January 25 Tip of the Week

One emerging area of complexity during this pandemic has been the payroll tax implications of an employee working from home – especially when that home is in a different state.  We’ve had many clients ask us about which states’ payroll taxes to deduct from a remote worker’s paychecks and the answer varies significantly depending on the states involved.  To answer these questions, employers must ask more questions like do the states involved in your question take into account whether the employee is working from home because they are required to or for convenience, do the states in question have a reciprocity agreement in place, and have any of the states involved adopted regulations pertaining to the COVID-19 pandemic that impact tax withholding.  As you can see, there is no simple answer to these complex questions and consulting with knowledgeable counsel is the best way to ensure your company is withholding the appropriate payroll taxes for your remote employees.