With remote work becoming standard operating practice for many firms, a new poll shows that 55% of Americans who have worked remotely during the pandemic were not aware that a failure to change their state tax withholding to reflect their remote work situation could result in tax consequences.
The survey, conducted in October with more than 2,000 U.S. adults by The Harris Poll on behalf of the American Institute of CPAs, found that 47% of respondents who were working remotely were not aware that each state has its own tax laws related to remote working. Further, 71% were not aware that working remotely in other states can have an effect on the amount of state taxes owed. Finally, 54% were unaware that the number of days worked out of the state where one’s physical workplace is located also may affect the amount of state taxes owed.
“Working remotely can have tax implications that vary from state to state,” said Eileen Sherr, CPA, AICPA’s director for tax policy and advocacy and a state tax expert, said in a press release. “The sudden and unplanned increase of many employees working remotely due to the pandemic has left many of them unaware of their current state tax liabilities and any additional steps they need to take now and at tax-filing time.”
The AICPA recommended that remote workers compile a list of any states they’ve worked remotely in during 2020 and try to approximate the number of days worked in each state. The organization also noted that income taxes also may be levied by cities, counties, municipalities, school districts or other jurisdictions, depending on the state, so workers should make sure to track this level of detail also. They also noted that a licensed CPA can help workers navigate questions and effectively manage their state tax liability.