During the pandemic, people have had to adapt in ways that they never anticipated. For some, that has meant working from home instead of commuting to their office. It has also meant that individuals in Texas may be facing more complicated tax issues than they have in the past, particularly if they are used to working in a different state than the one in which they live.
Work from home tax complications
Working out of state is not uncommon for many people who commute, especially if they live close to state lines. Typically, living and working in two different states does not pose much issue come tax time because workers pay taxes to the state in which they earned their income while receiving a credit for the state in which they live. During the pandemic, however, if individuals’ employers were based out of state and they worked remotely from home, they could face taxation from both states.
Convenience of employer law
For example, if Texas residents typically work in Arkansas but worked from home during the pandemic, they could be subjected to a convenience of employer law, which means that double taxation could occur. States with this type of law can collect taxes from workers whose employers are within those states even if the employees worked out of state. Already several states are attempting to address this complication, but for many it could be a serious problem.
Handling the issue
Understandably, no Texas resident wants to face more taxation on income than necessary. Unfortunately, during these unprecedented times, tax issues this year are even more complicated than usual. If individuals have concerns about this being taxed twice on their income due to having an out-of-state employer, they may wish to discuss their concerns with knowledgeable tax attorneys.