Tax season recently ended. Some taxpayers may have experienced the unpleasant surprise that they owed state taxes not just in the state that they live in, the state they consider their domicile, but in another state or even multiple states as well.
This can happen for a number of different reasons, primarily connected to traveling for work. Those who find themselves frustrated with these obligations are not alone. The issue is so common that a recent article in Market Watch discussed the problem, noting a proactive approach can help reduce the risk of this double or triple state tax burden.
How can I reduce my state tax burden when traveling for work?
Some helpful tips include:
- Keep records. Keep track of the days you work in each state. States generally have a rule as to how many days a person must work within the state before that person is subject to state taxes.
- Consider tech. The piece in Market Watch notes that entrepreneurs are putting together applications that can provide some assistance in keeping your records up to date and accurate. Consider downloading an app or other piece of tech that could help you keep your records updated with ease.
- Know the law. Many business people who travel operate by the “180 day” rule. This provides a rough approximation and is not exact. As such, without further research an individual could believe he or she is well within the minimum required work days to avoid taxation within a state only to get surprised with an audit in the future.
Those who travel frequently for work are wise to seek legal counsel to help with this last tip, as the law varies from state to state and can change from year to year. An experienced attorney can review your situation and help to reduce your tax obligations as much as possible.