Overview

Remote and seasonal workers can trigger state income tax obligations in more than one state. That happens because most states tax either residents on worldwide income or nonresidents on income earned from work performed inside the state. The interaction of “domicile” and “statutory residency” rules, employer withholding policies, and special doctrines like New York’s “convenience of the employer” rule creates complexity. Effective planning reduces double taxation, prevents withholding surprises, and helps you stay audit‑ready.

In my 15 years advising clients on multistate tax matters, I’ve repeatedly seen small recordkeeping changes and timely filings cut six‑figure exposures down to manageable amounts. This guide gives practical, up‑to‑date steps to protect your income and remain compliant. It is educational, not individualized tax advice — consult a CPA or tax attorney for decisions that affect your situation.

(For official guidance, see the IRS and your state tax agency; consumer‑oriented overviews are available from the Consumer Financial Protection Bureau.)

Why remote and seasonal workers face special state tax risk

  • Residency rules differ by state. Some states tax residents on all income (regardless of work location); others tax nonresidents only on income earned inside the state. That means a remote worker living in State A but doing work for an employer in State B can be subject to both states’ rules.
  • Withholding often follows the employer’s payroll setup, not the worker’s physical location, so you can get taxes withheld to the wrong state and face an unexpected balance due at filing time.
  • Seasonal work (short stretches of work in another state) can require nonresident returns or trigger a “statutory resident” status if you spend enough time in the state.
  • Some states apply special rules. New York’s “convenience of the employer” doctrine, for example, can treat remote days as New York‑sourced if the work is done for the employee’s convenience rather than the employer’s (NY Dept. of Taxation & Finance guidance).

Key concepts you must understand

  • Domicile vs. statutory residency: “Domicile” is your permanent home; you can change it but must take clear, objective steps. “Statutory resident” usually means spending a statutory number of days (commonly 183) in the state and maintaining a permanent place of abode there. Check the specific tests in states where you have ties. See our related guides on residency tests for more detail: Residency Tests Explained: Determining Your State Tax Home and State Residency and Income Tax: Moving Without Surprises.
  • Nonresident and part‑year returns: If you earn money in a state where you aren’t a resident, that state usually requires a nonresident return for wages or business income earned there. If you move during the year, file part‑year returns in the states where you were resident during parts of the year.
  • Credits and reciprocity: Many states offer a credit to residents for taxes paid to other states on the same income, which prevents double taxation in most situations. Some states also have reciprocal agreements that exempt cross‑border wages from source‑state withholding; check state tax agency resources.

Actionable planning steps (checklist)

  1. Clarify your domicile and track days in each state. Use calendar logs, travel apps, and copies of boarding passes or hotel receipts to prove where you were.
  2. Confirm where your employer is withholding state tax. If it’s wrong, correct your withholding form (W‑4 equivalent) and inform payroll promptly.
  3. Maintain detailed work‑location records. For remote work, log the date, hours, and physical location where the work was performed. This is the primary evidence states request when auditing telecommuters.
  4. Calculate estimated tax obligations quarterly if you expect a balance due in a state that doesn’t withhold. States can impose penalties for underpayment.
  5. Evaluate part‑year vs. nonresident filing and claim available credits for taxes paid to other states.
  6. Keep three years of returns and supporting records (many states have 3‑6 year statute of limitations; longer if fraud or substantial omission).

Withholding, payroll, and employer conversations

  • Employers often default to withholding based on the employer’s location or the address on file. That can lead to incorrect state withholding for remote employees; raise the issue with payroll early and supply the correct state withholding form.
  • If payroll refuses or is unable to withhold to your resident state, you will likely need to make estimated payments directly to your state tax agency.
  • For gig workers and contractors, where the work is performed and where the payer is located both matter for state tax sourcing; plan for quarterly estimated payments and collect 1099s carefully.

Common state rules and traps to watch

  • NY convenience rule: New York may tax nonresidents who work remotely for New York employers unless the remote work is performed out of necessity for the employer. This doctrine remains one of the most litigated and consequential issues for remote employees; check NY guidance before assuming nonresident status removes NY tax exposure.
  • Statutory days tests: Many states use a 183‑day test or similar. Even frequent short stays — weeks at a time for seasonal work — can add up quickly.
  • Reciprocity vs. credits: Reciprocal agreements typically apply to wage income and prevent source‑state withholding. Credits for taxes paid are broader but applied at tax filing rather than withholding.

Recordkeeping and documentation (what auditors want)

  • Travel logs showing dates and locations of work.
  • Home ownership or lease agreements, utility bills, voter registration, vehicle registrations, and driver’s licenses to prove domicile.
  • Employer correspondence showing payroll withholding setup and work‑from‑home approvals.
  • Timesheets, project logs, and invoices for freelancers and gig workers.

In my practice I’ve successfully defended clients in examinations by producing consistent, contemporaneous logs plus employer letters showing the business reason for remote work. Those documents matter more than a later‑prepared summary.

Examples that illustrate planning choices

Example 1 — Remote employee living in California working for a Nevada employer:
California taxes residents on all income, so the worker must report worldwide income to California even if the employer is in Nevada (a state without a broad personal income tax). The practical steps: confirm California withholding or make estimated payments, document domicile if considering a move, and compare long‑term tax impacts before changing residency.

Example 2 — Seasonal worker from Florida working in Colorado for winter months:
Florida does not tax wages at the state level; Colorado taxes wages earned for work performed there. The seasonal worker must file a Colorado nonresident return for income earned in Colorado. Document the season dates and claim refundable withholding if applicable.

Example 3 — Freelancer splitting projects between Maine and New Hampshire:
Maine taxes earned income; New Hampshire does not tax wages but taxes interest/dividends. The freelancer should allocate income to the state where the work was performed, keep clear project location records, and file a Maine return for income attributable to Maine work.

How to reduce friction and surprises

  • Plan before changing residences: Changing domicile requires more than a driver’s license swap. Take objective steps—sell or lease your home, register to vote, move family members, change memberships—if you intend to establish a new state of residence.
  • Update payroll immediately when your work location changes. One call to HR can prevent a large tax bill.
  • Make estimated payments to states that will not withhold for you. Use your state tax portal to avoid underpayment penalties.
  • Use professional help for complex situations: dual residency, high income, or multi‑state business income typically benefits from a CPA with multistate experience.

When to get professional help

  • You spent significant time working in a high‑tax state (e.g., New York) for an out‑of‑state employer.
  • You changed domicile or split a tax year between states.
  • You receive audit notices or proposed assessments from a state tax agency.
  • You have substantial investment, retirement, or pass‑through business income that crosses state lines.

Useful resources

Common FAQs (short answers)

Q — Will I owe taxes in both states?
A — Often no. Most residents get a credit for taxes paid to another state on the same income. However, differences in taxable income and credits can leave residual tax; careful calculation is required.

Q — Can I avoid withholding to the wrong state?
A — Usually yes. Update your address and withholding form with payroll. If payroll won’t cooperate, make estimated payments to your resident state and reconcile at filing.

Q — How many days can I work in another state before I become taxable there?
A — It depends. Many states use a 183‑day test, but definitions and exceptions vary. Keep precise day counts and consult state rules.

Final notes and professional disclaimer

State tax planning for remote and seasonal workers is largely about documentation, correct withholding, and timely filing. Small administrative steps early in a tax year can save substantial money and stress. In my experience, the single most effective prevention is consistent, contemporaneous location logs combined with prompt payroll updates.

This article is educational and does not constitute tax, legal, or accounting advice. For guidance specific to your facts, consult a licensed CPA or tax attorney.