Overview

Remote work changes where income is sourced, which can trigger state filing requirements even if you live in a different state than your employer. In my practice helping clients across multiple states, the most common issues we see are unclaimed credits for taxes paid to another state, missed nonresident returns, and incorrect withholding setup by employers.

Why this matters

  • States enforce their own filing rules—missing a required state form can lead to penalties, interest, and audits from state tax agencies (not just the IRS).
  • Filing the correct forms affects your take‑home pay, eligibility for credits, and whether you’ll owe back taxes.

How to determine which state forms apply

  1. Establish residency status
  • Your home state’s rules define resident vs. nonresident vs. part‑year resident. Residency rules differ by state; check your state tax agency for specifics.
  1. Identify source-of-income rules
  • States tax income earned from work performed in their jurisdiction. For remote work, “where the work is performed” often matters, not just your employer’s location.
  1. Check withholding and employer policies
  • Ask payroll whether they’re withholding state taxes for your home state and/or the employer state. Misconfigured withholding is a common cause of unexpected tax bills.
  1. Look for reciprocity or credits
  • Some states have reciprocity agreements (e.g., certain neighboring states) that remove or reduce the need to file an out‑of‑state return. Other states allow a credit for taxes paid to another state.

Common state forms and examples (illustrative only)

  • Resident return (example): New Jersey resident return — Form NJ‑1040.
  • Nonresident/part‑year return (example): New York nonresident/part‑year return — Form IT‑203.

These examples illustrate the difference between resident and nonresident filing; check the specific state form and instructions before filing.

Step-by-step checklist for remote workers

  1. Track where you perform work (dates, locations) and client/employer locations.
  2. Confirm your legal residency with your home state tax agency.
  3. Ask payroll which state(s) are being withheld and request adjustments if needed.
  4. If you earned income in another state, review that state’s nonresident filing rules and forms.
  5. Claim credits on your resident return for taxes paid to other states where allowed.
  6. Consider estimated state tax payments if you’re self‑employed or have significant out‑of‑state income.

Practical tips from my experience

  • Keep contemporaneous records (calendar, VPN logs, travel receipts) showing where you worked — those records are often what states request during reviews.
  • If your employer refuses to withhold for your state, pay estimated taxes to avoid penalties.
  • Use the nonresident form for the state where income was earned; do not attempt to force a single‑state filing if the laws require multistate filings.

Common mistakes

  • Assuming only one state return is necessary because you live in the same state as your employer’s HQ.
  • Forgetting to claim a credit for taxes paid to another state on your resident return.
  • Relying on payroll assumptions instead of verifying which states appear on your W‑2.

Short FAQs

Q: What if I never physically worked in the employer’s state?
A: If all work was performed from your home state, most states won’t tax you solely because of your employer’s location—but rules vary. Confirm with the state tax agency and payroll.

Q: Can I avoid filing by asking my employer not to withhold for the employer’s state?
A: No. Asking payroll to stop withholding doesn’t change filing obligations if you have taxable income sourced to that state.

Resources and authoritative references

  • IRS (general guidance): https://www.irs.gov/ (federal rules do not override state obligations).
  • Tax Foundation: https://taxfoundation.org (clearinghouse for state tax differences).
  • State tax agency sites for residency and form instructions — search your state’s Department of Revenue or Taxation website.

Internal guides on finhelp.io

Next steps

If your situation involves more than one state, gather your work‑location records and W‑2/1099s, then consult your state tax agency’s instructions or a tax professional. In complex cases (frequent travel, multiple employers, or remote work for a company with workers in many states), a tax advisor who understands multistate filings can save you time and reduce audit risk.

Professional disclaimer

This article is educational only and does not constitute tax advice. For guidance tailored to your facts, consult a qualified tax professional or your state tax agency.