Hello,
I live on the Kansas side of Kansas City but the company I work for is in Kansas City, Missouri. They recently implemented a Flex Work program which allows us to work some days at home and some days in the office. We now have the option to mark days we work from home so we aren’t taxed for Missouri income tax. Should I begin tracking the days I work from home and will this effect my taxes in a negative way when I go to file?
Yes. Track the days you work from home. You are obligated to file complete and accurate federal and state income tax returns.
Without knowing your complete tax situation (for example, marital status, kids, income-level) it’s not possible to answer whether this change will affect your taxes in a negative way.
I can tell you that this change will save you money on the one percent Kansas City Individual Earnings Tax. Nonresident only pay the tax on days worked inside KCMO.
Most likely you will also save on state tax as well. The Kansas state tax rate is 5.70% on income above $30,001. The Missouri tax rate is 5.4% on income above $8,585. Therefore, when you work in Kansas City you are taxed at 6.4% (5.4% Missouri + 1% KCMO). Kansas will give you a credit up to the KS state tax rate (5.7%), meaning you don’t get credit for the difference (6.4%-5.7% = 0.7%) on your Kansas tax return.
If you work from home, you are only taxed at 5.7% on those days (since that income is not being double taxed by Missouri).