Hi everyone! This is Dr. Nitin Chhoda and welcome to this important training video
in which I talk about "The new economic reality of remote work and key tax
implications for remote workers as well as employers" I talk about the new paradigm
shift towards permanent remote work in some cases. I'll also give you an
overview of state income taxes because there's a difference between your state
of domicile where you live and where you have your primary residence and state of
work where you actually work. And I'll also go over the state tax implications
with remote work. If you are an existing subscriber welcome back, if you're not a
subscriber yet and you learn something new please consider subscribing below
and please smash that notification button and please click the like button
if you learn something new because it really does help out the YouTube
algorithm with that being said let's go ahead and get started now next year
state income taxes may be the least of your concerns right now you're probably
thinking hey let me get some money coming in let me put some food on the
table let me keep the lights on I completely understand that and I would
do the same if I were in your shoes but I've had a lot of subscribers ask for
this training and I do believe it's a good idea to live in the present but
also plan for the future now in the past three months millions of Americans have
had to work from home because they had no other choice a lot of us had
childcare responsibilities and a lot of us were basically told to work from home
which is what we're doing now that the summer's here and now their offices are
starting to reopen that desire to work from home is actually increasing because
a lot of individuals want to continue to work from home in fact according to a
recent study by Gartner which is a leading research and advisory company
they did a survey of 317 CFOs and they found that almost three-quarters of the
CFOs that means almost 75% of these business leaders and thought leaders
wanted at least a portion of their workforce to continue working from home
permanently in fact according to a survey by the recruiting agency Robert
Half they said that 6 out of 10 individuals who were working from home
actually said that their work-life balance had improved and they preferred
working from home in fact if you take a look at this chart on your screen these
CFOs going back to Gartner who asked the question what percentage of your
workforce now remain remote permanently whereas
previously they were not remote in other words previously they were on site as
you can see on this chart 27 percent of the CFO said that five percent of their
workforce would now remain permanently remote 17 percent of them said that one
out of every five employees which is 20 percent of their workforce would now
become permanently remote four percent of them said that half their workers
would become remote and two percent of them said that more than half their
workers would now become permanently remote now as you know Mark Zuckerberg
the CEO of Facebook has recently been in the news and he is a big proponent of
remote work in fact Mark Zuckerberg specifically said that in the next five
to ten years he expects 50 percent of Facebook employees to work remotely
here's exactly what he said in fact all of these companies that are proponents
of remote work are now sensing that there's a significant cost-cutting
component to remote work because it's less expensive for a company to have an
employee do the same work but do it remotely as having that same employee
on-site in fact Alexandr banned from the Garden Institute specifically said most
CFOs recognize that technology and society have evolved to make remote work
more viable for a wider variety of functions than ever before now let's get
into an overview of state income taxes let me remind you I'm not an accountant
I'm doing this to provide general information on my channel you will need
to talk to an accountant about specific questions related to your state income
taxes if you're not sure about your state income taxes and you're working
remotely now is the time to talk to an accountant because remember if you self
file your taxes using some sort of an online software you need to know all the
rules because when you're filing the taxes you're making an attestation that
you're providing accurate information and again if you are working remotely I
strongly recommend that you hire an accountant so you get clarity about your
state income taxes so now let's talk about your state income taxes if your
living room your spare bedroom your kitchen if any part of your house now
becomes an office it actually has state tax implications
for you because remember your state of domicile
is the state where you live is the state where you have your primary residence
but your state of work is the state where you're working so if as a result
of this pandemic let's say you were living in New Jersey and you went to
live with an uncle and aunt or a family member in Oregon you now are subject to
state income taxes most likely in more than one state so these there are
cross-border implications to your state taxes if your state of work is different
from your state of domicile so let's let's now talk about state income taxes
for specific States now here's data from the Tax Foundation which is a Washington
dc-based think tank that was formed in 1937 and what they do is they collect
data and publish research studies on US tax policies at both the federal and the
state level it's a tax-exempt nonprofit educational and research organization on
