Working Remotely from Virginia - Client is in NC

Forum|Forum|3 years ago
August 30, 2022
1 reply
1 view

I am currently residing in VA state due to Work From Home. But client resides in NC State.

Due to that my company continues to withhold taxes from both states.

Could you please help me which forms i need to submit in order pay tax only for VA state as I reside only in VA.

rjs

Level 15

Where you "reside" is only part of the story. It matters where you physically work. Do you work at the client location in North Carolina, even only occasionally, or do you work exclusively in Virginia?

Any income you earn for working in NC is subject to tax by NC. Since you live in VA, all of your income is subject to tax by VA, no matter where the income is from. If some or all of your income is subject to tax by both states, you will get a credit on your VA resident tax return for part or all of any tax that you pay to NC.

However, if you work only in VA your income is not subject to NC tax, and you do not have to pay any NC tax. It doesn't matter where the client is located. If you physically work only in VA, your employer should not be withholding NC tax. If you never work in NC, and they are withholding NC tax, they are just doing it wrong. You should just ask the payroll department to stop withholding tax for a state that you don't work in. If they want you to fill out a form for that, ask them to give you the form.

Did you previously live in NC? If so, that could be why they are still mistakenly withholding NC tax. Did you properly notify payroll that you moved?

kranthinvAuthor

Level 2

I have recently started my job in Aug 2022. My work location is NC but due to pandemic I am working from home in VA. May be after few months I might move to NC.

As of now , I have not worked any time at NC in the client office. I only work from VA from home.

I repeatedly asked the HR - why they are deducting NC tax as I don't like in NC.

The HR complaints as Work location is NC even through you reside in VA due to pandemic.

Due to that they are deducting NC state tax as work location and VA tax as Resident tax.

I am also surprised as they are charging both states the same amount.

kranthinvAuthor

Level 2

@kranthinv - that 'work location' indicator in a payroll system is normally what triggers the withholding in a particular state. That work location is a physical location. And since they have a VA residence address for you, I can understand why they are withholding in both states.

If it is not resolved, it will be resolved on your tax return. You will complete a NC tax return as a non-resident. Then you will complete a VA tax return. Whatever the tax paid to NC is (and this is not the withholdings on the paycheck) becomes the basis of a credit on the VA tax return, so you are not taxed twice on the same dollar.

Since they have already withheld taxes in both states, even if resolved, you'll have to file in both states in any event for 2022.

Totally Agreed with you. I do also aware that usually as I reside in VA state, I used to pay full state tax to VA.

As my work location is in NC - I suppose to pay some minimal tax (Not full tax like i used to for VA state).

In simple terms, My paycheck will be deducted by full state tax for VA state and some minimum state tax for NC state.

Is this correct !!

If yes, what forms i need to submit to my HR or how can i convey similar thing to my HR !!