Use Tax for Remote Employees: When Home Office Purchases Trigger State Tax

Quick summary

Use tax is what states charge to make sure goods bought without sales tax still face the same tax burden as in-state purchases. Remote employees commonly encounter use tax when they buy desks, monitors, software, or other home office equipment from out-of-state sellers or online marketplaces that didn’t collect sales tax at checkout.

Below I explain when use tax applies, how to report it, employer and reimbursement issues, documentation steps that reduce audit risk, and links to further reading on FinHelp.

Why use tax matters now (short background)

The legal and practical landscape changed after the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), which allowed states to require remote sellers and marketplace facilitators to collect sales tax even without a physical presence. Still, not every purchase is collected at checkout. Use tax remains the taxpayer’s backstop obligation when sales tax wasn’t charged. For remote employees who buy home office goods from out-of-state vendors or small sellers, that obligation often falls on the employee.

States vary in how they collect use tax. Some let you report it on your personal income tax return, others provide a separate use tax form or a voluntary annual reporting option. For marketplace transactions, many states now require the online marketplace to collect and remit tax, which reduces but does not eliminate employee obligations.

Authoritative resources: Tax Foundation (overview of state rules) and the Streamlined Sales Tax Governing Board (on collection and marketplace facilitator laws).

When a remote employee likely owes use tax

You should assume use tax may apply when all of these are true:

• You live in a state that imposes use tax (almost all states do).
• You purchased tangible personal property (furniture, computers, peripherals) or taxable digital goods for use in your home state.
• The seller did not charge sales tax at the point of sale, or charged tax at a lower rate than your local rate.

Common scenarios:

• Buying a desk, monitor, or printer from an out-of-state seller who did not collect tax.
• Purchasing specialty software or cloud services from a vendor without nexus in your state.
• Receiving an item as a personal purchase when your employer did not provide it or reimburse it through an accountable plan.

Note: If the seller (or marketplace facilitator) collects and remits your home-state tax, you normally do not owe additional use tax.

Employer-provided equipment and reimbursements: who is responsible?

• Employer purchase or direct shipment: If your employer buys and ships equipment to you and the employer pays the vendor directly, the employer typically bears any sales/use tax obligation (but employer may pass cost via policies). Ask your employer whether they paid sales tax or claimed an exemption.

• Employee buys and is reimbursed: If you buy equipment and are reimbursed under an accountable plan (you submit receipts and the employer reimburses), the tax obligation can still rest with the purchaser at the time of purchase. Practically, if the employer reimburses the full cost including sales tax, you are made whole. If the employer reimburses only the pre-tax amount, you may still owe use tax.

• Salary stipend or non-accountable reimbursement: If an employer gives a general stipend and you buy equipment without proof, the tax treatment is the same as any consumer purchase — you remain responsible for use tax unless the seller collected it.

In my experience advising clients, asking your employer to purchase through its vendor channels or reimburse sales tax explicitly avoids confusion and potential liability for the employee.

How to report and pay use tax (practical steps)

1. Track purchases. Keep receipts, shipping addresses, and invoices for home-office furniture, electronics, and other taxable items.
2. Check whether the seller collected sales tax. Your invoice should show sales tax collected and the jurisdiction.
3. Find your state’s reporting path. Many states accept use tax reporting on the individual income tax return; others provide a separate online form or voluntary use tax schedule. Search your state Department of Revenue website for “use tax” guidance.
4. Compute the tax. Multiply the purchase price (sometimes including shipping and handling) by your state and local use tax rate. If you live in a jurisdiction with local add-ons, apply the combined rate.
5. Claim credits and exemptions where appropriate. If your employer provided the item or the purchase was for resale or for a nontaxable purpose, you’ll typically have documentation to support an exemption.
6. File and pay. Use your state’s portal to remit the tax. Keep records for at least three to four years in case of review.

Because state rules differ (what counts as taxable, whether shipping counts, how to treat digital goods), consult your state’s revenue department website for specific instructions or contact a tax professional.

Documentation and audit avoidance

Good recordkeeping reduces audit risk and simplifies reporting:

• Keep invoices showing seller, purchase date, shipping address, and amount.
• Save credit-card statements and email confirmations for cross-checking.
• If reimbursed by an employer, keep the reimbursement paperwork and any employer communications about tax treatment.
• Note marketplace transactions separately — marketplaces often provide consolidated annual statements that simplify reporting.

If a state auditor asks for proof of uncollected tax, clear records showing the seller didn’t collect sales tax and the taxpayer’s payment of use tax will resolve most issues. See FinHelp’s guide on State Sales and Use Tax Audits: Common Triggers for Small Businesses for audit red flags and preparation tips.

Marketplace sales and Wayfair’s influence

After Wayfair, many states implemented marketplace facilitator laws that require platforms (e.g., Amazon, Etsy) to collect and remit sales tax for third-party sellers. That has reduced the number of uncollected transactions. However:

• Not every platform sells in every state for every seller.
• Some small, infrequent sellers may not trigger marketplace collection.
• International purchases may still leave a use tax obligation.

If a marketplace collects the correct tax for your shipping address, you generally don’t owe use tax on that item. When they don’t, you are responsible.

Useful resources include the Streamlined Sales Tax Governing Board and Tax Foundation analyses of state collection rules.

Common misconceptions

• “No sales tax charged = no tax owed.” Not true. Use tax exists so taxpayers can’t avoid state tax simply by buying out-of-state.
• “Only big-ticket items matter.” Even small purchases can create use tax liability; frequency matters.
• “Employers always cover tax.” Not automatically. Clarify how equipment purchases and reimbursements are treated.

Practical checklist for remote employees

• Ask vendors whether they collect sales tax to your shipping address.
• Prefer purchases where the seller or marketplace collects and remits tax.
• Keep receipts and employer reimbursement records.
• Report use tax on your state return or via your state’s online use tax form if the seller didn’t collect tax.
• Consult a tax advisor when moving between states or when your employer changes payroll location.

When to get professional help

Contact a tax professional if you:

• Moved states during the tax year and have significant equipment purchases.
• Received a state notice about unpaid use tax.
• Have complex employer reimbursement arrangements or a home business that mixes personal and business purchases.

In my practice I’ve seen notice letters resolved quickly when taxpayers provided receipts and proof of marketplace collection. When records are missing, resolution takes longer and often adds interest and penalties.

Links and additional reading

• FinHelp: Use Tax — general glossary entry on use tax.
• FinHelp: Sales and Use Tax — broader context on sales and use taxes.
• FinHelp: State Sales and Use Tax Audits: Common Triggers for Small Businesses — audit preparedness and triggers.
• U.S. Supreme Court: South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018).
• Streamlined Sales Tax Governing Board: https://www.streamlinedsalestax.org
• Tax Foundation summary of state rules: https://taxfoundation.org

Professional disclaimer: This article is educational and reflects general state-level use tax concepts as of 2025. It is not legal or tax advice. Rules differ by state and facts matter. Consult a licensed tax professional or your state department of revenue for guidance tailored to your situation.