the chart you see the darker colors signify higher state income taxes and
the lighter colors signify lower state income taxes in fact there are nine
states one of them is Alaska and that you can actually see those states here
on the screen in a gray color so on one side of your screen you'll see
Washington and Nevada no state income taxes you see Wyoming South Dakota Texas
Florida with no state income taxes and there are two states specifically
Tennessee and New Hampshire that do tax investment income like interests and
dividends but they don't have state income taxes so what are the top state
marginal individual income tax rates in twenty twenty four different states if
you're living in California California has a state income tax of
13.3% if you're in New Jersey your state income taxes ten point seven five
percent if you're in New York your state income tax is eight point eight two
percent Pennsylvania three point zero seven percent excess no state income tax
Florida no state income tax Georgia 5.75% Virginia also 5.75%
North Carolina 5.25% Michigan 4.25% Illinois four point nine percent and
Ohio four point seven nine seven percent state income tax so so far we've covered
the new paradigm shift towards remote work number two we've covered an
overview of state income taxes and number three will now talk about the
state implications of state tax implications associated with remote work
now with some states as soon as you start working remotely in that state you
will owe taxes in that state now if you're working remotely that raises the
question as to whether you as a worker as an employee and your employer has a
tax presence in the state in which you are working if you are indeed if you or
your employer have indeed established a tax presence in a different state that
could come with additional tax reporting obligations in the state in which you
are working now as if this wasn't complex enough some states have
reciprocity agreements with other states in nearby jurisdictions now each state
has a different rule when it comes to state taxes and they take many different
things into account they take into account how long a worker works there
what income is earned and where that workers state of residence or state of
domicile is but here's the important thing that I want all my subscribers to
understand that no one really talks about and no one tells you if you live
in one state that's your state of domicile but if you work in a different
state even if you are just passing through that different state that state
of work most states require you to pay state income taxes even if you are just
passing through in fact there are two dozen states that require you to pay tax
even if you work there for a single day now this is significant if you're
someone who's traveling along if you're let's say an entertainer if
you are an athlete but for everyday individuals we've now been impacted
because of this pandemic who now have to work remotely for for a multitude of
different reasons this really complicates your filing for next year
your tax return filing for next year because now you have to take into
consideration not only a state of domicile which is where you live your
state of primary residence but also your state of work even if you were just
passing through and even if you were there for just a single day for a bunch
of states now in case you're wondering how is the state going to know that I
actually did work in that state well it's pretty simple if your employer has
you working remotely from home they'll know where you're working from because
they have your home address but if you're working from a different address
and they ask you where you're working from the employer will know and then the
employer could report that to the state also when tax preparers are filing taxes
they'll ask the employer where the employer was working from where their
employees were working from so one way or another this information is going to
be made available to the state and this is another reason why you need to talk
to an accountant before filing your taxes if you work remotely
in fact data from the American Institute of Certified Public Accountants which
was reported in the Wall Street Journal highlighted the differences between
different states when it comes to state taxes for remote workers all of these
states need money because they have their own budget shortfalls many states
have elected to keep taxing remote workers some some states have said that
they will not tax remote workers and other states never tax remote workers to
begin with for example for California and New York they expect remote workers
to pay state income taxes partly because the states need the money
Texas and Florida never charged state income taxes to begin with and early
indications from New Jersey and Pennsylvania they've indicated that they
will not charge tax to remote workers but again you will need to check with
accountants in your specific state so as you can see this is a pretty complex
subject and it has a lot of different implications for a lot of different
individuals if you are a remote worker this video was intended to give you a
starting point as to your obligations when it comes to your state taxes next
year I hope this was helpful I know this is complex but I try to simplify it as
much as I please speak with an accountant for his
four questions specific to your situation and state tax filing
guidelines and protocols specific to your situation because every situation
is different thank you so much for watching please
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