Remote work ID/PA

[imirkin]

I live in ID 100% of the time, however I work 100% remote. I used to live in PA, and had a home office there at my brother's house. My company allowed me to move, however they do not have payroll processing in ID, so I am still listed as Remote (home office PA) at that address although I am never physically there. My employer deducts PA state and locality taxes. ID taxes all my income as a resident. PA only taxes PA-source income or income earned while a resident of PA. I dont think either of those apply?

[Vanessa A · Accepted solution]

As long as you are working remotely because that is how the company has it set up for their convenience and it is not just a convenience for you, then no, PA will not tax this income. 

However, since your employer is continuing to withhold PA taxes, you will need to file a PA Non-Resident return to get a refund of taxes withheld and an ID Resident return.  You will need to pay the ID taxes with your return, since you did not have any withheld. 

[imirkin]

Can you explain the convenience thing? I am working remote as a convenience for me, it was my decision to go remote and they allowed it. However the setup where my home office is PA is a convenience for them as they do not do payroll processing in ID. 

[Vanessa A]

PA has a Convenience of the employer law which states that if you are working from home for your own convenience from another state, that PA will tax your income as PA source income.  Since you were working at your home office because that is what they required prior to moving to ID, it sounds like this does not apply to you.

Working remotely is basically working from home or a location that your employer is not providing (they are not providing an office for you to work in), the state you are working from does not determine whether or not it is for your convenience or their convenience.  

If you would have been going into the office that they provided to work prior to moving, then they agreed to allow you to work remotely instead of coming into the office, then this would be for your convenience. 

[imirkin]

I understand. 

So if I am getting a return from PA for all taxes paid, does that count as 2022 income that I will have to pay Idaho?

Turbotax asks for "taxes paid to other state" and credits ID taxes due. Since I had PA taxes withheld, I have included this amount and it reduces my ID taxes due. However since I'm getting all of it back from PA, it should go to ID as taxes for 2021. So do I put 0 as "taxes paid to other state" and pay the full amount ID taxes me for? Or do I put the amount withheld and paid to PA, wait until I get it as a refund, and then pay it next year?

[Vanessa A]

No, your tax refund from one state is not taxable by another state. 

Yes, you will put $0 for the amount paid to another state if you are getting all of your state taxes back.  This is assuming you lived in ID for all of 2021.  If you lived in PA at all during 2021, then you would have some tax liability for PA.