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The long arm of state tax law threatens telecommuters
Payroll tax cut would help employers rehire people: Steve Moore
FOX Business’ Blake Burman breaks down President Trump’s visit to a medical equipment distributor in Pennsylvania and the administration’s plan to build up the national stockpile of PPE. Trump economic adviser Steve Moore discusses how to hold China accountable for the coronavirus pandemic and how a payroll tax cut would be more beneficial to the American people than another round of stimulus from the federal government.
The new popularity of remote work is putting a spotlight on income taxes that New York and five other states impose on workers living out of state.
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My last column took a nationwide look at how the states are taxing, or not taxing, remote workers who took refuge there due to the pandemic. This one will focus on a single controversial rule that will likely affect thousands of New Yorkers and others whose offices were closed this year due to the pandemic. The rule's importance will grow as out-of-state telecommuting becomes more common, especially if more states adopt it.
It's known as the "convenience" rule. In a nutshell, it says that if a person has a job based in one state but lives and works in another state out of convenience rather than because the employer requires it, then that person owes income tax to the state where the job is based.
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In other words, someone with a New York-based job who lives and telecommutes from another state still owes full income tax to New York on that compensation. If the other state taxes that income as well and doesn't give a credit for the New York tax — as some states don't — the worker will likely be double taxed.
Here's real-life example: Prof. Edward Zelinsky, who teaches tax law at Yeshiva University's Cardozo Law School in Manhattan, lives in New Haven, Conn. Typically he spends about 50% of his workdays in New York City and the rest in Connecticut.