Working remotely from out of state during the pandemic could trigger taxation and you could become subject to double taxation.
Taxpayers should keep track of where they work and for how long. The rules are complicated and vary by state. Some states impose income tax on people who work there for as little as one day. Many states offer credits for taxes paid to another state, which may ease the tax liability, but will not offset it dollar for dollar. If you relocated to one of these 13 states, your income will not be taxed there, as they agreed not tax you, if you have moved there temporarily: Alabama, Georgia, Illinois, Indiana, Massachusetts, Maryland, Minnesota, Mississippi, Nebraska, New Jersey, Pennsylvania, Rhode Island and South Carolina. Also, there are 16 states and District of Columbia that have reciprocity agreements and do not tax nonresident workers. It’s important to know what your state income tax responsibility will be, so you will not make a costly mistake.
What to Do If You Have Not Filed Tax Returns.
We represent taxpayers in New York and New Jersey who have tax issues, and have recently seen an increase in those clients coming to us who have not filed tax returns, some for many years. In fact, the non-filer issue is a major priority for the IRS, who have stated publicly that they have identified more than 7 Million taxpayers who have failed to file returns, and that the IRS plans to roll-out an initiative to target these individuals. In addition, the willful failure to file a tax return is a federal tax crime under the Internal Revenue Code. What can non-filers do, and how can we help them get their tax return issue resolved with the IRS? It depends upon why they failed to file in the first-place. If the failure to file the tax returns was a lack of money then we can get those returns filed and begin working on a tax resolution for them to resolve the back tax balance, including Installment Agreement, Partial Installment Agreement, Offer-in-Compromise, or have their account placed in uncollectable status. If the taxpayer's failure to file was intentional and for other reasons, then the way to resolve the issue and avoid a criminal tax referral is by utilizing the IRS's Voluntary Disclosure Program. By doing a voluntary disclosure the taxpayer can come in and disclose the issue without fear of a criminal tax referral.