Nonresident and Mobile Workers: Nexus Triggers, State Tax Traps

Description

The increase in employers and employees operating or working in multiple states triggers new employment tax requirements. With changes to nexus thresholds and filing obligations following the Wayfair decision, tax professionals and advisers must understand how these changes interact with the complicated state tax rules and requirements regarding withholding, personal income tax allocation, and available resident credits.

For out-of-state employers, many states impose withholding tax administrative duties if the employer sends the employee to work in the other state or permits an employee to telecommute. With many companies registering in multiple states for sales taxes after Wayfair, they must now confront their obligations in those states with regards to employment taxes. Failure to adhere to such duties can lead to audits that may result in even more tax obligations. Employers must identify applicable state tax rules and filing requirements to avoid any unintended penalties.

For nonresident employees, tax advisers must also focus on the interplay between state employment tax obligations and personal income tax rules for traveling employees in multiple states. Employees must consider how to comply with a complex web of state rules for individual income tax allocation and any available exemptions or resident credits to minimize their tax liability.

Tax professionals and advisers must grasp rules in each state for potential tax and keep pace with state tax law developments in response to the economic nexus standards.

Listen as our panel discusses differing state tax withholding rules, personal income tax allocation, resident credits, and provides methods for ensuring registration, reporting, and administrative compliance with state tax laws.