You work from your kitchen table in New Jersey. Your employer's headquarters sits in Manhattan. Last month, you logged in from your parents' house in Pennsylvania for two weeks. Now three states want a piece of your paycheck, and you're not sure who gets what.
This guide explains where remote workers owe state and federal taxes, how to avoid double taxation, which states apply special rules like the convenience of the employer test, what happens when you work temporarily from another state or country, and what steps you can take to stay compliant across jurisdictions.
Remote work taxes depend on where you physically sit while working, not where your employer's headquarters happens to be. You'll typically owe taxes to your state of residence. You may also owe taxes to your employer's state if it applies special rules, or to any state where you temporarily perform work.
Two concepts make this easier to follow. Tax nexus is the connection between you and a state that gives it the right to tax you. Sourcing rules determine where your income is considered earned. Once you understand both, the rest falls into place.
Your resident state taxes all of your income, period. It doesn't matter where you earn it. For most remote workers who stay put in one location, this is the only state return you'll ever file.
Some states claim the right to tax you based on where your employer is located, even if you never set foot there. The most common mechanism is called the "convenience of the employer" rule, which we'll cover in detail below.
Working temporarily from another state, even for a few days, can trigger a tax obligation there. This creates a split between your resident state (where you live) and a work state (where you physically perform services).
Yes, multi-state filing is common for remote workers. The good news is that you typically won't pay full taxes to both states. Credits exist specifically to prevent double taxation.
Double taxation happens when two states both claim the right to tax the same income. A common scenario: you live in New Jersey while your employer sits in New York, a convenience-rule state. Local taxes can add another layer. Philadelphia's wage tax and New York City's income tax, for example, may apply based on your employer's location even if you work from home elsewhere.
Most states offer a resident credit for taxes you've already paid to another state on the same income. You'll file returns in both states, then claim a credit on your resident return for what you paid to the nonresident state.
A handful of states tax nonresidents who work remotely for an in-state employer when the remote arrangement is for the employee's convenience rather than a business necessity. This rule catches many remote workers off guard because it can apply even if you never physically work in that state.
Five states currently enforce some version of this rule:
Start by checking whether your employer has an office in a convenience-rule state. Then determine whether your remote arrangement was mandated by the employer or is a personal preference. Finally, document that distinction. Written agreements, HR policies, or offer letters specifying your work location carry real weight if a state ever challenges your position.
Reciprocity agreements are state-to-state deals that let workers who live in one state and work in another pay tax only to their state of residence. They're most useful for border commuters and hybrid workers splitting time between a home office and a physical office across state lines.
Key pairings include Pennsylvania and New Jersey, Virginia and Maryland and DC, and Illinois with several neighboring states. One limitation worth noting: reciprocity agreements generally cover only wages and salaries, not self-employment or business income.
Reciprocity isn't automatic. You have to file a withholding exemption certificate with your employer so they stop withholding tax for the work state. In New Jersey, for example, you'd file Form NJ-165. Skip this step and you'll be chasing a refund at filing time.
There's no universal safe harbor. Thresholds vary widely from state to state, which makes this one of the trickiest questions for anyone who works while traveling or visiting family.
Some states use day counts, others use income thresholds, and many use both.
Several states enforce a 183-day rule that can make you a statutory resident even if you maintain a home somewhere else. If you spend more than 183 days in a state during the tax year, you may owe taxes as if you lived there full-time. Some states, including New York, pair the day count with a requirement that you also maintain a permanent place of abode in that state. This threshold applies regardless of whether you own or rent property in that state, and it can trigger full resident tax liability on your worldwide income.
The "working from a family member's house for a few weeks" scenario is more common than ever. Be aware that a majority of states impose first-day filing obligations, meaning any work performed within their borders can create a filing obligation regardless of how short the stay.
Keep a contemporaneous log. If a state ever questions your filing position, a real-time record is far more defensible than trying to reconstruct your schedule after the fact.
If your employer is based in Texas, Florida, Washington, or another no-income-tax state, you still owe income taxes to your own state of residence. The upside is that multi-state complexity drops sharply. The employer's state doesn't create withholding obligations or nonresident filing requirements for you.
Federal taxes work the same no matter where you sit within the U.S. Your physical location doesn't change your federal income tax liability.
