What is in store for your 2021 return.
By Rob Tamburri
Are you still remote? As of September 2021, 45% of full-time US employees were working partly or entirely remote.[i] With no commute time, overall well-being, and flexibility of schedule being the top reasons a hybrid workplace is desired, 9 out of 10 workers hope to remain at least partially remote into the future.1 With the move to remote work at the beginning of the pandemic, people were no longer tied to a specific building and choose to move to get ahead of possible economic uncertainty. Living costs were significantly reduced by moving to less expensive locations or with family and friends in 2020. In addition, with leniency for 2020 returns, there was no tax filing obligation for remote workers who worked temporarily in a state. But, you may want to reevaluate your 2021 tax situation, especially since many states with leniency statutes are now expiring.
The number one concept for an individual who is a remote worker is to know that whatever state you are a resident of gets to tax your wages, regardless of where you earned them!
However, you may have a tax liability in non-resident states depending on where your company is located and what specific states are involved. Some states have reciprocity agreements with each other (read- no tax). Additionally, there are a handful of states which have a “convenience of employer” tests- that means you pay income tax to those states- period
This is turning into a big headache for both the employer and employee- especially since most HR departments are hesitant to provide any tax guidance. This is a good time of the year to double-check this- and you can “catch up” with either additional withholdings or making an estimated tax payment before year-end (you have until 1/15/22).[ii]
Please realize that states are looking to recoup costs they’ve borne over the past two years and are finding ways to tax out-of-state workers. So, it should be no surprise that New York and California top the list with precise rules and are very aggressive in determining tax nexus.
Companies need to develop systems of keeping track of their remote employees and their earnings activities. But as of now, the individual is responsible for ascertaining what taxes are owed to each state. This can be further complicated by tax burden not always being determined by time worked in a state but combined earnings. If you work remotely or are considering this type of employment, please get qualified tax advice BEFORE you ACT!
We are here to help you and your career through every stage of your financial life. Don’t hesitate to get in touch with us at 800-871-1219 or info@scarletoakfs.com. If you would like to speak to Rob Tamburri and his team directly, his contact information is below.
Rob Tamburri, CPA/PFS, is the Managing Partner- Georgia, based out of the Atlanta, GA office of the Certified Public Accounting Firm of Balog + Tamburri, LLC. He has been a CPA since 1993.
Mr. Tamburri manages the conduct of the Firm’s tax and financial consulting engagements. He specializes in Taxation, Accounting, and Virtual CFO consulting. He also has extensive experience working in health care, real estate, manufacturing, automotive services, logistics, restaurants, and personal service companies.
Mr. Tamburri is a member of the American Institute of Certified Public Accountants and Georgia Society of CPA’s and is licensed as a Certified Public Accountant (CPA) in Georgia, Florida, and New York, and is Personal Financial Specialist (PFS) as designated by the AICPA.
Rob Tamburri can be reached:
Balog + Tamburri, CPAs
Five Concourse Parkway
Suite 3000
Atlanta GA 30328
770-804-6403 (office)
770-853-0074 (cell)
This material was prepared by Rob Tamburri and does not necessarily represent the views of the presenting party (Scarlet Oak Financial Services), nor their affiliates Capital Asset Advisory Services, LLC. This information has been derived from sources believed to be accurate.
The information in this material is not intended as tax advice. This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and financial professionals before modifying your tax strategy.
[i] https://news.gallup.com/poll/355907/remote-work-persisting-trending-permanent.aspx
[ii] https://www.irs.gov/payments/pay-as-you-go-so-you-wont-owe-a-guide-to-withholding-estimated-taxes-and-ways-to-avoid-the-estimated-tax-penalty
https://www.cnbc.com/2021/07/18/still-working-remotely-your-2021-taxes-may-be-more-complicated-.html
