We have been creating various plans for them to come back and the majority still are working from home as the situation with Covid has been consistently changing. We have one employee that lives in Massachusetts and we are considering now March 2022 to let work from home as it is more convenient for her. 

She was advised by her accountant that she needs to withheld taxes for both CT and Mas. If we decide now that she can permanently work from home, should I register now in Mas and start paying her state income taxes there and also unemployment, what can be the issue with Massachusetts? Also, I will need to stop deducting in CT or do I use double taxation since CT has the "convenience rule" but my payroll company is telling me to choose only one state? I want to make sure we do the right thing for the employee and for our organization we follow the rules of both states. Thank you in advance.

[RaifH · Accepted solution]

CT only applies the convenience of the employer rule when the nonresident's state is a convenience of the employer state. MA is not a convenience of the employer state, therefore if she is performing all the work in MA, she should not be taxed on her wages by CT. 

If she is exclusively working in Massachusetts, then you should be withholding Massachusetts taxes. If she does have to come to the home office on occasion, you may have to withhold CT taxes as well. 

The MA website should point you in the right direction in terms of your obligations for collecting and remitting taxes. 

[Employer]

Thank you very much for your quick reply. 

Could you also let me know now when I register in Mas for state withholding and unemployment, PFML for this one employee, do I need to also register my business there, do I have any other business obligations?

[ErnieS0]

You can find information on Massachusetts withholding at Withholding Taxes on Wages.