Here's the key split. W-2 employees cannot deduct home office expenses under current law. The Tax Cuts and Jobs Act eliminated this deduction for employees through 2025, and the OBBBA has since made this permanent for 2026 and beyond.
Self-employed workers can claim the home office deduction if their workspace meets the IRS's "regular and exclusive use" standard under IRC §280A. The space has to be used regularly for business and used exclusively for business, not as a guest room that doubles as an office.
Self-employed remote workers operate under a different set of rules. They can deduct home office expenses, they pay self-employment tax covering both halves of FICA, and they often face more state nexus complexity because their business activity can create obligations in multiple states.
From the employer's side, companies withhold state taxes based on where employees actually perform work. For businesses with distributed teams, this creates real compliance challenges.
Employers register for payroll tax withholding in every state where an employee works. Getting this wrong creates problems for both sides. The employer faces penalties, and the employee ends up with incorrect withholding that complicates their personal return.
When an employee works remotely from a new state, employers must register for state unemployment tax (SUTA) in that state and file quarterly wage reports. Each state has its own registration process, unemployment tax rate, and wage base. Missing a registration deadline can trigger retroactive assessments and penalties. For companies with distributed teams, tracking which states require registration and staying current on quarterly filings becomes a significant administrative burden.
Permanent establishment is a tax concept where a remote employee's home office could create corporate tax nexus for the employer in that state. This could subject the company to state corporate income tax. While this is primarily an employer concern, employees benefit from understanding the business implications, especially when asking to relocate to a new state.
U.S. citizens and resident aliens owe federal tax on worldwide income regardless of where they live. For digital nomads and international remote workers, the rules layer on additional complexity.
The Foreign Earned Income Exclusion (FEIE) under IRC §911 lets qualifying taxpayers exclude up to $132,900 of foreign-earned income from U.S. taxation. To qualify, you'll meet either the physical presence test or the bona fide residence test.
The physical presence test requires you to be physically present in a foreign country or countries for at least 330 full days during any 12 consecutive months. Partial days don't count, and days spent in transit over international waters don't count either. The 12-month period can begin on any day and doesn't have to align with the calendar year, which gives you some flexibility in planning your travel.
The bona fide residence test requires you to establish genuine residency in a foreign country for an uninterrupted period that includes an entire tax year. The IRS looks at your intent, your permanent home, and your connections to the foreign country versus the U.S.
If you pay income tax to a foreign government, you can claim a foreign tax credit using Form 1116 against your U.S. tax liability. This is the international equivalent of the state-level resident credit. It prevents the same dollar of income from being taxed twice.
Staying compliant across multiple jurisdictions requires proactive planning and consistent documentation. These practices help you avoid surprises at filing time and build a defensible position if a state ever questions your return.
Researching remote work tax questions means tracking constantly evolving state rules, applying convenience tests, analyzing reciprocity agreements, and documenting defensible positions. Tax professionals often spend hours digging through state statutes and regulations to answer what seems like a straightforward question.
Marble's Intelligence agent helps tax professionals research multi-state questions with citation-backed answers linked directly to state statutes and regulations. Ask a federal or state tax question in plain English and get instant answers that link straight to the relevant code. Upload client documents and add project context so your assistant remembers the facts across the engagement.
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W-2 remote employees generally cannot deduct home office expenses under current federal law. Self-employed remote workers may qualify for the home office deduction if they meet IRS requirements for regular and exclusive business use under IRC §280A.
Alaska, Florida, Nevada, New Hampshire (wages only), South Dakota, Tennessee (wages only), Texas, Washington, and Wyoming do not tax wages. Living in one of these states significantly simplifies your remote work tax situation.
Your employer can't directly make you pay taxes anywhere. However, if your employer is in a convenience-of-the-employer rule state like New York, that state may independently claim the right to tax your income even if you work remotely from somewhere else entirely.
Failing to file a required state return can result in penalties, interest, and an extended statute of limitations. That means the state can assess taxes years later when reconstructing records is far more difficult and expensive.
Yes. You'll typically file a nonresident return in any state where your employer withheld taxes, either to confirm the correct amount or to claim a refund if taxes were over-withheld.
You generally pay income tax to your state of residence on all your income. You may also owe taxes to your employer's state if it applies a convenience-of-the-employer rule or if you occasionally travel to work from that state's office.
