Taxes and remote work question - Living in Colorado but working in Texas

[audballer]

Good morning all!

I have a few quick questions regarding remote work and state income tax when I live in one state (Colorado) and work in another state (Texas). I recently moved to Colorado this month and I want to make sure I pay the correct state and Federal income taxes now that I'm working remotely in Texas. From my basic research, Texas does not collect state income tax, but Colorado does. 

1. If my Texas employer withholds the necessary state income taxes from my paychecks to pay to Colorado, do I also personally have to pay state income tax to Colorado? 

2. Will I need to fill out any special Federal or state tax forms since I am working remotely?

3. Are there any other things I should keep in mind regarding taxes and remote work? I don't want any surprises!

Thanks very much, I appreciate any help you may have on this front.

Audrey

[Anonymous_ · Accepted solution]

There are no special forms you need to prepare and file strictly because you work remotely.

However, as a Colorado resident, you will be required to file a Colorado income tax return (and Colorado can impose a tax on the income you earn from your Texas employer, as well as any other taxable income).

See https://tax.colorado.gov/new-colorado-resident

[TomD8]

Texas has no state income tax.

As @Anonymous_ said, once you become a resident of Colorado, all your income becomes taxable by Colorado, regardless of where you earn it.

If your employer is withholding CO state income tax for you, he is doing so on your behalf.  It is still your obligation to file a Colorado tax return.  On that return, you'll be credited for all the CO taxes that were withheld.  (For this year, you'll be filing in CO as a part-year resident.)

You become a CO resident for tax purposes when you begin living in CO with the intent of making it your primary residence.

Be sure your employer is withholding CO state taxes.  IF they are not, you'll have to make quarterly estimated tax payments to CO.  This website explains how to do that:

https://tax.colorado.gov/individual-income-tax-estimated-payments

[NCperson]

@audballer - you are living AND working in Colorado.  Except for some limited circumstance, state income states are based on the physical world only.  So even though your employer may be based in TX, you are physically doing the work in CO and residing in CO.  ou owe tax to states where a) you work and b) you reside, but in this case, both are CO. 

[Anonymous_]

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@NCperson wrote:

you are physically doing the work in CO and residing in CO.  [y]ou owe tax to states where a) you work and b) you reside, but in this case, both are CO. 

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Even if @audballer were "physically doing the work in Texas" (e.g., travelling to a Texas work location), Colorado could still levy an income tax on @audballer's income as a Colorado resident.

[rjs]

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@audballer wrote:

1. If my Texas employer withholds the necessary state income taxes from my paychecks to pay to Colorado, do I also personally have to pay state income tax to Colorado? 

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@audballer 

State tax and withholding work just like federal tax. The amount of tax that you have to pay to Colorado for the year is calculated on the Colorado tax return that you file at the end of the year. The Colorado tax that your employer withholds from your pay is an advance payment towards the tax on your tax return. The amount that is withheld might be more or less than the actual Colorado tax that you have to pay. If the total amount that was withheld for the year is less than the total tax on your tax return, you have to pay the difference when you file your tax return. If the total amount that was withheld for the year is more than the total tax on your tax return, you will get a refund of the excess.